Believe it or not, it all goes back to what happened during the Great Depression

In regard to the unprecedented fiscal and monetary policies we’ve been witnessing over the last twenty years or so (huge deficits, zero interest rates, rampant money printing, governments buying financial assets that formerly had been under the purview of the private sector) there’s an explanation that comes under the heading of deflation anxiety.

For many years the global capitalist system had been building up unfunded future liabilities:

https://ballotpedia.org/Unfunded_liabilities

This figured to become deeply deflationary at some point. The Japanese economy was the harbinger. After its financial markets peaked around 1990 Japan started experiencing a degree of deflation that frightened central bankers worldwide.

Other signs were emerging. During the recession of 2000–2002 the American Nasdaq index lost 83% of its value! The Fed lowered its benchmark interest rate to zero for the first time. And then the generalized financial crisis of 2007–2009 hit.

The hugely (and increasingly) inflationary policies of the monetary authorities have been viewed as necessary to counter the kind of deflation that was so ruinous during the 1930s. With the threat of socialism during that decade the elites realized they’d have to let wage and employment levels rise. By the 1970s wages were relatively high in the advanced sector (the US, Europe, and Japan). Corporate profits tanked. So the corporations started to (a) off-shore production to low-wage countries, and (b) clamor for lower taxation rates.

After 1980 the Reaganite low taxation rates in combination with low returns on capital caused pension (and similar) funds to become under-funded. Since 1990 the challenge for the monetary authorities has been to inflate just enough so as to achieve a balance between their policies and the economy’s underlying deflationary tendencies. Such fine-tuning is a challenge, indeed. What we might get from all this is wild swings of inflation and deflation over periods of decades going forward.