EVERYTHING IS GOING SWIMMINGLY: ‘Dr. Doom’ Nouriel Roubini warns the era of stagflation is here and central banks are setting a trap in trying to normalize policy.

“The world economy is undergoing a radical regime shift,” he said in an op-ed for Project Syndicate on Tuesday, declaring the end of the Great Moderation, during which economies enjoyed low inflation, high growth, and mild recessions.

Those qualities have been the standard for the past few decades, but are reversing into what Roubini dubs as the Great Stagflation: an era of high inflation, low growth, high debt, and the potential for severe recessions.

Global economies carry larger debt ratios than before, setting up central banks for potential failure, Roubini said.

“Central banks are thus locked in a ‘debt trap’: any attempt to normalize monetary policy will cause debt-servicing burdens to spike, leading to massive insolvencies, cascading financial crises, and fallout in the real economy,” he said.

Glenn or I could do a whole series of I-Told-You-So articles going back 20 years, when big spending and big borrowing combined with ZIRP became the new normal, but it’s all too depressing.