Inflation increasing throughout 2022 in both advanced economies and emerging markets. Structural trends suggest that the problem will be secular, rather than transitory. Specifically, mMany countries are now engaged in various “wars”, some real, some metaphorical.which will lead to even larger fiscal deficits, more debt monetization, and higher inflation in the future.

The world going through a form of “geopolitical depression” crowned by the growing rivalry between the West and the aligned (if not allied) revisionist powers such as China, Russia, Iran, North Korea and Pakistan.

Hot and cold wars are on the rise. Russia’s brutal invasion of the Ukraine could yet expand to involve Nato. Israel, and therefore the United States, is on a collision course with Iran, which is about to become a nuclear weapons state. The broader Middle East is a tinderbox. YES The US and China will clash over the questions of who will dominate Asia and whether Taiwan will be forcefully reunited with the mainland.

Consequently, the US, Europe and Nato are rearming, as is almost everyone in the Middle East and Asia, including Japan, which has embarked on its biggest military buildup in many decades. Higher levels of spending on conventional and unconventional weapons (including nuclear, cyber, biological, and chemical) are all but guaranteed, and these spendings will weigh heavily on the treasury.

(Read: Jorge Iván González: ‘Development Plan does not give dictatorial powers’).

Climate change mitigation and adaptation could cost trillions of dollars per year for decades to come

The global war on climate change will also be costly, for both the public and private sectors. Climate change mitigation and adaptation could cost trillions of dollars a year for decades to come, and it is foolish to think that all these investments will fuel growth.

After a real war that destroys much of a country’s physical capital, a surge of investment can, of course, produce an economic expansion; however, the country is poorer for having lost much of its wealth. The same goes for climate inversions. A significant part of the existing capital stock will have to be disposed of, either because it has become obsolete or because it has been destroyed by climatic events.

Now we are also waging a costly war against future pandemics. For a variety of reasons, some of them related to climate change, disease outbreaks with the potential to become pandemics will become more frequent. Whether countries invest in prevention or address future health crises after the fact, they will incur higher costs in perpetuity, adding to the growing burden associated with societal aging and pay-as-you-go health care systems. and pension plans. This unfunded implicit debt burden is already estimated to be close to the level of clean public debt for most advanced economies.

(Keep reading: Key axes of the Plan to turn the country into a ‘World Power of Life’).

In addition, more and more we will find ourselves waging a war against the disruptive effects of “globotics”: the combination of globalization and automation (including artificial intelligence and robotics) that threatens a growing number of blue and white collar occupations.

Governments will be under pressure to help those left behind, be it through basic income schemes, massive fiscal transfers or public services with greater coverage.

Artificial intelligence is revolutionizing employment worldwide.

These costs will remain high even whether automation leads to an increase in economic growth. For example, maintaining a meager universal basic income of $1,000 per month would cost the US about 20 percent of its GDP.

Finally, we must also library an urgent (and related) war against rising income and wealth inequality. Otherwise, the malaise that afflicts young people and many working-class and middle-class households will continue to provoke a backlash against liberal democracy and free-market capitalism.

(It may interest you: Colombian avocado is also going for a better position in the Super Bowl).

To prevent populist mechanisms from coming to power and applying reckless and unsustainable economic policies, liberal democracies must spend a fortune to bolster their social safety netsas many are already doing.

Fighting these five “wars” will be costly, and economic and political factors will limit the ability of governments to finance them with higher taxes.

Fighting these five “wars” will be costly, and economic and political factors will limit the ability of governments to finance them with higher taxes. The tax-to-GDP ratio is already high in most advanced economies, especially in Europe, and tax evasion, avoidance and arbitrage will further complicate efforts to raise taxes on high incomes and capital (assuming that such measures can even outbid lobbyists or secure buyout) within center-right parties.

Therefore, library these wars need to save public spending and transfers as a percentage of GDP, and without a proportional increase in tax revenue. Structural budget deficits will grow even larger than they already are, which could lead to unsustainable debt ratios which will probably lead to borrowing costs and will culminate in a debt crisis, with evident adverse effects on economic growth.

For countries that borrow in their own currencies, the appropriate option will be to allow higher inflation to reduce the real value of the debt nominal at a long-term fixed rate.

(Continue: Interest rate hikes, will consumption dynamics change?).

This approach functions as a principal lien against savers and creditors in favor of borrowers and debtors, and can be combined with complementary draconian measures, such as financial repression, taxes on capital and full default (for countries that borrow in foreign currency or those where the debt is mostly short-term or indexed to inflation).

Because the «inflation tax» is a subtle and cunning form of tax that does not require legislative or executive approvalis the default path of least resistance when deficits and debts are increasingly unsustainable.

I focused mainly on the demand-side factors that will lead to higher spending, deficits, debt monetization, and inflation. But there are also many negative aggregate supply shocks in the medium term that could add to current stagflationary pressures, raising the risk of recession and cascading debt crises. The Great Moderation is dead and gone; the Great Staflationary Debt Crisis is upon us.

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Emeritus Professor of Economics at New York U.’s Stern School of Business, Chief Economist at Atlas Capital Team, CEO of Roubini Macro Associates, Co-Founder of ‘, and Author of MegaThreats: Ten Dangerous Trends That Imperil Our Future and How to Survive Them’ (Little, Brown and Company, 2022). He was a senior international affairs economist on the White House Council of Economic Advisers during the Clinton administration and has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank. His website is and he is the host of