By Nouriel Roubini
THE ALLURE AND LIMITS OF MONETIZED FISCAL DEFICITS
CLICK HERE TO READ THE WEB VERSION
cloud of gloom hovered over the International Monetary Fund’s annual meeting last month. With the global economy experiencing
Still, some of these risks could become less likely over time. The U.S. and China have reached a tentative agreement on a “phase one” partial trade deal, and the U.S. has suspended tariffs that were due to come into effect on October 15. If the negotiations continue, damaging tariffs on Chinese consumer goods scheduled for December 15 could also be postponed or suspended. The U.S. has also so far refrained from responding directly to Iran’s alleged downing of a U.S. drone and attack on Saudi oil facilities in recent months. U.S. President Donald Trump doubtless is aware that a spike in oil prices stemming from a military conflict would
a synchronized slowdown, any number of tail risks could bring on an outright recession. Among other things, investors and economic policymakers must worry about a renewed escalation in the Sino-American trade and technology war. A military conflict between the United States and Iran would be felt globally. The same could be true of “hard” Brexit by the United Kingdom or a collision between the IMF and Argentina’s incoming Peronist government.
American Consequences
39
Made with FlippingBook HTML5