Marketplace reports: How bad could economy get? Hold on! Before you answer "Oh, OK, stagflation; how bad could it be?," let me suggest exactly how bad it could be.
The country had a decade of stagflation in 1970's. Economic growth was lackluster while inflation skyrocketed at double-digit rates, peaking at a little under 15 percent. Unemployment was also ruinously high and real per capita income actually fell in three of the years of that decade. Not a pretty picture.
Worse, the cure for that bout of stagflation was, as it always is, a nasty recession. When the Fed finally crunched down on money and credit to bring down inflation, the economy tanked. Between 1981 and 1982, unemployment peaked at over 10 percent. And the economy shrank about 3 percent in 16 months. Labels: Inflation Intimation |
