Kitco News) The world could be facing a decade of stagflationary debt crisis like never before, warned Nouriel Roubini, CEO of Roubini Macro Associate and professor at the NYU Stern School of Business.
“The decade ahead may well be a Stagflationary Debt Crisis the likes of which we’ve never seen before,” Roubini wrote in his latest Time essay.
The next crisis won’t be like the previous ones due to the stagflationary aspect mixed in with massive public debt, Roubini explained as he gave examples from the 1970s and 2008.
“In the 1970s, we had stagflation but no massive debt crises, because debt levels were low. After 2008, we had a debt crisis followed by low inflation or deflation, because the credit crunch had generated a negative demand shock. Today, we face supply shocks in a context of much higher debt levels, implying that we are heading for a combination of 1970s-style stagflation and 2008-style debt crises—that is, a stagflationary debt crisis,” he wrote.
Stagflation is an environment defined by high inflation and slower growth.