Unconventional central bank policies, including quantitative easing (QE) have failed to spur either inflation or growth as fiscal austerity continues to bite, Nouriel Roubini said in an op-ed for Project Syndicate.
"We live in a world in which there is too much supply and too little demand," wrote Roubini, the bearish economist known as "Dr. Doom," who successfully called the housing crash leading into the Global Financial Crisis. "The result is persistent disinflationary, if not deflationary, pressure, despite aggressive monetary easing."
The reason all that easing hasn't caused inflation is because the post-2008 economic recovery has been anemic, amid a "painful deleveraging" after large buildups of both public and private debt, said Roubini, the head of Roubini Global Economics and a professor at New York University.
A host of factors have weighed on efforts to use monetary policy to spur inflation, he said, citing an output gap with firms facing limited pricing power and too many unemployed workers chasing too few jobs.