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Policy errors of the 1970s echo in our times

Vast debts make the world economy more fragile than it was over 40 years ago

Unexpectedly high inflation, wars in key commodity-producing regions, declining real wages, slowing economic growth, fears of tightening monetary policy and turbulence in stock markets — we see all of these things in today’s world economy. These were also the dominant features of the world economy in the 1970s. That period ended in the early 1980s, with a brutal monetary tightening in the US, a sharp reduction in inflation and a wave of debt crises in developing countries, especially in those of Latin America. It was also follow