Stagflation - You Heard It Here First
George Soros explains why we will have stagflation
Just to remind our readers, we in Bloodthirstan began speaking of stagflation, a Carter-era reality, in February of 2008. Stagflation is a nasty combination of unemployment and inflation. Taken together, as a sum, stagflation is the misery index. Here we have George Soros calmly explaining that we will have stagflation as a part of our recovery. You can watch him explain it on tape, if you have the stomach, or you can just read this:
After the financial market collapsed last fall, the Fed responded with a massive injection of liquidity and expansion of the monetary base.
Eventually, Ben Bernanke & Co. will face the challenge of having to remove that liquidity from the system. “That’s a big and difficult task and probably the authorities will not be able to do it well,” says legendary financier George Soros, chairman of Soros Fund Management. “That’s the fear that drives people into gold.”
Soros wouldn’t say whether he’s actively trading gold but certainly implied it’s a good bet; more explicitly, he agreed with the view there’s a “bubble” in Treasuries that’s likely to burst sooner rather than later.
“The moment this fear of deflation turns into a fear of inflation, you’ll find interest rates rise in the long end which is going to choke off the recovery,” he says. “If we are successful [in reviving the economy] we are heading from the prospect of deflation to stagflation.”
Now, the amazing thing about the hopey-changey crowd that brought us this administration is that they are the ones who will suffer the most from the economy they voted in. Unemployment will continue to rise and, naturally, the youngest workers will be out of a job first. Taxes will go up to try to recover the lost revenue, but the “rich” who are going to be tapped to pay those taxes will themselves be earning much less. So, as this scenario unfolds, I do hope that everyone who voted for this horror of an administration enjoys every single tuna broccoli casserole that they consume, along with very cheap beer or wine. Cheers!
- Aggie