Global Economy is Balanced on a Pinhead

From Andy Xie:

My central point is that the global economy is cruising toward mild stagflation with a 2 percent growth rate and 4 percent inflation rate. This scenario is the best that the central banks can hope to achieve; it combines an acceptable combination of financial stability, growth and inflation. But this equilibrium is balanced on a pinhead. It requires central banks to constantly manage expectations. The world could easily fall into hyperinflation or deflation if one major central bank makes a significant mistake.

Good reading throughout — but I wish he’d stop calling people pinheads.

Related posts:

  1. Path Dependency in the Economy
  2. The Economy: Something’s Got to Give
  3. Which is More Worrisome: Inflation or Deflation?
  4. The Looming Deflation/Reflation Whipsaw
  5. Global Markets All Pointing to Deflation