Comment: Global economy heading for stagflationary debt crisis

Conditions are ripe for a repeat of both the 1970s stagflationary shock and the 2008 debt crisis — this slow-motion train wreck looks unavoidable as matters stand

1st July, 2021
Comment: Global economy heading for stagflationary debt crisis
‘Debt ratios are much higher than in the 1970s, and a mix of loose economic policies and negative supply shocks threatens to fuel inflation, setting the stage for the mother of stagflationary debt crises over the next few years.’ Picture: Getty

In April, I warned that today’s 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.

After all, debt ratios in advanced economies and most emerging markets were much lower in the 1970s, which is...

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