Wednesday, May 11, 2011


It's widely recognized that the triggers for the stagflation of the 1970s were Nixon's decoupling of the dollar from the gold standard followed by a strong demand shock from OPEC for oil.  Unfortunately, we seem to be setup for a similar "perfect storm" again.  The Federal government's failure to stimulate demand through additional broad infrastructure spending combined with the insanity of recession austerity blended gently with high core energy prices seems to be driving the economy toward the stagflation cliff.

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