More economists are using dreaded "S" word

The maket has largely been flat since late in 1999. The only reason we haven't seen official inflation figures rising is because the government has been fudging them for years, swapping items in the market basket, counting falling prices of luxury items like plasma TV sets against food and energy to make it look like there is low inflation.

Look at housing and healthcare, that's what the true rate undisguised by cheap offshore labor has been.

The cure for stagflation in the 70s was double digit unemployment and double digit interest rates. Remember those 20% 30 year mortgages?

My guess is that is what they will try again. They don't know to do anything else.

Look at housing, health care and energy. All have risen dramatically, while wages and salaries for the working and middle class have stayed flat.

Bushco has done one thing pretty well - distract us from an endlessly stangnant economy.

The stock market has risen 6% in nearly 6 years - I'd have made more money in bank interest :(

For those using dial-up...

http://www.msnbc.msn.com/id/14153846/

NEW YORK - It's not a term economists toss about lightly, but signs of slowing growth and rising inflation in the U.S. economy have some using the "S" word: stagflation.

Combining the words stagnation and inflation, the term is used to describe periods of rising prices and a stalled economy. While the United States is far from the last severe episode of stagflation in the 1970s, when major economies were dogged by deep recessions and double-digit inflation, many economists are getting nervous.

"I think we could be headed for something like 'stagflation lite"' said Nouriel Roubini, professor of economics at New York University and principal at the consultancy Roubini Global Economics. "We're going to have a recession for sure, based on the shocks that are hitting the economy — including higher oil and commodities prices, rising rates and a slump in housing."

eom

Stagflation, at its most extreme, is a depression combined with hyperinflation -- a total collapse where most average people will lose everything, while only those at the top (of course!) will survive.

And the odds would be that any economic system arising from the ashes of extreme stagflation would be feudalistic in nature (i.e. lords and serfs).

:scared:

I believe that's the plan. :scared:

would that be close too a fair description?

and middle-class into high gear.

Sluuuurp.

"So yes, expect interest rates to keep going up. It's how the government is going to stay solvent. Don't expect it to do a damned thing about inflation, though, and don't expect the economy to do anything but get worse for average citizens."

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x21102 (post #5)

It's happening.

Lucky fucking me. :hide:

See, demand-pull inflation isn't necessarily bad...it happens when there's a very low unemployment rate, so people have money and demand is high. Cost-push inflation, however, happens when the cost of producing goods goes up, and isn't accompanied by decreased unemployment rates. The most obvious cause for this is gas prices. Now, my economics prof last year tried to claim that the increasing cost of gas was actually demand-pull, because in theory if fewer people bought it the cost would go down. But whether or not that's true, it contributes to the inflating price of virtually all other goods. So while increasing gas prices may not be an example of cost-push inflation, they most definitely create it everywhere else.

the cost would go down". Problem is he didn't tell you how far the demand would need decrease for that to occur and he also ignored the fact the Chinese would soak uo the surplus. You might care to ask of the likley effect of oil going over $200 / barrel and the Chinese being prepared to pay twice that.

It is impossible given a shock for the price to decline lower then what it originally was all other things being equal. This is the basic micro theory from an intro course. To get the result that the professor suggests you need to make some very obscure assumptions about market behaviors, ones that would make economics virtually useless as a way to predict aggregate behaviors.

The increased price causes a smaller quantity demanded. The demand curve for gasoline need not shift for any neoclassical reasons. The only way I could see what he says as working is if there are biased expectations. In that case it seems that it would be a dynamic system where expectations would have to be formed in a way that investments overcompensate for changes in price.

Yes, the rising demand from developing countries like China is contributing to this, but oil is becoming more expensive for a variety of reasons that DON'T have to do with demand, like instability in the region, the increasing cost of finding new oil reserves, and oil producers holding back supply to drive up prices. And like I said, even if the rising price of gas COULD be attributed to demand, the rising price of other goods, due to the increasing cost of transporting them, is definitely cost-push. But hey, he's a conservative economics professor teaching at a community college...what do you expect?

the price would fall below the original point. I guess in the short run it is possible to look at it such that over a specific time frame the price was falling but it doesn't make sense to say that this is because the price was rising.

There was a presentation at my university (Canadian) from a decently ranked American university (I don't remember which one). He constructed this model that fit perfectly with the stylized facts but considered firm size exogenous. He then used the model to explain firm size. The model was not even incentive compatible.

are on the rise....couldn't believe they actually reported it on the evening news....

...Nothings trickling on me yet!

The ONLY thing holding up the bush* economy is the $TRILLIONS of BORROWED dollars being reinjected through the US Armaments Industry through his phoney War on Terra.

There will be hell to pay when those bills come due. Of course, we'll have a Democratic president then to clean up the Republicans mess and get blamed for it all. :(

Those at the bottom will get the "tinkle down" from above, as always. Sigh. Stagflation. Damn, I remember that from my high school years. Tricky Dick has morphed into Dipsh** George. Just finished John Dean's Worse than Watergate. Aaaargh.

Exactly. But I'll still feel better if we have Dems in charge; at least we'd stand a chance of action being taken -- rather than "staying the course" to economic oblivion.

The "s" word: as in "shitty", "sinking", "stalling", "stinking", "sinking", "stealing",...stuff like that?

:rofl:

Economists,...are "stuck" in their own ideologies, taught by our very own U.S.A. capitalistic universities.

I'm looking for the genius economist who will create another system, a more adaptable theory of economic operations. S/he's out there, prolly buried by critics; but, that economist is out there and will be revealed, eventually.

EWWW,...patience HAS to be the most difficult human strength. HAS TO BE!!!