There are two separate issues that the world will need to contend with inflation and recession.
Recession simply means the world is producing less stuff...
Covid has killed millions of people taking them out of the workforce forever. Add to that "long Covid" may be disabling millions more. Meanwhile, working from home is not proving to be as productive as first touted. While companies are fighting to get their employees back to work, we can expect lower productivity than before Covid for quite a few years.
Fewer workers working less productively translate to less "stuff". Aka Recession.
This problem is further compounded by high energy costs (a key ingredient to making "stuff" efficiently ranging from growing food to building cars.
Lower world birth rates especially in countries with higher productivity rates will further reduce the volume of "stuff" being produced on a per capita basis. Example, look at the average productivity per US farmer vs a third world country farmer. Machinery does make people more productive.
Bottom line, there is plenty of reason to expect a long secular decline globally in the production of good and services. Combine adverse long-term trends, with Covid and government policies that try to stave off the political consequences of recession by printing money and adopting income and wealth redistribution policies (regardless of your ideology towards these polices, studies show they cause people to produce less "stuff") and the world is in for a rough ride.
Are we doomed? No, eventually, if wealth redistribution strategies don't undermine the capital base, investments in AI and automation should begin to replace the lost workers. Meanwhile, the energy needed to power our economy is "there", we simply have to take control of the developed world's energy poliices and put them into the hands of engineers. Environmentalists should have input, but they simply don't have the skills to make intelligent trade-offs. Right now, our energy policy is like putting an electrician in charge of building a home, the electrical work might be fine, the electrician knows squat about the natural gas, plumbing, carpentry, etc. needed to build a house.
But for now, people are using government to dismantle their wealth in the name of "equity". It is something quite different to redistribute wealth if you put strings on it, not allowing those who receive the wealth to spend it, but rather require them to keep it invested... but that is not what is happening... the world is in the process of taking its "savings" and spending it to placate the poor. History shows that is a flawed strategy, since the rebuilding of an economy is far more difficult once the savings run out, than it would have been.
But eventually, we will realize that there is no free lunch. Everyone who paints a "rosy" picture of strategies that don't focus on making more stuff is simply "liquidating" the world's savings. Causing the world to go broke and the eventual crash to be worse.
Now let's talk about inflation... inflation is simply a way to change how goods and services are distributed. Imagine all the world's goods and services are represented by 10 Apples... no matter how much money you print... there are still only 10 Apples. But printing money changes who gets those Apples.
Regarding "debt"
Debt can be good or bad. If I save $1000 (stored wealth) and you borrow it and spend it. Then the wealth is gone. I may still have $1000 coming to me, but you owe $1000 and you have nothing to show for it other than the good time you had spending it.
Now let's get back to our Apple example. If I loan you $1000 and you use it to plant Apple trees... and those apple trees produce $500 of Apples every year. Then I still own a $1000 debt and you own Apple trees that produce $500 of Apples. If you use a quarter of your income to pay me off. Then in 12 years or so even after paying me interest. I have more than $1000 in savings, and you have Apple trees worth at least $1000 and the world has more Apples annually. Win-Win-Win.
The takeaway, debt used to produce income produces a very different outcome than debt used to consume now. Debt used to consume now simply allows you to consume what I saved. But debt used to produce income helps everyone.
