‘It’s Going to Be Inflation Everywhere:’ Deputy ‘Doom’
From: CNBC
The global economy is entering a next “supercycle” phase that will generate inflation necessary for recovery, a strategist and protege of noted economist Nouriel Roubini told CNBC.
Arun Motianey, director of fixed income strategy at Roubini’s RBG Capital, said the supercycles feature periods of commodity booms followed by busts, and the US economy is on the verge of an inflationary period that will generate a sharp rise in prices.
“We’re heading into a world of inflation because we are highly indebted and we are indebted here in the US economy in the household sector and in the financial sector,” said Motianey, author of the book “SuperCycles.”
Motianey said the inflation would likely drive up the prices of other US assets such as stocks. Central banks “have to start letting inflation into the system,” he added.
Roubini has gained notoriety as a “Dr. Doom” who predicted the beginning of the financial crisis in 2007.
While Motianey’s forecast was not as dour as those customary from his boss at RBG, he did say the times ahead in fact will be more challenging if the economy isn’t able to create inflation and suffers deflation instead.
“It’s going to be inflation everywhere and it’s going to happen really through the weakness of the US dollar,” he said. “Then inflation in those other parts of the world that are expecting appreciating currencies, they’re going to inflate as well because that’s the way you ultimately correct this.”
