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Financial Times/John Plender/5-23-2020
“It is also sobering for western investors who fear Covid-19 may herald a Japanese-style future for the US and European economies. That would imply continual dependence on fiscal and monetary pump priming to fight endemic deflation, at the cost of ever bigger government debt: Japanification, in a word.”
USAGOLD note: Plender makes the same point advanced recently by Reinhardt and Rogoff: This time around, it is different … With the dangers of unemployment and zombified companies looming large, central banks, he says, will find it extremely difficult to retreat from monetary largesse. This time around, the result is likely to be a return of inflation – not Japanification.