New at Reason: The Return of Stagflation?

June 12, 2008

With unemployment and gas prices climbing, there is much talk of a return to the days of stagflation. But while these may not be the days of wine and roses, says Steve Chapman, the 1970s never had it so good.

Read all about it here.

Comments

|6.12.08 @ 7:11AM|#

With unemployment and gas prices climbing, there is much talk of a return to the days of stagflation.

I've been looking for an excuse to dig out my WIN button.

SIV|6.12.08 @ 7:23AM|#

"Excluding food and energy"

If they had only realized this was possible in the 70s they wouldn't have had it so bad either.

|6.12.08 @ 7:25AM|#

It has been so long since the US had a serious economic downturn, I think people have forgotten what one looks like. Further, the media, especially when there is a Republican in office, has plenty of incentive to play up any downturn in the economy as the next great depression. "Economy in historically light contraction" doesn't sell quite as many newspapers as "worst since Hoover".

Pablo Escobar|6.12.08 @ 7:55AM|#

The US has had 3 major crises:

1. The Great Depression of the 1930s

2. The stagflation of the 1970s

3. September 11, 2001

Number 1 & 3 led to BIG government. Only number 2 led to deregulation.

Except this time around we don't have Friedman around to nudge the debate in the libertarian direction.

P.S. Does Reason Magazine have plans to re-do the Free to Choose series, except a new, sexy version with celebrity libertarians and economists?

jtuf|6.12.08 @ 8:01AM|#

Great article Chapman. I'm glad I can rely on reason for sound economic analysis.

|6.12.08 @ 8:17AM|#

Pablo,
Only three? Hmmm, I'll have to disagree on that number. But I agree that most of the major political and economic crises have pushed the size of government bigger and bigger (see Civil War).

Guy Montag|6.12.08 @ 8:24AM|#

Someone please reassure me that Mr. Chapman did not suggest in the article jacking up taxes as a solution to, well, anything?

JMR|6.12.08 @ 8:28AM|#

And precious metals prices couldn't POSSIBLY

http://news.silverseek.com/SilverSeek/1212764222.php

be manipulated to mask inflation. Nope! We have an honest government & banking system!! Even the Wall Street Journal's columnists sometimes get it:

http://online.wsj.com/article/SB121296987173655833.html

(See bottom line.)
JMR

Episiarch|6.12.08 @ 8:34AM|#

Wow, a Chapman article that doesn't suck ass. Maybe our criticism has spurred him to try harder. I doubt it.

Pablo Escobar|6.12.08 @ 8:34AM|#

Btw, here's a piece where the neo-cons at Reason Magazine and Cato get bitch-smacked by the more Ron Paul/Austrian economics crowd:

http://www.takimag.com/site/article/libertarianisms_divergent_roads/

Most of it's true, unfortunately. What a shame there's so much fighting between ourselves...

Guy Montag|6.12.08 @ 8:43AM|#

Episiarch,

Wow, a Chapman article that doesn't suck ass. Maybe our criticism has spurred him to try harder.
I doubt it.

Don't discredit the market of ideas from having a positive influence on public discourse.

Guy Montag|6.12.08 @ 8:45AM|#

PE,

libertarianisms_divergent_roads

The Dr. Paul/Austrians are in favor of public roads? They don't need to be slapping anybody.

tomcastration|6.12.08 @ 9:20AM|#

Episiarch . . . you are prince of the morons. Chapman generally offers good analysis of any subject he chooses to tackle. Disagreeing with the premise, arguments or conclusions of an article does not immediately force it into the "suck-ass" category. I truly believe that you are convinced that if an opinion doesn't jive with your own, it "sucks". Well, Episiarch, thrill us with your infallible logic - submit some wonderful piece of journalism and allow us to see what does not "suck". Go ahead . . . do it.

Episiarch|6.12.08 @ 9:22AM|#

Steve, it's unbecoming for you to post under a sockpuppet. It's especially disturbing that you chose a handle involving castration. Maybe you can write a shitty article about that?

|6.12.08 @ 9:35AM|#

Wow, a Chapman article that doesn't suck ass. Maybe our criticism has spurred him to try harder. I doubt it.

It doesn't? Well, no these aren't the 70's, but after eight years of runaway deficient spending and a FFR near zero, the tab we've been running up is coming due. I don't see how cherry picking the data to keep the party going is a good idea.

Guy Montag|6.12.08 @ 9:36AM|#

OMG, H&R is becoming The Plank.

tomcastration|6.12.08 @ 9:46AM|#

Oh my ha! What a profound retort! May your penis shrivel in fear at the thought of tomcastration . . .
I just think that for you, of all people, to say that anyone sucks in their commentary . . . well, that's like a retard complaining about the quality of Einstein's writings.

Avatar300|6.12.08 @ 10:00AM|#

If Einstein is so smart, why didn't he write in an understandable manner?

Episiarch|6.12.08 @ 10:03AM|#

So I guess I hit a nerve, Steve?

Nigel Watt|6.12.08 @ 10:04AM|#

If Einstein is so smart, why didn't he write in an understandable manner?

German isn't an encryption method.

tomcastration|6.12.08 @ 10:19AM|#

I simply LOVE how your response range is limited to calling me Steve. Believe what you will . . . we must allow the dimwits to dream away! Maybe you and Dondero should go for a cup of joe . . . maybe bowling night?

Episiarch|6.12.08 @ 10:23AM|#

Steve, since no one besides Chapman would defend his crap, it has to be you. See the logic?

tomcastration|6.12.08 @ 10:28AM|#

wow! so true! Ok, you got me . . . hardy-har. If it makes you feel better, call me Steve. How about Steve-o. Or Stevie-rrific! Steve-o-rama. The Stevenator . . . or the beave-bustin, goon-hustlin Steve!

|6.12.08 @ 10:31AM|#

"The core rate, which excludes food and energy, has been eerily consistent for a long time. In April, the annual core inflation rate was 2.3 percent higher than a year before. In April 2007, it was up 2.4 percent. In April 2006, 2.3 percent. A year before that, 2.2 percent. Whatever the Fed was doing right before, it seems to be doing still."

Eerily consistent manipulation of the numbers, I'd say.

A price shock is not inflation; however, investors (and/ or "speculators") rushing to get rid of their inflating dollars by converting them to commodity positions looks a lot like inflation, to me.

Guy Montag|6.12.08 @ 10:35AM|#

Episiarch,

This "new" tom handle you are talking to sounds just like the stuff joe is posting on the homosexual memorial thread.

|6.12.08 @ 10:51AM|#

Oh hai, gai.

Im n yr hed, obsessin yr thawts.

tomcastration|6.12.08 @ 10:58AM|#

Guy Montag . . . cuz you know that I is joe. Must be a conspiracy . . . the tomcastration cannot be just one, new person!

tomcastration|6.12.08 @ 10:59AM|#

y'all is stagflatin'!

|6.12.08 @ 11:07AM|#

Yo, baby, I'm tryin' to watch the GAME!
You can't come in here in-stagflatin' like that!

|6.12.08 @ 11:11AM|#

Well, according to "a widely-read libertarian culture site", Hitler did employ some homosexuals in the S.A. Yes, there it is, in writing. So it must be true.

Kolohe|6.12.08 @ 11:15AM|#

Re: falling dollar and gold and we haven't seen inflation yet from the article.

Yes, it is correct that this particular 3 months have found both steady, and even increasing/decreasing in value respectively.

But the 4 years before that? The falling dollar is at least 50% of the oil runnup over the last 4 years and *all* of the gold increase.

And core inflation was over 4% last year, the highest in 17 years.

Now, I'm no gold bug, and I only blame Bernake/Greenspan as far as they refused to strangle the housing bubble in it's crib - by refusing to do the hard medicine that doomed the Carter and Bush I reelection chances.

I primarily blame Bush, but even more the Republican congress 04-06, for the wild spending spree on cheap debt that has debased the dollar.

|6.12.08 @ 11:17AM|#

Oops, wrong thread.

Or is it?

Kolohe|6.12.08 @ 11:20AM|#

Oops, must have misread somewhere. Core inflation was only 2 and half % or so, overall inflation was 4%.

Still, one thing agree with the left-leaning (and some right) economic critics that the CPI has been jiggered one too many times for comfort.

For instance, it absolutely did not reflect the higher retail cost of housing from '03 - '06. Otoh, it probably also doesn't reflect it's decline over the last year and a half either

JMR|6.12.08 @ 11:32AM|#

Since they keep changing the standard for calculating both inflation and unemployment, it's good to keep "shadowstats.com" in mind on these threads.
JMR

Brandon|6.12.08 @ 1:59PM|#

Warren said, "but after eight years of runaway deficient spending"

Deficit spending.

The Bush Administration is in fact quite proficient at spending boatloads of cash everyday.

|6.12.08 @ 3:30PM|#

eight years of runaway deficient spending is definitely an example of RC'z Law.

|6.12.08 @ 6:04PM|#

Of course the drastic increase in commodity prices and fallen purchasing power of the dollar does not indicate inflation, all the mainstream economists got together on a pentagram 70 years ago and mind melded inflation away. I mean, what is loosed in the Consensus is loosed on earth and the heavans.

|6.13.08 @ 10:46AM|#

Inflation is not measured in a "stable price leveil". Inflation is measured by bubbles that arise due to the influx of excess dollars leading to malinvestment...we have had the 1987 stock crash, various hedge fund bubbles, the dot com bubble (irrational exuberance), the housing bubble and now the oil bubble.

Chapman makes the typical Chicago school and Keynesian argument that the role of a central bank should be to "keep the price level stable everywhere" and above all, dear God, avoid any "deflation"....and don't pay any attention to those bubbles popping, they are just an illusion!