Commentators are fueling concerns there will be a new Great Depression, but good leaders base their strategies on facts, not fear-mongering.
Leaders must remain sceptical of claims that COVID-19 will cause a new Great Depression, argue Philipp Carlsson-Szlezak, Martin Reeves and Paul Swartz. Writing for Harvard Business Review, they explain that while headlines like “Unemployment Peaking Near Great Depression Levels” sell newspapers, they miss the point because, in terms of predicting a depression or debt crisis, price stability is the key indicator to watch.
They say we should “beware implicit and explicit equivalences to historical events”. It’s policy, not history, that predicts rapid deflation and inflation. So far, the authors argue, US policy makers are getting it right.