Matolcsy: Fears of durable inflation are justified

Some central banks and financial experts regard the return of durable inflation as wildly premature /Robin Wigglesworth, FT Markets Insight 2 November 2020/.

Am afraid the opposite is true. It is absolutely right to assume that we entered a new era for monetary policy due to the rerun of the 1970ys /and quite frankly the 1940s/. Both, the decade 50 years ago and the 2020s were ignited by the American Grand Strategy to keep the leading position of the incumbent western world power, the American Empire.

At that time and in the beginning of our decade American decisions started a chain-reaction in the global economy that resulted in durable inflation, the accumulation of huge public debts, political and social unrest in nearly all western countries and many more unpleasant side-effects. America could not stop the chain-reaction until Paul Volcker put an end to it.

It is still too early to say that globalization, technology, demographics, debt burdens and the weakening bargaining power of labour all remain the same as they were in the last 40ys.

Nothing will remain the same when a new global chain-reaction is in play.

Governor Matolcsy, MNB, the Central Bank of Hungary

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