No one is uttering that incendiary phrase, "Stagflation", but things seem a lot worse than they did when "Stagflation" helped unseat a president in 1979 and usher in voodoo economics. We've been living with that legacy ever since.
Stagflation is a word that marries inflation with stagnant wages. All you have to do is look at the price of oil since the outbreak of the Iraq war in 2003 when it was $25 a barrel. It closed on May 22 at $135.09. The dollar is in the toilet and will go down further when Fannie Mae and Freddie Mac collapse.
The high price of oil has barely begun to work its way through the economy but there are ominous signs. Here is some anecdotal evidence. I don't listen to pundits pontificate on whether or not we're in a recession.
My favorite el cheapo can of tuna, Chunk Light, has gone up 25% in price during the last 6 months. That's a 50% rate of inflation. My Con Ed bill is projected to go up 30% during the summer on top of a voted increase. (Here in NYC we already pay the highest electricity bills in the nation.) And the cost of oil is just beginning to work its way through the economy.
A close relative of mine who works for Citigroup as a tech wiz told me confidentially that Citigroup is committed to having a 70% off-shore presence. In other words, to deal with the horrendous aftereffects of unbridled speculation they are laying off people like crazy and hiring overseas to pick up the slack because labor is a commodity. He is not a displaced blue collar worker but a person with an advanced degree who has worked on NASA projects.
Wages are not only stagnant but they've gone down in real terms because people are working more hours for the same pay. And there are lots of layoffs here. Can you trust any economic indicators, or do they just exist to goose the stock market?
"Stagflation" was the epithet tossed at Jimmy Carter. We could see the gas lines. We saw the hostages in Iran. Reagan and his minions took full advantage of the wreckage, tossed out John Maynard Keynes and brought in Milton Friedman.
Keynes stated that government could have a beneficial role in the economy. Friedman never met a problem he didn't think the market could solve. Well, he was dead wrong.
Where are the shouts of stagflation now? Where is the mad-as-hell stuff?