TheDoctor wrote:One problem with labels (deflation/stagflation/etc) is that we humans just love to categorize current issues based on prior experiences and definitions. The crisis we are experiencing now, which I believe is still in its early stages, is unlike anything we've ever seen before. If you give it a label (stagflation), you will be subconsciously limiting your ability to truly understand it.
Housing prices in severe decline (deflationary). Oil prices up ~10x in 10 years (inflationary). Banking/mortgage credit crisis and debt writedown (deflationary), but government response to pass debt load on to taxpayers is highly inflationary. Government debt spiraling out of control. Consumers tapped out and unable to put upward pressure on wages due to cheap global workforce. Add it all up and what do you have? Damned if I know, but I wouldn't try to simplify it by calling it stagflation....
You make a good point.
No doubt any label is, to some extent, a simplification.
But I think stagflation fits.
Forget about houses - they're about the only thing going down in price. Virtually everything else is inflating rapidly.
Meanwhile, economic growth is stagnating.
Perhaps it's a limiting label, but if the word "stagflation" can't be applied to what's going on <i>right now</i>, then we need to strike the word from the language.