“We now have the worst of both worlds—not just inflation on the one side or stagnation on the other, but both of them together. We have a sort of ‘stagflation’ situation. And history, in modern terms, is indeed being made.” – Iain Macleod (1965)
Article by Chadwick Hagan from our premium news partners at The Epoch Times.
Stagflation was a new phenomenon in 1965, but now it looks like stagflation is back and it is looming over the economies of the United States and Europe.
What is stagflation?
Simply put stagflation is when prices continue to surge while economic growth grinds to a halt; a situation where the economy has persistently high unemployment, and high inflation (especially high energy prices).
Stagflation was last seen in the 1970s and 1980s. Out of control oil prices, mixed with rising unemployment and inflation sent the consumer price index to 14 percent in 1980. The Fed answered by raising interest rates; the Fed funds rate, the interbank rate for short term loans, hit 20 percent in 1980 and 21 percent in June 1981.
However, times are different now. While many employers have complained of labor shortages and many employers have experienced trouble finding workers in this economy, unemployment is somewhat under control. February 2022 numbers published by the Bureau of Labor Statistics reported that the majority of American states’ unemployment levels were below 5 percent.
While the exact causes of stagflation are not really known, stagflation is often seen during a supply shock or during a rapid increase in the money supply; both of these situations have happened recently in America. The consumer goods supply chain shock began in the midst of COVID-19, with oil prices rapidly accelerating at the start of the Russian-Ukrainian conflict. The increase in money supply began in March 2020, when the Federal Reserve began its fourth quantitative easing operation since 2008’s global financial crisis. Following COVID-19 the U.S. money supply surged. Trillions of dollars went out. According to the New York Times, $5 trillion was spent: $1.8 trillion to individuals and families; $1.7 trillion to businesses; $745 billion to state and local aid; $482 billion to healthcare and $288 billion to “other.”
Recently investing legend, and multibillionaire Ray Dalio warned of stagflation, stating to Yahoo Finance: “I think that most likely what we’re going to have is a period of stagflation. And then you have to understand how to build a portfolio that’s balanced for that kind of an environment.” Dalio continued, “what you have is enough tightening by the Federal Reserve to deal with inflation adequately, and that is too much tightening for the markets and the economy. So the Fed is going to be in a very difficult place a year from now as inflation still remains high and it starts to pinch on both the markets and the economy.”
Stagflation is already here in the U.S. housing market. According to Conor Sen, an investor and a Bloomberg columnist, “there are two ways to address this stagflation. The good way would be to improve the supply of resources like garage doors, cabinets, and windows that are holding back the homebuilding market. That’s something policymakers don’t really have the tools to address, at least in the short run. The second way would be to restrict credit or raise mortgage rates high enough to reduce home-buying demand, thus reining in home prices.”
There are, of course, those who disagree and think we are facing slowflation, versus stagflation. Prashant Bhayani, Chief Investment Advisor of BNP Paribas, suggested in a letter to clients that “stagflation is not our base case scenario, but inflation is set to remain higher for longer. We believe there is a shorter period of “Slowflation”—slowing growth with rising inflation before inflation peaks in the coming quarters.”
Regardless, sky-high energy prices are a reality and they are also a clear sign of stagflation. Gasoline, oil, and coal have surged repeatedly, month after month and this is not from what White House press secretary Jen Psaki labeled “Putin Price Hike.” Putin’s war certainly caused a disturbance, but the issues began with Washington’s continued fiscal stimulus measures.
2022 is turning out to be the year of multiple crises; slowflation and stagflation risks; global inflation; continued supply chain shocks; the humanitarian crisis in Ukraine; the potential for WW III and the potential for numerous economic recessions.
With food shortages coming, it’s a smart move to order organic, cooked, freeze-dried chicken for long-term storage from Prepper Organics.
Expect rates to rise significantly. Mortgage rates are already at 5 percent (a 30 year fixed rate mortgage is at 5.15 percent as of Friday afternoon) and New York Fed President John Williams hinted that a half point rate hike from the Fed could come next month, calling it a “reasonable option” on Thursday.
Only time will tell if America will experience a repeat of the sky-high interest rates of the 1980’s.
Will America-First News Outlets Make it to 2023?
Things are looking grim for conservative and populist news sites.
There’s something happening behind the scenes at several popular conservative news outlets. 2021 was bad, but 2022 is proving to be disastrous for news sites that aren’t “playing ball” with the corporate media narrative. It’s being said that advertisers are cracking down, forcing some of the biggest ad networks like Google and Yahoo to pull their inventory from conservative outlets. This has had two major effects. First, it has cooled most conservative outlets from discussing “taboo” topics like Pandemic Panic Theater, voter fraud, or The Great Reset. Second, it has isolated those ad networks that aren’t playing ball.
Certain topics are anathema for most ad networks. Speaking out against vaccines or vaccine mandates is a certain path to being demonetized. Highlighting voter fraud in the 2020 and future elections is another instant advertising death penalty. Throw in truthful stories about climate change hysteria, Critical Race Theory, and the border crisis and it’s easy to understand how difficult it is for America-First news outlets to spread the facts, share conservative opinions, and still pay the bills.
Without naming names, I have been told of several news outlets who have been forced to either consolidate with larger organizations or who have backed down on covering certain topics out of fear of being “canceled” by the ad networks. I get it. This is a business for many of us and it’s not very profitable. Those of us who do this for a living are often barely squeaking by, so loss of additional revenue can often mean being forced to make cuts. That means not being able to cover the topics properly. Its a Catch-22: Tell the truth and lose the money necessary to keep telling the truth, or avoid the truth and make enough money to survive. Those who have chosen survival simply aren’t able to spread the truth properly.
We will never avoid the truth. The Lord will provide if it is His will. Our job is simply to share the facts, spread the Gospel, and educate as many Americans as possible while exposing the forces of evil.
To those who have the means, we ask that you please donate. We have options available now, but there is no telling when those options will cancel us. We have our GivingFuel page. There have been many who have been canceled by PayPal, but for now it’s still an option. Your generosity is what keeps these sites running and allows us to get the truth to the masses. We’ve had great success in growing but we know we can do more with your assistance.
Thank you, and God Bless!
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JD Rucker – EIC