Inflation is clearly on the rise worldwide, running at over 5 per cent in the United States and over 3 per cent here and in Europe, all above central bank target levels.   

Does this mean we are set to experience high inflation, 1970s-style, again?   

To understand why higher inflation is more likely than not to take hold, it’s instructive to reflect on how macroeconomic ideas evolved when inflation surprised policymakers way back then. 

The Keynesian zeitgeist of the 1970s had no prescription for high inflation which appeared simultaneously with high unemployment.