If central banks increase interest rates enough to bring inflation down to 2%, they will cause a severe economic hard landing

 And if they don’t – attempting instead to protect growth and jobs – they will be left increasingly far behind the curve, leading to a de-anchoring of inflation expectations and a wage-price spiral.

Project Syndicate: In your latest PS commentary, you reaffirmed your expectation that monetary authorities’ efforts to rein in inflation will “cause both an economic and a financial crash,” and that “regardless of their tough talk,” central banks “will feel immense pressure to reverse their tightening” once that crash materializes. 

What would the impact of such a reversal be? Do monetary policymakers in the United States and Europe have any good – or less bad – options?

Nouriel Roubini: Central banks are in both a stagflation trap and a debt trap. 

Raising interest rates enough to crush inflation causes not only an economic crash, but also a financial crash, with highly leveraged private and public debtors facing severe distress. 

In these circumstances, central banks will blink.

Nouriel Roubini Project Syndicate 15 November 2022

https://www.project-syndicate.org/onpoint/interview-nouriel-roubini-stagflation-debt-crisis-crypto-china-2022-11


Megathreats

The Ten Trends that Imperil Our Future, and How to Survive Them

Nouriel Roubini 2022-10-20

https://englundmacro.blogspot.com/2022/10/roubini-megathreats.html


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