Egged on by past gloomy successes, a new breed of superdoomster is abroad to ruin your day (if not life). Let’s take them to task:
The first war, Roubini says, will be focused on security, as China, the United States, Europe, Japan and even Australia lift spending at home and abroad to protect their borders and interests.
The third war will be against the next pandemic; Roubini said we either spend a fortune to prepare for it beforehand, or spend even more when it arrives.
The fourth war is around automation, improving the social safety net as AI and other technology cause job losses.
The fifth and related war is on income and wealth inequality, which will require fiscal policies that favour labour and minorities.
Roubini says all of these wars are inherently inflationary. And in a world where high debt levels already threaten to compound the hard landing he believes will eventually arrive as central banks fight the current bout of inflation, governments and societies face some seriously difficult decisions.
The only thing linking these predictions is Nouriel Roubini’s overuse of the word “war” to create the SCARY LIST.
The war on China will be tough. But the West has every chance of prevailing. Possibly without a shot being fired.
The best way to win it is for a united West to make clear to China that if it annexes Taiwan (or anybody else) it will be kicked out of the global economy via an even more stringent set of trade and monetary sanctions than those applied to Russia.
Unless the CCP wants to also fight a civil war amid a collapsing economy then it won’t do it. Or, if it does, it will mark the end of Chinese expansion forever.
The Ukraine War has made this outcome more not less possible.
Yes, it is inflationary.
The second war, against climate change, is probably already lost. We’ll keep trying and eventually decarbonise too late. I expect this to end in several hundred years in radially reduced, semi-anarchistic nation-states. It’s s shame but, hey, the Earth has seen worse.
Free energy is not inflationary.
The third war against the next pandemic is fictional. Why not worry about the next super eruption of the Siberian Traps or Chicxulub crater?
It is irrelevant to inflation because it is inherently unpredictable and infrequent.
The fourth and fifth wars are the same battle. Automation is not bad. It is good. Imagine no more truck drivers abusing the roads!
More seriously, capital deepening is how society gets richer. If it is too unbalanced then we’ll tax the winners and redistribute. It’ll be a fight but sense should prevail.
Automation is very deflationary unless we see UBI which would make price effects neutral at worst.
In short, Roubini’s SCARY LIST list is poorly conceived, poorly thought-through, and not much more inflationary than the past decade. This means the sixth war that he has been shopping around of late, the great stagflation bust of sovereign debt, is also dubious.
