Home Latest News Inflation 'policy mistakes of the 1970s echoing in our time,' Financial Times...

Inflation ‘policy mistakes of the 1970s echoing in our time,’ Financial Times columnist warns

NEW ONESYou can now listen to Fox News articles!

The Financial Times published an op-ed Tuesday warning that the global economy is vulnerable to inflation, stagflation and recession, with loud “echoes of the 1970s”.

The article, titled “Policy Mistakes of the 1970s Echoing Our Times,” compared America and today’s world to the economic problems that plagued that shambolic decade, with the added caveat that “large debt is making the global economy more vulnerable than it was 40 years ago.” past.”

Unexpectedly high inflationwars in key commodity-producing regions, falling real wages, slowing economic growth, fears of monetary policy tightening and stock market turbulence — we see all of these things in the current global economy,” wrote Martin Wolf, chief economics commentator at FT.

“These were also the dominant features of the global economy in the 1970s,” he added.

BIDEN ON ECONOMY: ‘IT COULD BE WORSE’

President Biden speaks about inflation and supply chain issues at the Port of Los Angeles, Friday, June 10, 2022, in Los Angeles.

President Biden speaks about inflation and supply chain issues at the Port of Los Angeles, Friday, June 10, 2022, in Los Angeles.
((AP Photo/Damian Dovarganes))

“That period ended in the early 1980s, with a brutal monetary tightening in the US, a sharp decline in inflation and a spate of debt crises in developing countries, especially in Latin America,” Wolf continued.

He noted that this period of crisis was followed by an upheaval in the global economy. “It was also followed by massive changes in economic policy: the conventional Keynesian economy was buried, labor markets were liberalized, state-owned enterprises were privatized, and economies were opened up to trade.”

Some have speculated that in the same way the economic problems of our time could lead to a reset of the global economy. Supply chain disruptions and heightened geopolitical tensions between the US and China could lead to increased domestic production. Likewise, the US and Europe’s reliance on foreign actors, such as Russia, for oil is being questioned given the national security risks involved.

BIDEN MOVES WRONG INFLATION ‘EVERYWHERE BUT HERE’ BUT OUR RATE HIGHER THAN MOST DEVELOPED COUNTRIES

US President Joe Biden (C) meets with Federal Reserve Chair Jerome Powell and Secretary of the Treasury Janet Yellen in the Oval Office at the White House on May 31, 2022 in Washington, DC. The three met to discuss the Biden administration's plan to combat record high inflation.

US President Joe Biden (C) meets with Federal Reserve Chair Jerome Powell and Secretary of the Treasury Janet Yellen in the Oval Office at the White House on May 31, 2022 in Washington, DC. The three met to discuss the Biden administration’s plan to combat record high inflation.
(Photo by Kevin Dietsch/Getty Images)

Wolf wondered “how close are the parallels, especially with the 1970s? What are the differences? And what can we learn from those mistakes?” He said countries risk “stagflation” if proper policies are not taken.

“Is what we’re seeing tantamount to stagflation — defined as a prolonged period of higher-than-expected inflation and lower-than-expected growth? The answer is ‘not yet,’ but it is a risk,” Wolf wrote.

“Inflation is well above target almost everywhere,” he wrote.

“The echoes of the 1970s are loud: higher-than-expected inflation, major shocks and weakening growth.” Wolf also argued that despite this, “the differences are also encouraging.”

In this September 30, 2021 file photo, Federal Reserve Chairman Jerome Powell testifies during a House Financial Services Committee hearing on Capitol Hill in Washington. Powell says the tangled supply chains and shortages that have plagued the US economy since this summer have gotten worse and are likely to keep inflation high well into the next year. (Sarah Silbiger/Pool Photo via AP, File)

In this September 30, 2021 file photo, Federal Reserve Chairman Jerome Powell testifies during a House Financial Services Committee hearing on Capitol Hill in Washington. Powell says the tangled supply chains and shortages that have plagued the US economy since this summer have gotten worse and are likely to keep inflation high well into the next year. (Sarah Silbiger/Pool Photo via AP, File)

Among these differences, Wolf noted that while oil prices have risen significantly in the present time, the rise is less than in 1973 and 1981.

CLICK HERE TO GET THE FOX NEWS APP

However, there is one big difference that will make countries worse off in the coming years, he said: “There is a clear danger in one respect where the global economy looks more fragile than 40 years ago: the size of the debt stock, especially stocks are in foreign currency.”

Wolf also noted that risks remain in the global economy, such as Russia cutting off oil to the United States and Europe. “Russia could also stop exporting gas to Europe, creating further disruptions.”

RELATED ARTICLES

AFL Tips & Preview – Round 16

Round 16 of the 2022 AFL kicks off with two encounters that will have a major impact on the makeup of both the Top...

Facebook Introduces New Group Organization Sidebar, Community Channels

Facebook is introducing a new way for users to quickly access and organize their Facebook groups. Both admins and members can use the...

Clinics struggle to divert patients as states ban abortion

They call her desperate, scared and often broke. Some are victims of rape and domestic violence. Others are new mothers, still nursing...

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

AFL Tips & Preview – Round 16

Round 16 of the 2022 AFL kicks off with two encounters that will have a major impact on the makeup of both the Top...

Facebook Introduces New Group Organization Sidebar, Community Channels

Facebook is introducing a new way for users to quickly access and organize their Facebook groups. Both admins and members can use the...

Clinics struggle to divert patients as states ban abortion

They call her desperate, scared and often broke. Some are victims of rape and domestic violence. Others are new mothers, still nursing...

Australian retail labor shortages hit 50-year high: survey

SYDNEY, June 29 (Xinhua) — A research report from Australia’s top retail organization, the Australian Retailers Association (ARA), has shown that the Australian labor...