IEA research quoted in The Daily Telegraph
The debt’s sustainability also relies on interest rates remaining low. Currently the general view is that deflation is a bigger risk than inflation, with central banks around the world struggling to lift inflation to their targets – requiring low interest rates, rather than high rates.
If inflation was to surge, interest rates might shoot up. Tim writes: “The Institute of Economic Affairs this week warned the galloping money supply could be a threat. Another risk is posed by the shift away from globalisation – when once cheap goods from nations including China kept inflation down in the West, a combination of trade wars and coronavirus could reverse the process, pushing prices up.”
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