Posted by
Tim Blessing on Thursday, February 28, 2008 7:08:58 PM
The Economy may be entering a stagflation phase that nothing can be done about in the short term.
The last bout of this in 1980 caused the Federal Reserve to raise interest rates to 21 percent, but inflation was 13 percent.
Unemployment rose to over 10 percent as a direct result of that policy.
Reagan came into office cut taxes, cut spending, and increased defense spending.
All were eventually reined in by Congress.
It took two years for the Fed to purge the economy of hyperinflation and put the economy back on track.
Needless to say, a lot of people lost their jobs, but the economy was good for almost 10 years.
I don't think Bernanke is a good a Fed Chairman as Paul Volcker was at that time, but that's one man's opinion.