Roll Call: Latest News on Capitol Hill, Congress, Politics and Elections
March 30, 2015

Prepare for Stagflation 2.0?

“As the debate rages over who the next Federal Reserve chairman will be, it seems Ben Bernanke’s legacy will not just be that he saved the world from financial calamity five years ago: he is also likely to bequeath stagflation, or at least a mild form of it,” writes David Rosenberg.

“While deflation continues to dominate the thought process in the market and at the worlds’ major central banks, the reality is that core inflation has bottomed… It is against this backdrop that the Fed is probably going to start tapering its quantitative easing programme… However, the Fed and other central banks are hardly going to be touching short-term interest rates, which will remain negative in real terms for years.”

“So financial repression will remain the order of the day, until the Fed gets what it wants – which is inflation expectations heading up to 2.5 per cent… That is not price stability: it is more bad news for pensioners and those who live on fixed income investments, and good news for Uncle Sam and other debtors.”

  • Some_guy_with_something_to_say

    Idiocy from a nut job.

  • killias2

    Oh my lord, seriously? “[T]he reality is that core inflation has bottomed,”That is not price stability.”

    Can we please stop freaking out about inflation when we have none of it? And can we stay focused on the unemployment problems that are continuing to plague us?

    Regardless, does anyone actually remember stagflation? Double digit annual inflation rates? Meanwhile, the average inflation rate under Obama is below 2%. That means the central bank is -actually falling short of its mandate-. But, here we go, another round of “serious” idiots barking bullshit about inflation.

    • Some_guy_with_something_to_say

      A man who describes 2.5% inflation as stagflation is outing himself as a gold standard quack.

  • Lorehead

    Why, exactly, is mass unemployment more acceptable than lower real yields for creditors, especially for an Austrian who theoretically attributes the recession to malinvestment?

    • Tom_P

      Mass unemployment affects other people, I need my investment income to stay high.

      • Lorehead

        Well then, if you think the market’s inflation expectations are too low, invest in TIPS inflation-protected bonds.

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