At least that's the impression I get:
"Another thing we might see is a certain tendency towards the financial repression that was a feature of the post-war world in which Warren Hogan first studied economics. A legacy of the 1930s was a much tighter regulatory regime for banks, elements of which lasted for decades. A legacy of the 1940s was a very large stock of government debt. Debt to GDP ratios were well into triple digits for countries like the United Kingdom and the United States (and for Australia). Yet from the 1950s through to the 1970s, debt-servicing dynamics were kept within manageable bounds. The rapid growth in economic output in the long post-war boom, which was aided by demographics and productivity performance, was a major help. But also contributing was a combination of central banks holding down long-term interest rates at government direction, and banks and other entities being forced to hold government debt. And of course, at the end of that boom, a period of unanticipated high inflation played a role in lowering debt to GDP ratios.
In the current era, however, the rapid output growth will likely occur in the countries that don't have much government debt but do have productivity catch-up working for them, while in many of the countries that have a lot of debt the demographics will be going the wrong way. It is therefore conceivable that with slow-growing countries feeling pressed for solutions, regulatory actions might have certain attractions. Given this, and with many emerging countries having mixed feelings about many aspects of free financial markets anyway, it is conceivable that the current trend towards more assertive and intrusive financial regulation – which is occurring for very understandable reasons – will end up going much further than contemplated at present. The potential for an outcome that eventually involves significant inflation is also obvious."
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