Martin Wolf seems to shy away from openly destroying some new absurd economic prophesies. /FT, 18 November 2020/
One of them sees the return of high inflation, high interest rates - simply the rerun of the 1970s. At the core of their prophecy, one can find wrong economic forecasts expecting a strong inflationary pressure in our decade. They see the number of consumers to rise relative to that of producers, globalisation to weaken, global labour force to shrink and market power of labour to re-emerge – the result must be high inflation.
None of them will happen. The rise of regions and mega-cities will replace former globalisation, new technologies will strengthen producers, global labour force will increase in Asia and Africa, the capital – of course- will remain Das Capital.
Nevertheless, we can expect the reverse rerun of the 70s with low inflation, low energy prices, lower deficits and much higher central bank balance sheets.
Governor Matolcsy, MNB, the Central Bank of Hungary