{"id":58480,"date":"2021-07-03T10:38:03","date_gmt":"2021-07-03T15:38:03","guid":{"rendered":"https:\/\/olduvai.ca\/?p=58480"},"modified":"2021-07-03T10:38:03","modified_gmt":"2021-07-03T15:38:03","slug":"the-looming-stagflationary-debt-crisis","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=58480","title":{"rendered":"The Looming Stagflationary Debt Crisis"},"content":{"rendered":"<div class=\"grid-container\">\n<div class=\"grid-x grid-padding-x  \">\n<div class=\"grid-container\">\n<div class=\"grid-x grid-padding-x  \">\n<figure class=\"cell image image--lead image--ratio-2-1   \"><picture class=\"fbg-image__element\"><img loading=\"lazy\" decoding=\"async\" class=\"lazyunload ls-is-cached lazyloaded\" src=\"https:\/\/webapi.project-syndicate.org\/library\/f53a776bffcdf18d066b1f91d136b136.jpg\" alt=\"roubini153_OLIVIER DOULIERYAFP via Getty Images_USdebt\" width=\"320\" height=\"160\" data-src=\"https:\/\/webapi.project-syndicate.org\/library\/f53a776bffcdf18d066b1f91d136b136.jpg\" \/><\/picture><span class=\"image__copyright\">Olivier Douliery\/AFP via Getty Images<\/span><\/figure>\n<\/div>\n<\/div>\n<div class=\"grid-container\">\n<div class=\"grid-x grid-margin-x fbg-image article__container\" data-sticky-target=\"interaction-article\" data-page-area=\"article-top\" data-sticky-offset=\"20%\" data-scroll-area-container=\"main\">\n<div class=\"small-12 medium-10 medium-offset-1 large-8 large-offset-2 xlarge-7 cell article__interaction fbg-image__inlay\"><\/div>\n<h3 class=\"small-12 medium-10 medium-offset-1 large-8 large-offset-2 xlarge-7 cell article__title article__title--main u-mb-se\" dir=\"ltr\"><a href=\"https:\/\/www.project-syndicate.org\/commentary\/stagflation-debt-crisis-2020s-by-nouriel-roubini-2021-06\">The Looming Stagflationary Debt Crisis<\/a><\/h3>\n<div class=\"small-12 medium-10 medium-offset-1 large-8 large-offset-2 xlarge-6 xlarge-offset-3 cell u-mt-se\">\n<div class=\"article__abs u-mt-se\" dir=\"ltr\">\n<p>Years of ultra-loose fiscal and monetary policies have put the global economy on track for a slow-motion train wreck in the coming years. When the crash comes, the stagflation of the 1970s will be combined with the spiraling debt crises of the post-2008 era, leaving major central banks in an impossible position.<\/p>\n<\/div>\n<div class=\"article__body article__body--commentary  english\" dir=\"ltr\" data-page-area=\"article-body\">\n<p data-line-id=\"5fd5834733c947349094d37ca266e057\">NEW YORK \u2013 In April, I\u00a0<a class=\"link link__internal\" href=\"https:\/\/www.project-syndicate.org\/commentary\/stagflation-threat-after-covid19-pandemic-by-nouriel-roubini-2021-04\" aria-controls=\"article-link-6076e5c910f8d04a706f19d6\" aria-expanded=\"false\" aria-haspopup=\"true\">warned<\/a>\u00a0that today\u2019s extremely loose monetary and fiscal policies, when combined with a number of negative supply shocks, could result in 1970s-style stagflation (high inflation alongside a recession). In fact, the risk today is even bigger than it was then.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<aside class=\"inlay inlay--slide slide__container show-for-medium editorpick-container\" dir=\"ltr\" lang=\"en-us\">\n<article class=\"listing asize asize--c \" data-url=\"stagflation-debt-crisis-2020s-by-nouriel-roubini-2021-06\"><\/article>\n<\/aside>\n<p data-line-id=\"a52fea8caeea4472975b0057e1dffc56\">After all, debt ratios in advanced economies and most emerging markets were much lower in the 1970s, which is why stagflation has not been associated with debt crises historically. If anything, unexpected inflation in the 1970s wiped out the real value of nominal debts at fixed rates, thus reducing many advanced economies\u2019 public-debt burdens.\u00a0<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"c6d92649ecee46e29448d9490e0fbf7a\">Conversely, during the 2007-08 financial crisis, high debt ratios (private and public) caused a severe debt crisis \u2013 as housing bubbles burst \u2013 but the ensuing recession led to low inflation, if not outright deflation. Owing to the credit crunch, there was a macro shock to aggregate demand, whereas the risks today are on the supply side.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"3e02bba101fa41e4b74637a58b29f03e\">We are thus left with the worst of both the stagflationary 1970s and the 2007-10 period. Debt ratios are much higher than in the 1970s, and a mix of loose economic policies and negative supply shocks threatens to fuel inflation rather than deflation, setting the stage for the mother of stagflationary debt crises over the next few years.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Olivier Douliery\/AFP via Getty Images The Looming Stagflationary Debt Crisis Years of ultra-loose fiscal and monetary policies have put the global economy on track for a slow-motion train wreck in the coming years. When the crash comes, the stagflation of the 1970s will be combined with the spiraling debt crises of the post-2008 era, leaving [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[195,4106,1917,8402,3303],"class_list":["post-58480","post","type-post","status-publish","format-standard","hentry","category-economics","tag-debt","tag-debt-crisis","tag-nouriel-roubini","tag-project-syndicate","tag-stagflation"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/58480","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=58480"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/58480\/revisions"}],"predecessor-version":[{"id":58481,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/58480\/revisions\/58481"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=58480"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=58480"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=58480"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}