If It's Not Stagflation Now, It Never Was
Did we have stagflation in the 1970s? Does everyone agree on that? Then we have stagflation now. Because if you calculate the CPI today in the same methodology it was calculated in the 1970s, it is running at 11.2%. Combine that with slow growth and high unemployment, shake it up and stir, and what do you have? The same exact combination from the 1970s.
Stagflation wins, folks. Or there was no stagflation in the 1970s. Take your pick.
No matter how you measure the unmeasurable and subjective phenomenon called price inflation - which is always a long run result of excess money creation - it continues to trend upward.
Who Predicted Stagflation?
June 15, 2009
Why I predict serious stagflation by Robert Murphy, Austrian School of Economics
"When doing interviews for my new book on the Great Depression, a natural question comes up: will the present crisis turn out as bad as the 1930s?
My standard answer is typical for an economist: "yes and no." On the one hand, there were very specific reasons that unemployment broke 25 percent in 1933, and we don't have those factors in place today. So I don't think the official unemployment rate will get anywhere near that catastrophic level, though it could very well come in at the #2 spot in US economic history.
However, even though unemployment rates will not be as severe, I still predict that we are in store for a miserable decade of economic stagnation. Given all of the huge assaults of the federal government into the private sector in just the past six months, I frankly don't understand how anyone except true believers in Karl Marx can be seeing "green shoots."
I wonder if the Austrian School economists ever get tired of being right?
David in Qatar