SDR, I confess I didn’t read the originally referenced, apparently apocalyptic, article. But I have read the Nouriel Roubini article describing the economic bogeyman the Fed is afraid of.
I think we are a very, very long way from Nouriel’s (hypothetical) scenario. We’re doing way, way better than 1974-1981, and that’s way better than the Nouriel Roubini lights-out scenario. We can have a 50-60% drop in real estate and stock prices, and still not be close to the Roubini scenario. I think we could really use a 50-60% drop in most asset prices, and we’d be doing well 10 years from now if that asset price deflation was allowed to happen quickly, with casualties.
