Stagflation

What is stagflation?

1. The economy is either not growing or it is growing slowly
2. Unemployment is high
3. Inflation is high

Problems are obvious.  There are no jobs and things are costing more and more every day.  The lack of growth points towards a continuation of “no jobs”.

One simple way to look at this is a recession with inflation.

These two things typically don’t go together.

If there is inflation, there is too much money in the economy which often can arise when everyone has plenty of work and lots of money to spend.

When there is a recession, prices tend to be low because people are unemployed.  They have less money.  Less money in the economy means lower inflation.

The solution to each of these situations is contrary to the other.

Too much inflation?  No problem.  Raise interest rates to take money out of the economy.  But there is no money in the economy because of the recession, and taking money out at this time will only make the recession worse.

So, let’s solve the recession problem.  Let’s lower interest rates and increase government spending.  This will put money back into the economy, but this will make inflation worse than it already is.

So, pick your poison.  Solve one problem and make the other worse.

This is why stagflation is such a Doomsday economic situation.

Trump is taking all the steps needed to cause Stagflation.

He is artificially raising prices with his non-sensical tariffs.

At the same time, he is leading us into a recession by cutting the current markets we have with our international trading partners.

Demand for our goods is going to drop while the prices we pay at home will rise.

This is stagflation.

This is worse than a recession.

This is worse than inflation.

But the worst thing is…

This entire situation is self-inflicted.

Trump initiated all of this and then a Republican-led Congress abdicated their responsibility to stop it.  They would rather the economy collapse than to have Trump call them a name and maybe they lose the next election and have to find a real job.