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Since the beginning of the year, the world economy has faced a new bout of severe financial market volatility, marked by sharply falling prices for equities and other risky assets.A variety of factors are at work: concerns about a hard landing for the Chinese economy; worries that growth in the United States is faltering at a time when the Federal Reserve has begun raising interest rates; fears of an escalating Saudi-Iranian conflict; and signs – most notably plummeting oil and commodity prices – of severe weakness in global demand.Instead – and this is the fourth aberration – inflation is still too low and falling in advanced economies, despite central banks' unconventional policies and surging balance sheets.The recent market turmoil has started the deflation of the global asset bubble wrought by QE, though the expansion of unconventional monetary policies may feed it for a while longer. The real economy in most advanced and emerging economies is seriously ill, and yet, until recently, financial markets soared to greater highs, supported by central banks' additional easing. Welcome to the New Abnormal for growth, inflation, monetary policies, and asset prices, and make yourself at home because it looks like we'll be here for a while.
This is not 2008, but seven sources of global risk exist
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