Economist Nouriel Roubini warns of “The Ground Is Prepared for the Mother of All Debt Crises,” which he also calls “a catastrophe in slow motion” in an op-edfor Wirtschaftswoche on July 10. People associate stagflation with the crisis in the 1970s, when debt was not so high, and therefore exclude a similar scenario for the current situation. This is wrong, Roubini wrote. The coming crisis will also be different from the post-2008 period, when credit scarcity provoked a recession-induced deflation in prices.
“The high debt ratios and a mix of loose economic policies and negative supply-side shocks threaten to boost inflation. This sets the stage for the mother of all stagflationary debt crises in the years to come. The loose monetary and fiscal policy will continue to fuel asset and credit bubbles and lead to a slow-motion disaster,” Roubini writes.
