via MSN:
-
Nouriel Roubini warned the US economy faces a huge market crash and stagflationary debt crisis.
-
The economist said inflation could spiral if the Fed doesn’t raise interest rates high enough.
-
However, rate hikes may slow growth, raise unemployment, and cause headaches for borrowers, he said.
Nouriel Roubini warned investors to prepare for a historic market crash, and suggested the US economy could tumble into a quagmire of shrinking output, surging inflation, and soaring unemployment.
The economics professor at NYU Stern, whose nickname is “Dr. Doom,” shared his grim outlook during a recent eToro webinar. He argued the Federal Reserve might have to double interest rates to 5% in order to curb inflation, but hiking to that level could choke economic growth and cause a spike in joblessness.
Moreover, raising rates could spark a debt crisis, Roubini said. American consumers, companies, and other entities have borrowed aggressively over the past decade, and could struggle to repay their loans if interest costs jump, he explained.
The upshot is the rate hikes needed to rein in inflation could tank the economy, and cause crashes across stocks, bonds, housing, credit, private equity, and other assets in bubble territory, Roubini said. If that fallout spurs the central bank to give up on fighting inflation, price increases could spiral out of control as well, he continued.