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- Jul 11, 2019
I think stagflation is on the horizon. I already saw a thread about hyperinflation and wanted to share this perspective.
Causes, according to wikipedia- Economists offer two principal explanations for why stagflation occurs. First, stagflation can result when the economy faces a supply shock, such as a rapid increase in the price of oil. An unfavorable situation like that tends to raise prices at the same time as it slows economic growth by making production more costly and less profitable.
Suez-canal blockage anyone?
- Second, the government can cause stagflation if it creates policies that harm industry while growing the money supply too quickly. These two things would probably have to occur simultaneously because policies that slow economic growth do not usually cause inflation, and policies that cause inflation do not usually slow economic growth.
Both explanations are offered in analyses of the 1970s stagflation in the West. It began with a huge rise in oil prices, but then continued as central banks used excessively stimulative monetary policy to counteract the resulting recession, causing a price/wage spiral.
The main question is, how to make a profit from this?
Curious about your perspectives
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