Project Syndicate/Nouriel Roubini/12-29-2021
“Central banks’ resolve will be tested if policy-rate hikes lead to shocks in the bond, credit, and stock markets. With such a massive build-up of private and public debt, markets may not be able to digest higher borrowing costs. If there is a tantrum, central banks would find themselves in a debt trap and probably would reverse course. That would make an upward shift in inflation expectations likely, with inflation becoming endemic.”
USAGOLD note: The shifting sands of central bank policy, in our view, will become the major story in financial markets in the coming year. Roubini concludes, “Come what may, investors are likely to remain on the edge of their seats for most of the year.”