Copyright © Françoise Herrmann
The term ‘stagflation’, a portmanteau term combining economic stagnation and high inflation, is back, according to Ben Bernanke, former Chair of the US Federal Reserve (2006-2014), and famous US economist. A term that spells trouble, but not dramatic trouble, and that probably only needed to be uttered once to go viral, considering in whose discourse it was embedded (Bavarez, 2022).
What ‘stagflation’ means, according to Bernanke, who incidentally just published a book titled: 21st Century Monetary Policy: The Federal Reserve from the Great Inflation to Covid-19, is that the US economy is entering a period of slow growth, similar to the 70s, with high (but not runaway) inflation, and employment up just enough to prevent a tailspin recession (Ross Sorkin, 2022). After the unprecedented pandemic economic standstill, with great-depression unemployment rates, unparalleled government support packages, preventing a complete collapse of the economy, the current supply and demand bottlenecks, and the war in Ukraine, dashing hopes for a spectacular recovery, ‘stagflation’ might not be too catastrophic, as long as it is just temporary, and the world is not teetering on the brink of anything else.
Bernanke, B. (2022). 21st Century Monetary Policy: The Federal Reserve from the Great Inflation to Covid-19. New York NY: W.W. Norton & Company.
Ross Sorkin, A. (May 16, 2022). Ben Bernanke sees ‘stagflation’ ahead. The NYTImes. https://www.nytimes.com/2022/05/16/business/ben-bernanke-predicts-stagflation.html
Baverez, N. (May 16, 2022). Stagflation : « Back to the seventies ». LePoint.fr https://www.lepoint.fr/editos-du-point/nicolas-baverez/stagflation-back-to-the-seventies-16-05-2022-2475695_73.php
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