If economies recover and stimulus turbocharges pent-up demand, a lot of bank credit could result from central bank money
The increasing risk of a return of inflation in the US and Europe is beginning to galvanise debates among economists. One key source of inflation fears is the expectation that, once the Covid-19 pandemic has been overcome by vaccines, pent-up demand will explode in an orgy of consumption.
Moreover, today’s unprecedentedly large government bailout programmes will have powerful inflationary multiplier effects.