The huge run-up in government debt accompanied by massive central bank bond purchases in response to the COVID-19 pandemic is rekindling fears in some circles of a return to the high inflation era last witnessed in the 1970s and early-1980s, says Peter Perkins at MRB Partners, but that period is not a good guide upon which to assess future risks. He points out the 1970s inflation outbreak followed the sharp depreciation of the US dollar and two major commodity price shocks that drove up food and energy inflation, and that is not the case today. Furthermore, adds Perkins, labour market forces back then enabled employee compensation to quickly catch-up to past inflation, helping reinforce underlying price pressures, and that wage-inflation link is much less strong now. This is not to downplay the risks of inflation in the coming years, says Perkins, indeed he expects it to rise. The global monetary system, he says, may not have undergone an abrupt change as occurred in the early-1970s, but has nonetheless has changed significantly since the Global Financial Crisis. Many mistakenly argued that central banks were “printing money” over the past decade, according to Perkins, but the increasing reliance of central banks on their balance sheets rather than interest rates as policy tools represents an important shift in the monetary landscape, with the potential to trigger higher inflation if it were to persist and stimulate significant private-sector spending.