StagflationWhen a individual is asked what is the worst financial situations one can believe of the most frequent answer is, of course, high unemployment. We all know what unemployment signifies: persons have no jobs, consequently no money to live by and the welfare of an complete nation is at stake. It just takes a appear at the current predicament in South Europe, in particular in Greece and Spain, to realize that higher unemployment can have devastating consequences. What makes life slightly simpler for the unemployed is the reality that rates tend to fall when unemployment rises, as the Philips Curve claims. But, when a nation has to deal with high inflation and high unemployment simultaneously it faces a predicament named stagflation.

I presume you had been speaking about the 1918-1921 double-dipper. If you study the short article meticulously, you will see that I didn’t blame the Republican President Warren Harding for slipping back into a depression Rather, I blamed the Federal Reserve, who is independent of the President, for contributing to the contraction as a result of the anti-inflation policies they have been nonetheless studying the ropes of this macroeconomics point. Actually, I gave the Republican President kudos for becoming the first President to take measures at the federal level to mitigate the effects of the depression on the population.

Dr. Mark J. Perry is a professor of economics and finance in the College of Management at the Flint campus of the University of Michigan Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a going … Read more ...