👨🎓 Stagflation - the worst of both worlds
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Dear all,
We’ve explored inflation, deflation, and even the extreme case of hyperinflation. But what happens when an economy experiences the worst of both worlds - rising inflation and stagnant economic growth?
This phenomenon is known as stagflation, and it’s one of the most challenging economic conditions to navigate.
Stagflation is characterized by three key features:
High Inflation: Prices for goods and services rise rapidly, eroding purchasing power.
Stagnant Economic Growth: The economy isn’t growing or is growing very slowly, leading to weak job creation and wage stagnation.
High Unemployment: Despite rising prices, job opportunities are scarce, leading to higher unemployment rates.
Stagflation is particularly difficult for policymakers because the usual tool…
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