In 2021, the big debate about the outlook for the global economy focused on whether the rising inflation in the United States and other advanced economies was transitory or persistent. Key central banks and most Wall Street researchers were on “Team Transitory”. They attributed the problem to base effects and temporary supply bottlenecks, implying that the high inflation rate would rapidly fall back to central banks’ 2% target range.

Meanwhile, “Team Persistent” – led by Lawrence H. Summers of Harvard University, Mohamed A. El-Erian of Queens’ College at the University of Cambridge, and other ec...