Here’s Why Wall Street Blames the Fed for the Market Crash, and the Looming Recession

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He noted the Fed was still struggling to rein in inflation, and the past decade of ultra-low interest rates have fueled insane amounts of borrowing from “zombie” households and banks. That could mean debt and inflation troubles as interest rates continue to rise.

“With central banks forced to increase interest rates in an effort to restore price stability, zombies are experiencing sharp increases in their debt-servicing costs … Simply bailing out private and public agents with loose macro policies would pour more gasoline on the inflationary fire,” Roubini said, predicting the Fed wouldn’t have the policy tools to prevent a financial disaster from striking.

“Once the inflation genie gets out of the bottle — which is what will happen when central banks abandon the fight in the face of the looming economic and financial crash — nominal and real borrowing costs will surge,” he added.