The extraordinary policy response to the exogenous COVID-19 shock is one of the key reasons why we expect a V-shaped recovery and a return of inflation in this cycle. But that is not all. This policy response will also bring about a remarkable shift in the trend in the US saving-investment gap (or the current account deficit), widening beyond the stable range of 2-3% of GDP that it has been in over the past nine years. The US policy response and its transmission to the rest of the world via the current account deficit plays an important role in global reflation and supports our call for a synchronous recovery in ... (full story)