[quote=Rich Toscano]The US in the 70s, for generic stagflation. (BTW if high inflation and low growth/employment never happen together, why is there a word to describe them happening together?)
Or, for an example of an inflation driven by a loss of confidence in the sovereign debt and currency, Iceland in 08-09.
I don’t know how to make an example gallop so I think I’m good.[/quote]
Whatever started the 70’s inflation (oil embargoes, wage inflation), the economic policy mistakes kept inflation high. Today, Inflation would remedy/reduce the debt problem, so Fed will likely hope for and adopt strategies to increase inflation.
Rich: Are you gonna wear more gold chains than Mr. T at the next (Halloween) meet-up?
“And, as has been stressed by a number of scholars, a belief in a permanent trade-off between inflation and unemployment briefly held sway. These views led to highly expansionary monetary and fiscal policies, and inflation and booming real growth resulted….
The Samuelson-Solow permanent trade-off view was rejected at the start of the Nixon administration. However, it was replaced by another flawed model: first by a natural rate framework with a very low natural rate, then by a natural rate framework with an extreme insensitivity of inflation to slack. It was this succession of misguided models that gave rise to repeated policy mistakes and persistent inflation in this period.”
