http://www.foxbusiness.com/economy/2012/06/08/ready-or-not-stagflation-is-here/

The solution is Austrian - free markets, sound currency, (extremely) limited government - if we can avoid the Nation States killing us all as they fall over and collapse, and we can preserve our technology, this is the best news you will ever hate.

That seems fairly accurate.


Good luck to us all.

Naw, I'd call it a 10X.

Stagflation is defined as a combination of high inflation and a stagnant economy. No question we currently have a stagnant economy, but high inflation too?? I dunno, but the current under 3% inflation rate is generally not considered a high at least by historical standards. Consequently, I personally find the article a bit of a stretch.

Low inflation rates and low interest rates are the product of govt. meddling with the economy. Remember the late 70's? High cost of money along with high inflation. Right now I think the problem is the folks with the money don't want to spend it because they're very nervous & holding onto cash.

The real inflation rate is far above 3% - the article points out the manipulation of statistics by Government.

True inflation is easily measured by the loss of value of the currency compared to hard assets, like gold. And that has risen at much more than 3%.

Every penny of the $5 Trillion "stimulus" is inflationary pressure.

If that's the case, then the article makes even less sense, since gold prices have dropped over $300 per ounce since September 2011.

A three hundred dollars drop isn't what a $300.00 drop would have been when gold was five or six hundred dollars per ounce. In modern (post QE) pricing, it represents a mere sixteen percent dip, which is well within the norm for metals over the years.

The value of a currency is determined by the quantity of currency in circulation.

Every dollar put into circulation makes an existing dollar worth a bit less.

Essentially, inflation is an invisible tax. When the government needs money, the Federal Reserve just adds it to the government's books. It creates money out of thin air.

That makes the money that's already out there worth less.

So,...when the Federal Reserve prints up a few hundred billion dollars and gives it to the government, you still have that $20 bill in your wallet, but it will only buy what $19.50 would before an additional huge lump of money was printed up by the Federal Reserve and given to the government.

The Federal Reserve extracts the value from your money by simply printing up more of it.

That's inflation.