As a catastrophic stagflationary debt crisis strikes a heavily leveraged global economy, stock markets will decline by another 40%.

I've been arguing for a year that the inflation would rise steadily, that it would be fueled by bad policies as well as supply shocks

that attempts to combat it by central banks would result in a harsh economic downturn.

I foresaw a severe and protracted recession that would cause widespread financial misery and a debt crisis.

Despite their hawkish rhetoric, central bankers may relent and accept inflation that is above target if they find themselves in a debt trap.

Due to greater inflation and higher inflation expectations, any combination of riskier equities and less risky fixed-income bonds will lose money on the bonds.

Additionally, the global economy has been more fragmented as a result of the wider sanctions regime, not least because the dollar has been weaponized (BUXX, +0.39% DXY, +0.44%)


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