As the world begins to recover from the worst downturn since the Great Depression, the conventional wisdom is that we have employed lessons of the past effectively: a flood of money; a dose of fiscal stimulus; and an avoidance of the worst trade protectionism. We even have Ben Bernanke, a scholar of the Depression, at the helm of the US Federal Reserve. So what could we be missing?

The old playbook may have new, unintended consequences. Last year, when governments faced financial markets paralysed by possible failure of counterparties, they used the tools they had, even if an imperfect fit. To keep credit flowing, central banks opened the money spigots. When traditional monetary tools were insufficient, they invented new ones to buy or lend against assets. And it worked.

Of course, governments knew these dramatic actions would have consequences. Central banks have been watching carefully for early signs of the traditional danger – inflation. Yet in a new era of global competition, companies are unlikely to have the pricing power that led to “demand pull” inflation in decades past; nor are unions likely to be able to make wage demands that contributed to “cost-push” stagflation. Walmart and the developing world's labour force have changed the paradigm.