Is Stagflation Coming?
Centrals banks have been monetizing large fiscal deficits in what amounts to “helicopter money” or an application of Modern Monetary Theory.
At a time when public and private debt is growing from an already high baseline (425% of GDP in advanced economies and 356% globally), only a combination of low short- and long-term interest rates can keep debt burdens sustainable.
Monetary-policy normalization at this point would crash bond and credit markets, and then stock markets, inciting a recession.
Central banks have effectively lost their independence.
Nouriel Roubini 14 April 2021
The 1970s were an era of stagflation — high inflation and low growth. They were also, as a result, an era of terrible performance for asset prices.
Martin Wolf 26 March 2021
https://englundmacro.blogspot.com/2021/03/a-spectre-is-haunting-investors-return.html
If the strategy fails, ending in overheating, high inflation, financial instability and the economics of the 1970s, the US experiment of 2021 will go down as one of the biggest own goals of economic policymaking since François Mitterrand’s failed reflation in France in 1981.
The whole world is watching.
FT 16 February 2021
https://englundmacro.blogspot.com/2021/02/for-four-decades-governments-have.html
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