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April 18, 2005
The Threat of Stagflation
In the 1970's soaring prices of oil and other commodities led to stagflation - a combination of high inflation and high unemployment, which left no good policy options. If the Fed cut interest rates to create jobs, it risked causing an inflationary spiral; if it raised interest rates to bring inflation down, it would further increase unemployment.Can it happen again?
Read Paul Krugman's article, "A Whiff of Stagflation" in the New York Times.
Posted by at April 18, 2005 07:04 PM | Permalink
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