The United States economy isn’t really recovering and it’s too weak to stand on its own two feet. The Federal Reserve understands this, which is why it’s still continuing with its quantitative easing initiative of $85 billion per month – soon to be $75 billion. It realizes that as soon as it ceases its injections, the market will tank because it depends too much on stimulus.
New York University economist Nouriel Roubini told an audience at a Time Inc. breakfast event Friday that the central bank’s monetary actions are leading to the creation of bubbles, including housing, junk bonds and eventually bitcoins. This, he says, will incite a financial crisis within the next two to three years.
Although Roubini forecasts economic growth this year, he concedes that it won’t be enough to increase wages for the average American worker. This will then substantially decrease consumer spending and debt reduction.
“The question is whether we have gotten to sustainable growth that is not based on bubbles,” said Roubini, according to Forbes. “Not yet.”
Roubini warned that income inequality will widen because the United States is underinvesting in education and infrastructure – studies continue to show that the U.S. tops the global list of nations’ education spending. In the end, according to Roubini, the average person will be left in the dust and wind in the next few years.
“Capital will do well, and skilled labor will do well,” added Roubini. “Blue collar workers, not as much.”
Others, such as Peter Schiff, president of Euro Pacific Capital and author of “The Real Crash,” have warned that with Janet Yellen becoming the next Fed Chair inflation could very well worsen because she is a staunch supporter of moneyprinting, credit expansion and artificially low interest rates.