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The world is now so peaceful, the post-Spanish flu world was not. When the Spanish flu was detected first, the First World War still had not ended. There was a big recession in the US economy. The unemployment rate increased to 11.7 per cent from 1.4 per cent. Apart from recession, there was unrest and violence. Workers revolted.

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In the meantime, Palmer Raids were launched. Under the initiative of United States Department of Justice, over 10,000 people were captured in a series of raids in the name of attorney general A Mitchell Palmer. Captured people were forced to leave the country.

This operation was mainly launched against communists and migrants of Italy and East Europe. Different European countries, USA and Germany sank into debt.

Post-Spanish flu economy mainly started turning around in 1923. The credit was attributed to US President Warren G. Harding.

An owner of a newspaper Warren G. Harding from Ohio was elected president from the Republican Party in 1920. He took steps of tax rebate, use of technology and new investment to boost the economy. This strong of economy continued till world economic recession of 1929.

President Warren G. Harding was a most popular president. He died only at the age of 57 while president. His popularity declined after his death. Later, it was known that he had illicit affairs with many women. A British woman, Nanna Popham, even claimed her daughter Elizabeth's father was president Harding. Although it was denied, it was proved through DNA test in 2015 that Elizabeth's father was Harding.

Another scandal of the president was 'The Teapot Dome Scandal'. This scandal came to being for providing work without any tender in exchange of bribes, to a company named Teapot Dome. Teapot Dome Scandal was the most notorious scandal in USA before Nixon's Watergate Scandal.

Current world

During Covid-19, the big question of current world is about the return of stagflation. Stagflation is an economic situation in which the economy is stuck in a cycle of high inflation, downtrend growth and high unemployment. The living cost increases in a great deal during this period. It is a very bad time for economy. It becomes very difficult to take steps to lessen inflation.

The central banks usually increase the rate of interest on fund to decrease the inflation. Bank loans become expensive. If a bank loan becomes expensive, investment also becomes expensive. If investment falls, new employment opportunities are also hampered. As a result, the recession prolongs.

Such a situation emerged in the US economy at the end of 1970s. The rate of inflation in US increased to 13.3 per cent in 1980 and unemployment increased to 10.8 per cent in 1982.

On the one hand the economic activities have increased due to decreasing of coronavirus infection, and supply is not enough on the other. The price of all types of energy, including oil and coal have increased in the world market. However, the supply system has not returned to the previous stage. Shipping fare for transporting commodities is on the rise. As a result, inflation is taking place worldwide.

One group of economists think stagflation is returning to the world again. The central banks' role is crucial to overcome this situation. The central banks prepare the monetary policy. The main target of monetary policy of developed countries including US, Britain is to control inflation and bring down rate of unemployment.

Bangladesh: Concerns over five indicators

Although Bangladesh economy is doing fine comparatively, all indicators are not in a good condition. Exports, raw and capital machinery import and loans in the private sector are increasing. However, economists think there is necessity to be cautious about at least five indicators.

1. Inflation: Inflation is under control on the records, under 6 per cent. There is no reflection of market price in the government statistics. Prices of about all commodities are on the rise. So it it is difficult for the middle class to maintain living costs. The entire world is now busy tackling inflation. And now discussions and plans must be focused on whether inflation will lead to stagflation or not.

2. Wage earners' income: Remittance was upward even during the coronavirus pandemic. But remittance is decreasing steadily for the last four months. In the current fiscal year, the remittance (July-September) decreased to 19 per cent. As communications were shut, remittance was sent through banking channels. Besides, there was 2 per cent incentive. But after the resumption of communications, the inflow remittance started decreasing. Downward trend in remittance is a matter of concern.

3. New poor: Some 20.5 per cent of population was below the poverty line before coronavirus. There is no government statistics as to how many people have gone below the poverty line due to the coronavirus pandemic. Think-tank SANEM's survey says some 42 per cent of people are poor. Experts think the statistics of poor is necessary for the government in its policymaking and planning.

4. Discrimination: It was being said at one time that the recovery in the post-Covid world would be in an L. That means the economy will be downward and will continue for long. Later, it was said the recovery will be a V. That means although the economy falls speedily, it will go up quickly. Now it is being said the recovery will take place like the letter K meaning recovery of one group will go up while another group will go down. Discrimination in income and assets will intensify. Discrimination was increasing in the country. Experts think coronavirus is causing this to increase further.

5. Default loan: The government has provided over Tk 1,000 billion as stimulus packages to tackle coronavirus. Over Tk 500 billion has been given for the industrial sector. Bangladesh Bank itself is raising questions what percentage of this money has been spent on the productive sector. Besides, accounting of default loans was suspended for long. So bankers and economists raise questions as to how much money will return to the banks when the situation will become normal.

All together, International Monetary Fund (IMF) forecasts Bangladesh's GDP in the current year would be 4.6 per cent, which is third in South Asia. The people of limited income will be in trouble if the pressure of inflation pushes up living costs. Meanwhile, those who have become poor will suffer the most.

This report, originally published in Prothom Alo print and online editions, has been rewritten in English by Rabiul Islam.

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