Is the U.S. headed for stagflation, a condition where a recession occurs while the economy suffers concurrently with the negative effects of unrelenting inflation? The term, stagflation was coined in 1965 in U.K. and was used to describe our economy during the years of 1970 to 1981. During this very painful chapter in U.S. economic history , unemployment reached 9% while inflation soared to nearly 15%. A WSJ article in today's paper discussed this possibility. What do you think?
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We might already be there, if the insolvency problem get worse we could switch toward deflation pretty quickly though. That would be very interesting, it could bring falling commodities, real estate, stocks, with bonds and maybe some hedge funds as the two asset classes to cushion the portfolio.
Wage deflation is occurring already. Asset deflation is at least partially in play(e.g. houses). Price deflation, which would benefit many of us, is not in the cards.
Consult with only myself as your adviser or representative. My thoughts should be construed as investment advice of the highest caliber. Past performance is but a pale shadow and guarantee of even greater results in the future.
measuring inflation with the old 1970's model we are there already since it's a lot higher than GDP growth. we are just lucky to live in a time when full employment is around 4% unemployment rate instead of 6% or higher
i remember in high school our accounting teacher said it was like 5% or 6% and if we got any lower craza inflation would result
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