QOD

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1. Delaware Dem says:

   February 6, 2009 at 1:14 pm

   It seems we are approaching stagflation right now more than we are deflation. In the fall, when gas prices plummeted for no reason, I thought we were generally headed for a deflation. But now gas prices are headed back up again.

2. anon says:

   February 6, 2009 at 1:16 pm

   Too soon to tell.

   Companies that make stuff you want have the choice of cutting price or selling nothing.

   Companies that make stuff you need (electricity, college education, food, water, gas) are jacking up prices virtually at will.

   The new unemployment figures will cause salaries to crash.

   So inflation/deflation is too soon to really calculate.

   Stagflation is inflation without growth. We’ve already got the “no growth” and if inflation shows up then we will have stagflation. Right now the layoffs are keeping inflation down.

3. Delaware Dem says:

   February 6, 2009 at 1:20 pm

   Stagflation is high unemployment + high inflation.

   How are layoffs keeping inflation down?

4. anon says:

   February 6, 2009 at 1:28 pm

   Stagflation is high unemployment + high inflation.

   Nope – look it up.

   Stagflation is a growth in price (inflation) with little or no GDP growth (same thing as saying no growth in productivity).

   If you have gradual inflation that is matched or exceeded by GDP growth, that is not stagflation no matter how many people are unemployed. That is generally a good thing, unless it becomes a drag on long-term investment.

   How are layoffs keeping inflation down?

   Supply and demand – unemployed people don’t buy as much, therefore less demand, and lower prices.

   Layoffs certainly keep wage inflation down, which ultimately helps to keep commodity inflation down. We need us some wage inflation.

5. anon says:

   February 6, 2009 at 1:29 pm

   Stagflation is high unemployment + high inflation.

   You may be thinking of Reagan’s “misery index” which he used successfully against Carter.

6. Unstable Isotope says:

   February 6, 2009 at 1:46 pm

   I think we’re actually in deflation now. I believe that deflation is a contraction in money supply – credit and cash are in short supply right now. I think the worst outcome is what’s called the “deflationary spiral” where people don’t buy because things will be cheaper tomorrow and wages start going down (we’re seeing that already) so less people buy…

7. nemski says:

   February 6, 2009 at 2:02 pm

   Stagflation: what happens when you get a lap dance at a bachelor party

   Deflation: what happens when, during coitus, your wife asks you if you’ve talked to your mother lately

8. Mark H says:

   February 6, 2009 at 3:23 pm

   Nemski, does that mean you call your mother before sex? 🙂