'Inevitable pain': How the foundations for economic strife were laid years ago

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Is a global recession on the horizon? Well, considering how the world reacted to Covid-19—followed by the injection of mountains of money into the economy—one thing is for certain: consequences are inevitable.

It’s not unusual to hear people discuss the state of the economy and pin its direction on the most recent fiscal circumstances, movements and policy. Of course, economic downturn often stems from a cause set in motion decades in the past, so it’s vital economic analysis consider the entire picture, not just the immediate history leading up to an event.

ATA Chief Economist Dr John Humphreys unpacks the current state of global economics, delving into the possibility of a recession on TNT Radio podcast Jason Q Citizen & Friends on Monday, 3 October 2022.

”It’s not crazy to be worried about a global recession. It does seem like one very plausible consequence from the fact the world lost its collective mind, threw us into unnecessary lockdowns and then printed an insane amount of money to try and cover it up.

“That sort of behaviour has consequences; actions have consequences and it’s not pretty. A downturn is inevitable everywhere but whether it turns into a global recession or how bad it’s going to be, I don’t know. But some amount of pain was always going to be inevitable, given the choices that were made over the past couple of years. The issues are going to be, which countries will cop it worst? And how are we going to get through it?

”The problem with these economic downturns like the ones we’re moving towards, is that they were caused years ago. We put in place years ago the pieces that would inevitably lead here. Once we print far too much money, started the inflationary spiral and require a higher interest rate to get it under wraps and have no productivity agenda for the last two decades… Once you add all that together, it’s going to eventually come to ahead.”

Listen to the podcast below: