Twice over the past two days, Jonathan Miller, appraiser extraordinaire, has mentioned “stagflation”, in his blog, Matrix.
Stagflation, as we all know, and as quoted at Investopedia, is:
“A condition of slow economic growth and relatively high unemployment – a time of stagnation – accompanied by a rise in prices, or inflation …
… Stagflation occurs when the economy isn’t growing but prices are, which is not a good situation for a country to be in. This happened to a great extent during the 1970s, when world oil prices rose dramatically, fueling sharp inflation in developed countries. For these countries, including the U.S., stagnation increased the inflationary effects.”
As Mr. Miller says:
Stagflation [Wik] can be defined as: â€œstagâ€? refers to a sluggish economy with job shortages and little income growth, while â€œflationâ€? signifies rapidly rising prices. This was a problem in the 1970â€™s and difficult to resolve by the Fed because unemployment and inflation have opposite solutions. Raising interest rates reduces inflation by cooling the economy reducing jobs but lowering interest rates increases economic production and jobs.
In fact, everyone is using the term “stagflation” these days.
A Washington blogger has the details:
(M)entions of stagflation spiked heavily starting last month. And given today’s news, I’ll bet they’ll spike even higher in the coming months. If news cites really are a decent way of projecting economic performance, the news is not good.
Sucks being us.
Stagflation is not to be confused with “self-flagellation“.
P.S. This entry exhausted me. Too many links.