In the children’s fairytale Goldilocks and the Three Bears, Goldilocks encounters three bowls of porridge. One that is too cold and one that is too hot, until, of course, she settles on one that is just right.
As the world continues its long and challenging recovery from the coronavirus pandemic, the global economy and Goldilocks, ironically have a great deal in common.
Economies around the world must not be too cold (recessionary and deflationary) or too hot (inflationary), lest major issues begin to swiftly arise.
Going forward, the global economy faces the contractionary forces of struggling economies across the world, relatively anaemic recoveries outside of nations that have engaged in enormous levels of stimulus and declining demographics in most of the world’s largest economies.
At the same time, the ghost of inflation that scarred households in the 1970s and 1980s may have returned to haunt us once more.
But how does all this…