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World is facing a rare ‘inflationary depression,’ says economic historian

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The world economy could face a unique “inflationary depression” as it emerges from lockdowns, with government spending propping up demand even as unemployment soars, according to economic historian Robert Skidelsky.

What makes the economic shock from the coronavirus different to the Great Depression, he said, is that shuttering industries to control the disease has yet to cause a plunge in purchasing power – largely because governments have stepped in to subsidise wages.

"Governments with their own central banks can just get enough money to spend whatever they want. People find that uncomfortable, but it's true.": Robert Skidelsky

“Governments with their own central banks can just get enough money to spend whatever they want. People find that uncomfortable, but it’s true.”: Robert SkidelskyCredit:Bloomberg

In Europe alone, that support has so far saved about 40 million jobs. It’s also going to push prices up, according to Skidelsky, author of a three-part biography of the British economist John Maynard Keynes.

“As we come out of the lockdown, there is going to be a depression and inflation at the same time,” he told Bloomberg TV’s Tom Keene and Francine Lacqua in an interview. “It’s very, very unusual.”



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