Are we back to stagflation?

Question

Historically, inflation and economic expansion went together. But in the 70s we saw inflation plus economic stagnation - stagflation, it was called. Is it happening again? If not, or if not quite, in what ways is it different today? What can we do about it?

Answer 1

unlikely since one of the biggest problems back then was low interest rates (relatively speaking). Today when the hint of inflation crops up the Fed raises the prime.

Answer 2

yes, we are in stagflation, and not only in us but also in europe (i'm italian).

What can we do? nothing at the moment but the next year the situation will become worse and so the governments of the world will have to do a big big change, with a new economic government based on a new economic system, very different from today that will make the economy restart

Answer 3

I'd have to completely disagree with Haggis.  We are currently seeing expected inflation as this looming giant which is pinning us down.  As the FED has been easing over the past year, it is apparent that Bernanke was more worried about expected growth then expected inflation.  Now, we are at a point which rate cuts have stopped yet the 30 year rates keep rising. (Remember, the FED controls short-term interest rates)   Some say that we went too far with the rate cuts too late.  And that inflation is now the center of our problems...

When we look at this theoretically, interest rates are a factor of expected economic growth, monetary policy, and expected inflation.  Couple the poor growth with high expected inflation and we definitely have stagflation.  

What can we do about it...like it or not, not much  We currently should just sit back and watch.  Our impact on foreign markets will cushion our decline and spread it out across the globe.