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2020-06-30

Towering debts are a big threat, even if servicing costs are low

One innocent explanation for the extraordinary bounce back in global equity markets in the second quarter is that investors have concluded that the worst of the pandemic is over and that recovery is within reach.

A less innocent — but all too plausible — alternative reading is that investors now believe central banks will exercise complete control over asset prices for the foreseeable future.

could ensure a lasting decoupling of equity prices from ailing economies.

In a recent paper for the Brookings Institution, Sage Belz and David Wessel

A pick-up in inflation is a far more probable outcome than markets currently allow. 

It is, moreover, part of the solution to countries’ excessive debt burdens.



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