Times sure have gotten complicated. Used to be the reason the economy turned sour was because of too much deflation. Or too much inflation. Comparatively speaking, these two have always been predictable financial predators that, if not pushovers, were relatively beatable.

Then came the 70s and the rise of a scary, new beast: Stagflation. It joined the worst of inflation with the worst of stagnation to torment us between 1973 and 1980. For the most part after that, the creature wandered off, never to be (officially) seen again.

Until 2008. Now, apparently, there’s a "Son of Stagflation" just now reaching maturity that could be around for a long time, tormenting us with its particularly bewildering attacks.

Picture the U.S. economy strapped to a gurney in Dr. Frankenstein’s laboratory. That’s stagflation. It’s got inflated legs, atrophied arms, a scary-looking head that’s a little of both, and, oh yeah, a really mean disposition.

Luckily for us, gold bullets can still kill it.

The Inflation Part of Stagflation

Here’s Wikipedia’s definition: "Stagflation is an economic situation in which inflation and economic stagnation occur simultaneously and remain unchecked for a period of time."

What makes stagflation so strange is that, as mentioned, we’re used to seeing one or the other, inflation or stagnation, an overheated economy or something ice cold. Clearly what we’re witnessing today includes unsettling parts of both, plus another unexpected factor. Wrote analyst Robert J. Samuelson, stagflation "signified the simultaneous occurrence of high inflation, high unemployment and slow economic growth; but its defining feature was the persistence of this poisonous combination over long periods of time."

Some analysts dispute our stagflation status. Newsweek wrote that, "the situation we're in is nowhere near stagflation." That’s because, "the Consumer Price Index is rising at a 3 percent annual rate, compared with 13 percent in 1979." Of course…CPI figures were pretty earnest back in 1979, intent on reporting the actual rate of inflation.

Today’s statistics can make no such claim, having been bureaucratically fooled with until they’re now just a laughable caricature of reality. A 3% annual rate? Hey, even a 5.6% annual rate (the most recent official figure)? Who’s going to believe that? The receipts you get at the supermarket and gas station give you all the statistics you need on the subject.

Is There Anything Pizza Can’t Do?

Even our beloved pizza can shed some light. According to a story by Al Olson of MSNBC, "Pizza makers have seen their cheese costs soar this year from $1.30 a pound to $1.76 a pound. Even worse, the flour used to make the dough has gone from $3 to $7 a bushel to $25 a bushel in less than a year."

So let’s see…$1.30 to $1.76 a pound for that pizza cheese represents a startling 35% jump in cost. And — let’s be generous here — going from $7 to $25 for pizza flour represents a mind-blowing 257% price hike. Average the two and you get a 146% increase.

Page 1 of 2 :: First | Last :: Prev | 1 2 | Next