Huge fiscal and monetary stimulus programs have sparked a growing debate about whether advanced economies may sooner or later experience the sort of rapid price growth last seen a generation ago. While stimulus advocates point to current weak demand and the public’s deeply ingrained low-inflation expectations, anxious hawks fear that a new and dangerous global inflationary consensus may be taking hold.
BERLIN – The COVID-19 pandemic has mercilessly exposed the weaknesses of institutions upon which the overwhelming majority of the world’s people rely. That includes both national governments and the international order. Neither is likely to survive in their current form – nor should they.
Long before clever commentators proclaimed the arrival of “the Anthropocene” – a geological epoch defined by humankind’s command over nature – it was a truism in advanced industrialized economies that the world was eminently under our control. Then along came a microscopic organism, and with it a global shock. Despite all our scientific knowledge and technological capabilities, COVID-19 has the upper hand, at least for the time being.
Compounding the irony, the world’s most advanced and powerful countries were among the least prepared for the pandemic. Having spent hundreds of billions of dollars on research and development, they have the world’s most powerful technologies and the strongest militaries, but they did not take seriously the risk that the next big threat might come from nature. We now know that this was a mistake of historic proportions. The seemingly implausible has come to pass; the mother of all black swans has landed.
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