Back in the 60s and 70s, when many of today’s traders and portfolio managers weren’t even born yet, the U.S. was plagued with the double-whammy of soaring inflation and plodding GDP growth. In a word, it was the era of “Stagflation.” Some say if you remember those times you weren’t really there. I was there, however, and remember well what happened. Unpopular wars and expensive new social programs ballooned government deficits which were monetized by the U.S. central bank, sowing the seeds of the subsequent economic malaise.

But wait: is that four decades ago? Or right now? It seems like a good characterization of today’s backdrop as well. It’s been a long time since we’ve seen much of the word stagflation but, given recent economic data, it may not be long before stagflation rejoins the financial punditry’s lexicon and appears in the daily narrative on the economy and markets . . .

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