Brady’s Lessons – Phenomenal World

As ever, the 1970s loom large. The economic and political trauma of those years has cast a long shadow over economic policymakers and commentators, and some are wondering whether we are in for a return. There are of course some superficial similarities: then as now, accommodative fiscal and monetary policies preceded a period of elevated inflation. Then as now, inflationary pressures coincided with an energy shock (the 1973 embargo and 2022 invasion of Ukraine) and then another energy shock (the 1979 Iranian Revolution and 2026 Iran War).  Initially, emerging markets enjoyed unprecedented capital inflows—the petrodollar recycling of the 1970s, the sugar rush of low rates in 2021—before facing debt pressures associated…