In 2022, inflation won’t be our main economic problem

My years of working as an economist on Wall Street taught me that all too often the consensus economic view turns out to be very wrong. A striking instance of such an error was the spectacular failure of the economic profession to anticipate the 2008-2009 Great Economic Recession. A principal reason for that forecasting error was the failure of most economists to take into account financial market considerations.

Next year is shaping up to be another year when the consensus economic forecast will prove to be way off the mark for a similar reason. Whereas the consensus view now seems to be that inflation will be 2022’s main economic problem, it seems more probable that once central banks start tightening monetary policy to control inflation, the bursting of today’s global “everything” asset price and credit market bubble will be our principal economic headache. When those bubbles burst, inflation will be the least of our economic problems as was the case during the 2008-2009 economic recession.

 
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Πηγή: aei.org