In this article, Desmond Lachman raises his concern about the US economy and financial market crisis. He predicts that next year we will have a crisis like the one we had in 2008-2009. The main causes of the crisis would be price bubbles and credit risk mispricing. Another cause would be high debt level. The US is at its expansionary level with low-interest rates, inflated equity prices, and a weak dollar. Federal Reserve has a difficult choice as raising interest would risk the price bubble burst. The fiscal and monetary stimulus would be the main reasons behind the overheating of the economy.
https://www.usnews.com/opinion/economic-intelligence/articles/2018-02-14/us-economy-is-in-danger-of-overheating-and-exploding-into-financial-crisis
1 comment:
The article talks about how in 2008 price bubbles were limited to housing and credit market but seem to be spread out this time around and the debt to GDP ratio higher. With all that said, it's still a bold claim to make which only time will tell if true.
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