Will Britain turn into Zimbabwe or Japan? In other words, will the fallout from the economic crisis precipitated by Covid 19 lead to hyper-inflation or to deflation? Are we going back to the 1970s – or to a strange world of which no living Briton has any recollection? Or, more graphically, will it be savers and bond-holders who get ripped off to pay to bills of the crisis – or do borrowers face being buried by their debts?
In May, the Consumer Prices Index (CPI) fell to an annualised 0.5 per cent. A fall was expected thanks to plunging oil prices. But many people fear it will only be temporary as the economy begins a fraught recovery. After all, what do the economic textbooks tell you to expect when you mix together an expansion in the money supply combined with a contraction in output? And boy, do we have those two ingredients at the moment.
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