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World Faces Rare ‘Inflationary Depression,’ Says Keynes Scholar

  • Historian Skidelsky says inflation or tax can pay for spending
  • He says powers of money creation are ‘uncomfortable but true’
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WATCH: U.K. House of Lords Crossbench Peer Robert Skidelsky warns of an “inflationary depression” in the economic fallout of the coronavirus pandemic.Source: Bloomberg

The world economy could face a unique “inflationary depression” as it emerges from lockdowns, with government spending propping up demand even as unemployment soars, according to economic historian Robert Skidelsky.

What makes the economic shock from the coronavirus different to the Great Depression, he said, is that shuttering industries to control the disease has yet to cause a plunge in purchasing power -- largely because governments have stepped in to subsidize wages.