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News Link • Economy - Economics USA

The Return of Stagflation?

• Bill Bonner, The Daily Reckoning
London, England – The Dow up 95 points yesterday. Gold flat. “Investors start to fret over renewed threat of stagflation,” says a headline in today’s Financial Times. You remember stagflation from the ’70s. Prices rose. The economy didn’t. It seems to be happening again – thanks to the feds. The economy is caught between an unstoppable force on one side and an immovable object on the other. Between a Great Correction…and awful money-printing. Deflation and inflation. “Don’t fight the Fed,” say the old-timers. The Fed’s easy money is boosting up prices all over the world. Not all prices…at least not in the US and other advanced economies. But prices for key “auction-priced” goods – such as food and energy…and stocks…are going up fast. The typical US stock has gained 100% in the last two years. (We are coming up to the 2-year anniversary of this rally next week.) And yesterday, we paid more than $6 a gallon for diesel fuel in France.

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