I have repeatedly stressed that the US Federal Reserve's ultra-loose monetary policy will not change in the near future and given my reasons why.

Between 2014 and 2015, when the Fed began to reduce its asset purchases, it caused the US economy and financial markets to cool down and lose their power, and so the Fed had to take action and cut interest rates again in 2019. This experience will certainly make the Fed more cautious about when to end its quantitative easing, so investors need not worry too much about when the Fed will pull back.

However, while the world's central banks, led by the Fed, will maintain ultra-loose monetary policy for a long time, we need to be more aware of the threat of a repeat of 1970s stagflation and the 2008 debt crisis which spiraled out of control, which could trigger a great crisis in the global economy and financial markets.

The market is not discussing these risks at present but they could lead to a black-swan crisis that imperils the world.

It's understandable that the Fed does not want to risk making the same mistake of pulling back too fast as it did between 2014 to 2015, but it is also important to ensure that the economy and financial markets do not become so dependent on monetary policy that they can't be driven back to real growth through market demand.

The current loose monetary and fiscal policy will definitely continue to inflate the asset and credit bubble, amid high PE ratios and low equity risk premiums.

Meanwhile, housing prices are defying economic gravity and rising, transactions of cryptocurrencies are booming and high-yield corporate debt is piling up alongside rising mortgage debt.

If there were a sudden loss of confidence in any one of these assets, global financial markets would be convulsed and economies would stall.

However, loose monetary policy will continue to keep some prices high, such as gold and oil, which are likely to be safe havens for investors. Therefore, prices will remain high, inflation will be inevitable, and this will create favorable conditions for global stagflation.

The bigger problem is that although there was stagflation in the 1970s, the debt ratios of developed economies and most emerging markets today are far higher than they were during the seventies.

Amid the present state of the economy and financial markets and excessive reliance on government and central banks' fiscal and monetary policies, many central banks have actually lost their independence.

So, even if inflationary pressures keep rising, governments and central banks are afraid to tighten their purses, which makes it seem as if there is no way to reverse overheating asset prices.

In other words, even if the risk of stagflation is rising, it may be impossible to effectively address it.

To make matters worse, many governments have fallen deeper into debt because of the Covid pandemic while relying on central banks to maintain the current debt and fiscal spending, leading analysts to believe that these governments have gone bankrupt.

So if there's a crisis in the global economy and financial markets, will these countries be able to rescue banks, businesses and the common man?

Thus, the question to consider is not when central banks will leave the market.

On the contrary, we need to consider the possibility that even if central banks stay in the market, it does not mean there will be no crisis.

Andrew Wong is chairman and CEO of Anli Securities

Stagflation, debt mountain pose black swan threats