Nearly all developed countries are trying to cope with the surge in their borrowing needs in the coming years. They are taking part in a beauty parade before global savers, and the less attractive they appear, the higher the rate of interest they will have to pay for their money. This is partly about numbers, including the size of the stock of debt and the rate at which it is rising. But it is also about trust. To what extent can a country be trusted to pay its debts?

But the pressure on all governments will be to try to minimise the burden of debt, and one way of doing that will be to try to erode its real value, either by devaluing the currency and/or by encouraging inflation. This cannot, of course, be done openly. It has to be done by stealth. Some countries are more to be trusted than others. The more you are trusted, the cheaper you can borrow.

All investment in government stock looks dreadful given the pressure on governments around the world to cut the real value of the debt. Indeed, it may be that the world is in the early stages of a long cycle during which there will be a return to higher inflation.

Back in 1925 the Russian economist Nikolai Kondratieff published a book, The Major Economic Cycles. In it he set out the idea that there were long waves of 50 to 60 years' duration, during which prices tended to rise and then fall. This work was developed by another economist, Joseph Schumpeter, who also incorporated Kondratieff's work with that of the French economist Clement Juglar, who had observed that there was a business cycle of seven to 11 years.

Inflation hit bottom in 2001, from which it has gradually climbed. Long-term interest rates lag behind inflation by about seven years, so they hit a trough in 2008-9. Now they are set to rise. The peak of inflation, if you buy the idea of such a cycle, will be around 2028, with interest rates again lagging behind a bit.

I have always felt intrigued by the idea of a long-wave cycle, but have been more convinced of the usefulness of the seven- to 11-year business cycle as a basis for planning. We have just had a classic, though particularly serious, downswing. We can now be reasonably confident of the growth phase, but we should recognise that there will be another recession in another seven to 11 years' time. Getting public finances into reasonable shape before that hits us is the great challenge facing all developed countries. But, from an investment perspective, the Kondratieff upswing in inflation should serve as a warning because it fits in with what many of us fear governments will do: cheat savers by inflating away the real value of their savings.

How else can a government pay back its debts?