Today's links at the Cafe Americain include this one to an interview of Jesse over at Chris Martenson's site. The quote that prompted this post is front-and-center at the beginning of the interview:
Stagflation has been my forecast for quite some time, as the most likely outcome, with a real protracted deflation or hyperinflation as lesser probabilities.The dead horse I beat constantly is that there is no monetary-based inflation in "stagflation," that the price inflation is caused by the diversion of credit into speculative excess in staple commodities, not by wage inflation, which neoliberals argued to be the cause of the1970s stagflation.
Stagflation is actually screwflation, which is the financial terrorists' solution to deflation, i.e., a contracting economy from a money supply standpoint. But credit diverted into pure speculation does not spur employment because it shifts aggregate demand into staples and, thus, increases unemployment in non-staple industries even while driving down margins in staple industries (because of increased input costs), which, in turn, drives increased unemployment in staple industries.
We're in a spiral to a deflationary bottom. "Stagflation" is merely a strategy for managing the landing to the benefit of the financial terrorists.