{"id":226770,"date":"2021-04-14T20:14:00","date_gmt":"2021-04-14T17:14:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/opinion-stagflationary-forces-are-building-roubini-warns\/"},"modified":"2021-04-14T20:14:00","modified_gmt":"2021-04-14T17:14:00","slug":"opinion-stagflationary-forces-are-building-roubini-warns","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/opinion-stagflationary-forces-are-building-roubini-warns\/","title":{"rendered":"#\n  Opinion: Stagflationary forces are building, Roubini warns"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a287a02b7065\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a287a02b7065\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/opinion-stagflationary-forces-are-building-roubini-warns\/#Loose_money_supply_shocks_and_demographic_trends_could_create_ideal_conditions_for_high_inflation_and_low_growth\" >Loose money, supply shocks and demographic trends could create ideal conditions for high inflation and low growth<\/a><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/opinion-stagflationary-forces-are-building-roubini-warns\/#Arguments_for_inflation\" >Arguments for inflation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/opinion-stagflationary-forces-are-building-roubini-warns\/#Monetizing_debts\" >Monetizing debts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/opinion-stagflationary-forces-are-building-roubini-warns\/#Supply_shocks\" >Supply shocks<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/opinion-stagflationary-forces-are-building-roubini-warns\/#Populist_backlash\" >Populist backlash<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/buradabiliyorum.com\/en\/opinion-stagflationary-forces-are-building-roubini-warns\/#Persistent_pressures\" >Persistent pressures<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/buradabiliyorum.com\/en\/opinion-stagflationary-forces-are-building-roubini-warns\/#More_on_inflation\" >More on inflation<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/buradabiliyorum.com\/en\/opinion-stagflationary-forces-are-building-roubini-warns\/#Nouriel_Roubini\" >Nouriel Roubini<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#<br \/>\n  Opinion: Stagflationary forces are building, Roubini warns<br \/>\n<\/strong>&#8221;<\/p>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"Loose_money_supply_shocks_and_demographic_trends_could_create_ideal_conditions_for_high_inflation_and_low_growth\"><\/span>\n  Loose money, supply shocks and demographic trends could create ideal conditions for high inflation and low growth<br \/>\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\">\n<div class=\"article__side\">\n<div class=\"container--sticky not-active\">\n<div class=\"cx--next\">\n              <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0000232183\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       NEW YORK (<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.project-syndicate.org\/\" class=\"icon none\">Project Syndicate<\/a>)\u2014There is a growing debate about whether the inflation that will arise over the next few months will be temporary, reflecting the sharp bounceback from the COVID-19 recession, or persistent, reflecting both demand-pull and cost-push factors.<\/p>\n<p> Several arguments point to a persistent secular increase in inflation, which has remained below most central banks\u2019 annual 2% target for over a decade. <\/p>\n<div class=\"paywall\">\n<h6><span class=\"ez-toc-section\" id=\"Arguments_for_inflation\"><\/span>Arguments for inflation<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p> The first holds that the United States has enacted excessive fiscal stimulus for an economy that already <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ears to be recovering faster than expected. The additional $1.9 trillion of spending approved in March came on top of a $3 trillion package last spring and a $900 billion stimulus in December, and a\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.whitehouse.gov\/briefing-room\/statements-releases\/2021\/03\/31\/fact-sheet-the-american-jobs-plan\/\" class=\"icon none\">$2 trillion<\/a>\u00a0infrastructure bill will soon follow. <\/p>\n<p>The U.S. response to the crisis is thus an order of magnitude larger than its response to the 2008 global financial crisis.<\/p>\n<p>The counterargument is that this stimulus will not trigger lasting inflation, because households will save a large fraction of it to pay down debts. Moreover, investments in infrastructure will increase not just demand but also supply, by expanding the stock of productivity-enhancing public capital. But, of course, even accounting for these dynamics, the bulge of private savings brought by the stimulus implies that there will be some inflationary release of pent-up demand.<\/p>\n<p>A second, related argument is that the Federal Reserve and other major central banks are being excessively accommodative with policies that combine monetary and credit easing. The liquidity provided by central banks has already led to asset inflation in the short run, and will drive inflationary credit growth and real spending as economic reopening and recovery accelerate. <\/p>\n<p>Some will argue that when the time comes, central banks can simply mop up the excess liquidity by drawing down their balance sheets and raising policy rates from zero or negative levels. But this claim has become increasingly hard to swallow.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Monetizing_debts\"><\/span>Monetizing debts<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>Centrals banks have been\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.project-syndicate.org\/commentary\/limits-of-mmt-supply-shock-by-nouriel-roubini-2019-10\" class=\"icon none\">monetizing<\/a>\u00a0large fiscal deficits in what amounts to \u201chelicopter money\u201d or an application of Modern Monetary Theory.<\/p>\n<p> At a time when public and private debt is growing from an already high baseline (<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.iif.com\/Publications\/Members-Only-Content-Sign-in?returnurl=\/publications\/id\/4182\" class=\"icon none\">425% of gross domestic product<\/a>\u00a0in advanced economies and\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.axios.com\/global-debt-gdp-898959ed-f96a-4c4d-85a3-5d3cc419631f.html\" class=\"icon none\">356% globally<\/a>), only a combination of low short- and long-term interest rates can keep debt burdens sustainable. Monetary-policy normalization at this point would crash bond and credit markets, and then stock markets<br \/>\n        GDOW,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/210599024\/realtime\" class=\"positive\">+0.92%<\/bg-quote><\/p>\n<p>        DWCF,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/210598058\/realtime\" class=\"positive\">+0.25%<\/bg-quote><\/p>\n<p>        SPX,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/210599714\/realtime\" class=\"positive\">+0.09%<\/bg-quote><span>,<\/span><br \/>\n       inciting a recession. Central banks have effectively lost their independence.<\/p>\n<p>Here, the counterargument is that when economies reach full capacity and full employment, central banks will do whatever it takes to maintain their credibility and independence. The alternative would be a de-anchoring of inflation expectations that would destroy their reputations and allow for runaway price growth.<\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<h6><span class=\"ez-toc-section\" id=\"Supply_shocks\"><\/span>Supply shocks<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>A third claim is that the monetization of fiscal deficits will not be inflationary; rather, it will merely prevent deflation. However, this assumes that the shock hitting the global economy resembles the one in 2008, when the collapse of an asset bubble created a credit crunch and thus an aggregate demand shock.<\/p>\n<p>The problem today is that we are recovering from a negative aggregate supply shock. As such, overly loose monetary and fiscal policies could indeed lead to inflation or, worse, stagflation (high inflation alongside a recession). After all, the stagflation of the 1970s came after two negative oil-supply shocks following the 1973 Yom Kippur War and the 1979 Iranian Revolution.<\/p>\n<p>In today\u2019s context, we will need to worry about a number of potential negative supply shocks, both as threats to potential growth and as possible factors driving up production costs. These include trade hurdles such as de-globalization and rising protectionism; post-pandemic supply bottlenecks; the deepening Sino-American cold war; and the ensuing balkanization of global supply chains, and reshoring of foreign direct investment from low-cost China to higher-cost locations.<\/p>\n<p>Equally worrying is the demographic structure in both advanced and emerging economies. Just when elderly cohorts are boosting consumption by spending down their savings, new restrictions on migration will be putting upward pressure on labor costs.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Populist_backlash\"><\/span>Populist backlash<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>Moreover, rising income and wealth inequalities mean that the threat of a populist backlash will remain in play. On one hand, this could take the form of fiscal and regulatory policies to support workers and unions\u2014a further source of pressure on labor costs. On the other hand, the concentration of oligopolistic power in the corporate sector also could prove inflationary, because it boosts producers\u2019 pricing power. And, of course, the backlash against Big Tech and capital-intensive, labor-saving <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> could reduce innovation more broadly.<\/p>\n<p>There is a counternarrative to this stagflationary thesis. Despite the public backlash, technological innovation in artificial intelligence, machine learning, and robotics could continue to weaken labor, and demographic effects could be offset by higher retirement ages (implying a larger labor supply).<\/p>\n<p>Similarly, today\u2019s reversal of globalization may itself be reversed as regional integration deepens in many parts of the world, and as the outsourcing of services provides workarounds for obstacles to labor migration (a programmer in India doesn\u2019t have to move to Silicon Valley to design a U.S. app). Finally, any reductions in income inequality may simply militate against tepid demand and deflationary secular stagnation, rather than being severely inflationary.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Persistent_pressures\"><\/span>Persistent pressures<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>In the short run, the slack in markets for goods, labor, and commodities, and in some real-estate markets, will prevent a sustained inflationary surge. But over the next few years, loose monetary and fiscal policies will start to trigger persistent inflationary\u2014and eventually stagflationary\u2014pressure, owing to the emergence of any number of persistent negative supply shocks.<\/p>\n<p>Make no mistake: inflation\u2019s return would have severe economic and financial consequences. We would have gone from the \u201cGreat Moderation\u201d to a new period of macro instability. The secular bull market in bonds would finally end, and rising nominal and real bond yields would make today\u2019s debts unsustainable, crashing global equity markets. In due time, we could even witness the return of 1970s-style malaise.<\/p>\n<p><strong><em>Nouriel Roubini, professor of economics at New York University\u2019s Stern School of Business, is host of the\u00a0<\/em><\/strong><a rel=\"nofollow noopener\" target=\"_blank\" href=\"http:\/\/www.nourieltoday.com\/\" class=\"icon none\"><strong><em>NourielToday.com<\/em><\/strong><\/a><strong><em>\u00a0broadcast.<\/em><\/strong><\/p>\n<p><strong><em>This commentary was published with permission of <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.project-syndicate.org\" class=\"icon none\">Project Syndicate<\/a>\u2014<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.project-syndicate.org\/commentary\/stagflation-threat-after-covid19-pandemic-by-nouriel-roubini-2021-04\" class=\"icon none\">Is Stagflation Coming?<\/a><\/em><\/strong><\/p>\n<h6><span class=\"ez-toc-section\" id=\"More_on_inflation\"><\/span>More on inflation<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p><strong>Sunny Oh:<\/strong> Here\u2019s why the bond market shrugged off a surge in U.S. inflation<\/p>\n<p><strong>James K. Galbraith:<\/strong> Here\u2019s why fears of surging inflation are off-base<\/p>\n<p><strong>Barron\u2019s: <\/strong>9 Charts to Understand the State of U.S. Inflation<\/p>\n<p><strong>Peter Morici: <\/strong>Stagflation will challenge the president in 2021<\/p><\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>      <span>By<\/span><\/p>\n<div class=\"author  hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Nouriel Roubini\",\"subhead\":\"The Wall Street Journal\",\"list\":[]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Nouriel_Roubini\"><\/span>Nouriel Roubini<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B21005575-02D4-D4B5-4572-D38AF7443FB1%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Opinion: Stagflationary forces are building, Roubini warns &#8221; Loose money, supply shocks and demographic trends could create ideal conditions for high inflation and low growth NEW YORK (Project Syndicate)\u2014There is a growing debate about whether the inflation that will arise over the next few months will be temporary, reflecting the sharp bounceback from the&#8230;<\/p>\n","protected":false},"author":1,"featured_media":226771,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-226770","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/226770","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=226770"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/226770\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/226771"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=226770"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=226770"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=226770"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}