A Form of ‘Neo-Stagflation’ Has Emerged

September 30th, 2011

Via: Globe and Mail:

This neo-stagflation is characterized by rising prices for food, fuel and metals – which were also key drivers in the 1970s stagflationary spiral.

“An OECD economic cycle in which prices of foods, fuels and precious metals rise far more strongly than prices of manufactured goods – or workers’ wages – is inherently stagflationary,” he wrote in a recent report. “A greater and greater share of total consumer spending goes to the commodity producers who own the farmland, the mines or the oil wells. The industrial and service-based economies find they cannot deliver the kind of strong, sustained, low-inflation economic growth that was the pattern for most of the postwar era.”

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