According to economic historian Niall Ferguson, inflation could repeat the course of the late 1960s that laid the foundation for sustained high prices for the following decade.

Ferguson told CNBC on Friday that if they responded to the Covid-19 pandemic in a similar way to the 2008 Great Recession, policy makers will face a new challenge in the form of soaring inflation.

“The interesting thing about disasters is that one disaster can lead to another. You can go from a public health disaster to a fiscal, monetary and potentially inflationary disaster,” Ferguson said at the Ambrosetti Forum in Italy.

“It’s not that big of a catastrophe, it doesn’t kill people, but an inflation start would be a problem.”

US consumer prices rose 5.4% year over year in July, the largest increase since August 2008.

The US Federal Reserve and many economists claim the recent surge in inflation will be “temporary,” but Ferguson has questioned this.

“How long is fleeting? At what point do expectations shift fundamentally, especially when the Federal Reserve tells people, ‘We have changed our inflation target system and we don’t mind if inflation is above target for a while’? ” Ferguson, a Milbank Family Senior Fellow at the Hoover Institution, Stanford University, said.

“In my opinion, we are not heading towards the 1970s, but could repeat the late 1960s when then Fed chairman McChesney Martin lost control of inflation expectations.”

His comments come after former IMF chief economist and Harvard professor of public policy, Kenneth Rogoff, suggested in an article earlier this week that the US withdrawal from Afghanistan would add to the list of “worrying” parallels between the 2020s and the “Perfect storm” expanded. Factors that led to very high inflation in the 1970s.

Suggested that the high inflation of the 1970s had its origin in the late 1960s, Ferguson added that it was too early to conclude with any certainty that the current warming is temporary.

Data on US house prices and consumer inflation expectations released on Tuesday may have added to Fed concerns. The S&P / Case-Shiller Index, which measures home prices in 20 major US cities, rose 19.1% year-over-year in June, the biggest jump in the series’ history since 1987. US consumers are now looking in 12 months an inflation rate of 6.8%. That’s a full percentage point more than a year ago, or 17.2% on a relative basis.

Former Treasury Secretary Larry Summers tweeted, “Any time you hear that inflation is temporary, remember that double house price inflation has not yet appeared in the indices. Residential real estate accounts for 40 percent of the core CPI [consumer price index]. “

Ferguson suggested that the Fed’s Delta-Covid-19 variant might have done a favor to cool the US economy slightly after a hot summer, but other external factors could still come into play.

“The great inflations in history have almost always been linked to war. The thing that would really unanchorate inflation expectations would be if this cold war … between the United States and China escalated into a hot war, shall we say around Taiwan, “he said.

Ferguson speculated that in light of the US withdrawal from Afghanistan, Chinese President Xi Jinping might see the emerging US reluctance to face military conflict as an opportunity to seek total control of Taiwan. This would force the US to decide whether to enter into another distant war or cede its global hegemony, he suggested.

– CNBC’s Jeff Cox contributed to this report.