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Economic growth slows, inflation surges

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posted on Apr, 28 2011 @ 01:50 PM
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Anyone remember "stagflation" from the 1970's?


stag·fla·tion/ˌstagˈflāSHən/
Noun: Persistent high inflation combined with high unemployment and stagnant demand in a country's economy.


source


WASHINGTON (Reuters) – Economic growth braked sharply in the first quarter as higher food and gasoline prices dampened consumer spending and sent inflation rising at its fastest pace in 2-1/2 years.
Another report on Thursday showed a surprise jump in the number of Americans claiming unemployment benefits last week, which could cast a shadow on expectations for a significant pick-up in output in the second quarter.


Sounds like it's back. Here's what happened last time around. Looking uncomfortably familiar.

source


The government's ever-rising need for funds swelled the budget deficit and led to greater government borrowing, which in turn pushed up interest rates and increased costs for businesses and consumers even further. With energy costs and interest rates high, business investment languished and unemployment rose to uncomfortable levels.

In desperation, President Jimmy Carter (1977-1981) tried to combat economic weakness and unemployment by increasing government spending, and he established voluntary wage and price guidelines to control inflation. Both were largely unsuccessful.


Stagflation - along with the iran hostage crisis - cost carter a 2nd term as president. Now we can clearly see that obama and the democrats have learned nothing from history and are trying the same "cure" that carter tried and failed with.

Alas, we can also expect the same results - economic failure.





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