[DrBang]

Economic contraction on a global scale in conjunction with inflation in all basic commodities. I believe this is stagflation. I remember how terrified this made economists back in the 1970's.

I am not an economist (though I did study it at high school 20 years ago). I am a scientist and engineer by profession. Attempts to debate several related points with friends I went school with who now have dual degrees in law and economics have stalled. I believe the world they live in and worship is in the final stages of self destruction. Our debate stone walled. It all came down to what you really believe and not about debating the facts. The link below is about where I decided to stop wasting my time with these guys. link

Even with my novice level knowledge of economics, I see stagflation with a possibility of hyper-stagflation. I would be very interested in the opinions of posters on this website. What are the markers and are those markers behaving within historical signatures? Or are we really seeing something that has never happened before (this is what I think).

To understand the nature of the characteristic signatures is to be able to understand how fast things are happening. In my opinion, the fallout won't happen equally all over the world. Some regions will be less vulnerable. I seek to understand the true nature of the catastrophe. When the music stops playing, where will you be? Fighting other people for a chair or off somewhere playing you own music?

[Cashmere]

Definitely stagflation.

Inflation at 8-10% and GDP falling.

Textbook stagflation.

[nobodypanic]

or according to some, deflation. take your pick, i don't know which it'll be.

[SILENTTODD]

Let's just all do what that other Republican dimwit of recent times Jerry Ford (of there's a Ford in the White House, and no Gas fame) advocated we do:

Let's all put on our "WIN!" buttons (Wip Inflation Now!)

I realize I'm really dating myself that I can remember this crap!

[patience]

In the 1970's the US had an OPEC-induced oil shortage that:

1) Raised fuel prices.
2) Dropped auto sales.
3) Scared consumers into reducing spending.
4) Contracted the real economy, reducing spending more.
5) Inflation ran amok (easy credit, low interest rates, and fuel price inceases).

Now we have high fuel prices from increased demand/decreasing supply/speculation/you name it, so:

1) Fuel prices are up.
2) Auto sales are WAY down.
3) Consumers are broke and maxxed out in debt, reducing spending.
4) Housing bubble crashed, contracting the real economy, reducing spending more.
5) Inflation is high (easy credit, low interest rates, and fuel price increases).

So, what is so different that we won't have a replay of the 70's, except more so, due to the severity of each factor?

[WyoDutch]

$this->bbcode_second_pass_quote('patience', 'I')n the 1970's the US had an OPEC-induced oil shortage...

[TheDoctor]

One problem with labels (deflation/stagflation/etc) is that we humans just love to categorize current issues based on prior experiences and definitions. The crisis we are experiencing now, which I believe is still in its early stages, is unlike anything we've ever seen before. If you give it a label (stagflation), you will be subconsciously limiting your ability to truly understand it.

Housing prices in severe decline (deflationary). Oil prices up ~10x in 10 years (inflationary). Banking/mortgage credit crisis and debt writedown (deflationary), but government response to pass debt load on to taxpayers is highly inflationary. Government debt spiraling out of control. Consumers tapped out and unable to put upward pressure on wages due to cheap global workforce. Add it all up and what do you have? Damned if I know, but I wouldn't try to simplify it by calling it stagflation....

[mmasters]

Things will get out of hand or very bad quickly if the fed drops the ball in their supportive efforts. HAve to watch how they respond to the next crisis. Another war next year IMHO is a certainty, that will cause inflation to skyrocket.

[Bytesmiths]

$this->bbcode_second_pass_quote('DrBang', 'W')hen the music stops playing, where will you be? Fighting other people for a chair or off somewhere playing you own music?

[Bytesmiths]

$this->bbcode_second_pass_quote('patience', '5')) Inflation is high (easy credit, low interest rates, and fuel price increases).

[Cashmere]

$this->bbcode_second_pass_quote('TheDoctor', 'O')ne problem with labels (deflation/stagflation/etc) is that we humans just love to categorize current issues based on prior experiences and definitions. The crisis we are experiencing now, which I believe is still in its early stages, is unlike anything we've ever seen before. If you give it a label (stagflation), you will be subconsciously limiting your ability to truly understand it.

Housing prices in severe decline (deflationary). Oil prices up ~10x in 10 years (inflationary). Banking/mortgage credit crisis and debt writedown (deflationary), but government response to pass debt load on to taxpayers is highly inflationary. Government debt spiraling out of control. Consumers tapped out and unable to put upward pressure on wages due to cheap global workforce. Add it all up and what do you have? Damned if I know, but I wouldn't try to simplify it by calling it stagflation....

[kpeavey]

$this->bbcode_second_pass_quote('TheDoctor', 'T')he crisis we are experiencing now, which I believe is still in its early stages, is unlike anything we've ever seen before.

[TheDude]

$this->bbcode_second_pass_quote('WyoDutch', 'T')he 1973 oil crisis, all in all, cost the U.S. economy no less than $900 billion, and probably as much as $1,200 billion.

[the48thronin]

$this->bbcode_second_pass_quote('TheDude', '&')lt;snip> And of course Nixon called for Project Independence to wean us off depending on relying on foreign sources of energy - forever.

Too bad those were all prime examples of what around here we call "low hanging fruit."

[Daniel_Plainview]

$this->bbcode_second_pass_quote('kpeavey', '')$this->bbcode_second_pass_quote('TheDoctor', 'T')he crisis we are experiencing now, which I believe is still in its early stages, is unlike anything we've ever seen before.

[Snowrunner]

$this->bbcode_second_pass_quote('DrBang', 'I') am not an economist (though I did study it at high school 20 years ago). I am a scientist and engineer by profession. Attempts to debate several related points with friends I went school with who now have dual degrees in law and economics have stalled. I believe the world they live in and worship is in the final stages of self destruction. Our debate stone walled. It all came down to what you really believe and not about debating the facts. The link below is about where I decided to stop wasting my time with these guys.

[Starvid]

In Sweden we currently (and suddenly!) have 4 % inflation (core inflation about 2 %) and 0 % growth, but things are pretty nice anyways.

Further, and contrary to the US, public finances are in excellent shape. Count on large amount of contracyclical spending in the form of tax cuts and increased infrastructure investment in the fall budget.

Swedish growth might well rise and inflation fall, at least during the next few quarters.

[Alanintx]

I disagree that we are in a period of stagflation. Simply becasue the money supply is actually shrinking as opposed to remaining stagnant.

While we can see price inflation in things we purchase, such as gasoline and food, the actual money supply is deflating. Soon, price deflation must follow as night follows day. Which is really scary, becasue "things" will be cheaper, but you won't have money to buy them. And by things, I mean food/oil/healthcare.

Stay liquid, and get out of debt. That is the only strategy to survive deflation.