Stagflation

 I have heard in recent times a lot of talk of stagflation returning. I am old enough to have grown up in the 70s and 80s ( like John Quiggin.) That is when it was trendy to talk about stagflation. Inflation and unemployment both reached double digits! The misery index exploded! IT also stayed around a while.

Thus I got to expect exactly that. both inflation and unemployment had to reach double digits. If you read the definition.clearly it does not state what levels inflation and unemployment have to reach.

Thus if Australia gets to 5% both in the CPI and unemployment do we have stagflation? If we only have it for a short time is that counted?

I would say no in both cases BUT I can see why some would argue otherwise. Mark the Graph we need you to write on this.

Most Western nations have independent central banks. Here in OZ I am sure the RBA will raise rates quickly to ensure inflationary expectations do not rise as well so the rise inflation would be temporary but as the economy slows unemployment will rise. Falls in unemployment always are much slower than inflation.

So my question is are we about to get stagflation or not?

Whoopsy I really should have talked more about the Fed. IF a FEd which has a lot of Trump nominees leaves interest rates where they are or even cut them as inflation rises then look out. Arthur Burns has returned!