Talk:Stagflation

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[edit] The essence of the meaning of Stagflation remains buried in mumbo-jumbo

Lost, gone, not there -- it's as if the Fed has edited this article to cover up the abuse of the value of the dollar it now perpetrates.ExecTaxes (talk) 21:19, 15 February 2008 (UTC)

I'm not sure what you mean. Where do you think a point like that should go, and is it compatible with NPOV? --Rinconsoleao (talk) 22:10, 16 February 2008 (UTC)
Let's take a look at the history of this article as illustrated by all the edits since early January, with some key themes and changes drawn from the history and shown below. Helplessness, the actual fact and true essence of the word dilemma once were mentioned here at the top of the article. Now, lost, gone. Check out Webster's online, the definition of "dilemma", which follows. Note 2.a. That is what has been muffled to the point of obscurity. NPOV? I think Webster's has NPOV.ExecTaxes (talk) 20:46, 18 February 2008 (UTC)

Main Entry: di·lem·ma Function: noun Pronunciation: d&-'le-m& also dī- Etymology: Late Latin, from Late Greek dilemmat-, dilemma, probably back-formation from Greek dilemmatos involving two assumptions, from di- + lemmat-, lemma assumption -- more at LEMMA 1 : an argument presenting two or more equally conclusive alternatives against an opponent 2 a : a usually undesirable or unpleasant choice <faces this dilemma: raise interest rates and slow the economy or lower them and risk serious inflation> b : a situation involving such a choice <here am I brought to a very pretty dilemma; I must commit murder or commit matrimony -- George Farquhar> ; broadly : PREDICAMENT <lords and bailiffs were in a terrible dilemma -- G. M. Trevelyan> 3 a : a problem involving a difficult choice <the dilemma of "liberty versus order" -- J. M. Burns> b : a difficult or persistent problem <unemployment ... the great central dilemma of our advancing technology -- August Heckscher> - dil·em·mat·ic/"di-l&-'ma-tik also -"dī-/ adjective usage Although some commentators insist that dilemma be restricted to instances in which the alternatives to be chosen are equally unsatisfactory, their concern is misplaced; the unsatisfactoriness of the options is usually a matter of how the author presents them. What is distressing or painful about a dilemma is having to make a choice one does not want to make. The use of such adjectives as terrible, painful, and irreconcilable suggests that dilemma is losing some of its unpleasant force. There also seems to be a tendency especially in sense 3b toward applying the word to less weighty problems <solved their goaltending dilemma -- Pat Calabria>.

11 February 2008 Rinconsoleao (Talk | contribs) (45,167 bytes) (WHY governments make mistakes is not really so relevant for the first section of this article. Could be explained further below (in neoclassical section?))

6 February 2008 Rinconsoleao (Talk | contribs) (45,497 bytes) (There are many possible reasons for government policy errors. Listing them all in that sentence is unnecessary, especially since an additional reason is given in last sentence of paragraph.)

5 February 2008 ExecTaxes (Talk | contribs) (45,559 bytes) (An essential element was removed by a recent edit. It is restored.ExecTaxes (talk) 18:29, 18 February 2008 (UTC))

2 February 2008 ExecTaxes (Talk | contribs) (45,405 bytes) (Clearly a glitch, for central banks would never central banks "use excessively stimulative monetary policy" to fight inflation.ExecTaxes (talk))

25 January 2008 Rinconsoleao (Talk | contribs) (40,985 bytes) (/* Neo-classical views on stagflationAndrew Abel and Ben Bernanke (1995), Macroeconomics, 2nd ed., Chap. 11, 'Classical Business Cycle Analysis: Market-Clearing Macroeconomics'. Addison-Wesley, ISBN 0

24 January 2008 ExecTaxes (Talk | contribs) (35,176 bytes) (Essential element of the factor of "dilemma" reincluded.ExecTaxes (talk) 18:29, 18 February 2008 (UTC))

23 January 2008 Xavexgoem (Talk | contribs) (33,175 bytes) (flagged dilemma as OR (it's slightly apocalyptic). Although it's mostly true I'm sure, it needs to be cited and placed elsewhere (otherwise article reads what-it-is, run-for-the-hills, how-it-works))

21 January 2008 ExecTaxes (Talk | contribs) (30,210 bytes) (Someone recently removed the essence of the definition of stagflation. This is inexcusable. Would those who suddenly found interest in stagflation kindly remember that the LAYMAN who uses Wiki.ExecTaxes (talk))

21 January 2008 ExecTaxes (Talk | contribs) m (29,179 bytes) (A "springboard effect" results when there's no more tinkering that will help -- in a world that depends on tinkering to get by.ExecTaxes (talk) 18:29, 18 February 2008 (UTC))

17 December 2007 ExecTaxes (Talk | contribs) (19,833 bytes) (The key to understanding stagflation is that the presence of both inflation and economic decline are obvious. Without this point made crisply, the meaning of this section would be dilutedExecTaxes (talk) 18:29, 18 February 2008 (UTC))ExecTaxes (talk) 20:46, 18 February 2008 (UTC)

This existed at the top on Decmeber 17, 2007:
Stagflation becomes a dilemma for monetary policy when policies usually used to increase economic growth will further increase runaway inflation while policies used to fight inflation will further the decline of an already-declining economy
Stagflation only becomes a problem when the marginal impact of the further use of the principal monetary policy tool available to assist central bank direction of the domestic economy does more marginal harm than marginal good, if used. Ultimately the central bank can either stimulate the economy or attempt to rein it in through the mechanism of adjusting the domestic interest rate, its primary tool. A choice can be implemented which tends to improve growth but does it ignite systemic inflation? A choice can be implemented which tends to fight inflation but how badly does it impinge growth? During periods properly described as stagflation both problems co-exist. In modern times it will be only after the central bank has used all possible tools to meet both goals, using the best quantitative measures it has at its disposal, for stagflation to occur. Major economic conditions of unusual proportion will have already created near-crises on both fronts before staglation can set in again. Stagflation is the name of the dilemma which exists wherein the central bank has rendered itself powerless to fix either inflation or stagnation.

ExecTaxes (talk) 20:46, 18 February 2008 (UTC)

Several days have passed. The two preceeding paragraphs appear to belong at the top of this article. Comments?ExecTaxes (talk) 15:00, 20 February 2008 (UTC)

[edit] US Bias?

Since this term was coined in the UK and can be used in reference to any free market economy, why is the article so heavily biased to the US, particularly in the introduction? How about removing all those references to 'The Fed' and replacing them with non-county specific terms like 'a central bank'? —Preceding unsigned comment added by 82.20.31.4 (talk) 17:48, 8 January 2008 (UTC)

The actions of the U.S. Federal Reserve are clearly at cause and leading the global eceonomy into stagflation. The article appropriately focuses on the U.S. because the U.S. can without a doubt be seen as the policy maker whose choices impact the global economy most in this matter. It is appropriate.ExecTaxes (talk) 21:55, 16 January 2008 (UTC)
FURTHER ON THIS POINT: One need do no more than note the collapse of European, Eastern and South American stock markets of the day of the U.S.'s Martin Luther King Holiday, a collapse said by all to be directly linked to the certainty of a U.S. recession despite the Bush plan to stimulate the U.S. economy. Ignoring the fact that U.S. stagflation leads to global stagnation, at best, is totally unrealistic. Economics is a science of realism.ExecTaxes (talk) 17:40, 21 January 2008 (UTC)

[edit] Moved from article

SUGGESTION TO OTHER EDITORS: (This paragraph appears redundant.ExecTaxes (talk) 00:40, 8 December 2007 (UTC))The dilemma in monetary policy is instructive. The central bank can make one of two choices, each with negative outcomes. First, the bank can choose to stimulate the economy and create jobs by increasing the money supply (typically by creating government debt through the issuance of bonds and then loaning the money to commercial banks at low interest rates), but this risks boosting the pace of inflation. The other choice is to pursue a tight monetary policy (minimal government debt, which limits the money supply and results in higher interest rates) to reduce inflation, at the risk of higher unemployment and slower output growth.

[edit] word origin

Googling on Iain MacLeod (1913-1970, MP for Enfield West, Chancellor of the Exchequer 1970 and editor of The Spectator) yielded the article title now present in the link. Sorry for any confusion caused by earlier error. The coinage of stagflation is attributed to him by the late political journalist Peter Jenkins (Mrs. Thatcher's Revolution 1988)-- Alan Peakall 14:46 Dec 3, 2002 (UTC)

I dispute the source used, as it's wishy-washy:
The term was probably used first by a British member of Parliament, Ian MacLeod, in a 1965 speech to the House of Commons.
Note: "probably"? The article gives no sources--certainly none to Peter Jenkins, who the Wikipedia article attributes to "Ian MacLeod" (not even the correct spelling of his name: "Iain"). -Eep² 13:38, 5 May 2007 (UTC)
I changed the source to a better one and noted that the coinage is not definite. In any case, its an improvement over the mistake that someone added before: attributing the word origin to Peter Beter.--Dcooper 15:46, 5 May 2007 (UTC)
Do you have a link for that "House of Commons’ Official Report (also known as Hansard), 17 November 1965, page 1,165" reference? It would be nice to be able to verify MacLeod actually said that... -Eep² 11:07, 6 May 2007 (UTC)
OK, I found some more sources but stil nothing on the official Hansard (House of Commons Daily Debates) site.
The origin of the word stagflation can be traced to the late Iain Macleod, a Tory member of the British Parliament who held many ministerial posts, including Chancellor of the Exchequer.
MacLeod reportedly coined the term in a 1965 speech to the House of Commons, saying ``We now have the worst of both worlds - - not just inflation on the one side or stagnation on the other, but both of them together. We have a sort of 'stagflation' situation.
On 17 November 1965, Iain Macleod, the spokesman on economic issues for the United Kingdom’s Conservative Party, spoke in the House of Commons on the state of the UK economy:
‘We now have the worst of both worlds—not just inflation on the one side or stagnation on the other, but both of them together. We have a sort of “stagflation” situation. And history, in modern terms, is indeed being made.’ (17 November 1965, page 1,165).(1)
With these words, Macleod coined the term ‘stagflation’.(2)
(1) Many of the statements quoted in this paper are those by UK policy-makers in Parliament, as given in the House of Commons’ Official Report (also known as Hansard). These quotations are indicated by the date of the speech and the page from the Hansard volume from which the quotation is taken.
(2) Macleod used the term again in a speech to Parliament on 7 July 1970 and confirmed that he had invented the word. From then on, the term was common parlance in UK economic policy debate, being used, for example, in an article in The Economist of 15 August 1970. Some sources (eg Hall and Taylor (1997)) attribute the term to Paul Samuelson (1975). But the earliest occasion on which we have found Samuelson used the word was in a Newsweek column of 19 March 1973, entitled ‘What’s Wrong?’, reprinted in Samuelson (1973, pages 178–80).
OK, I think this is the correct document but it's not available online so I have to request it, which I did. Hopefully it's free and will be emailed to me (or made accessible online for all to view). -Eep² 12:44, 6 May 2007 (UTC)

[edit] administration

Shouldn't that be under the Carter Administration, not Nixon? The combination of rising prices, persistent unemployment, and a stagnant economy had by 1977, when Carter took office, been dubbed "stagflation." The Carter administration sought to slow inflation by raising interest rates and restraining federal spending.

I second that. The 1979 crises was a double wopper! stagflation was under all four years of the carter administration. Also, there was stagflation under harry truman, from 1946-1948.


This article is a little anachronistic and blury.

It was also very bad in Canada at the time, I think that's worth mentioning. The Fwanksta 23:03, 14 October 2007 (UTC)
Nixon's Phase I Price Controls, a 90-day price freeze, were in 1972.
Phase's II, III-A, III-B and IV (Decontrol) covered 1972-1974.
Watergate so dominated the news in the second Nixon Administration that stagflation was not a top "news" item until Ford took office. After consulting the country's top economists who came to Washington for an economic symposium, Ford understood that during stagflation anything the government did would only make things worse, hence Ford brought the leaders of that symposium for a White Houe press briefing, during which time he unveiled the "WIN" button, an acronym for "Whip Inflation Now." Stagflation had tied his hands he had realized, and any act which interfered with business decision making would slow down the recovery. Thus he chose the "WIN" button to represent the consensus of this country's top economists that changes in either monetary or fiscal policy would create more problems than they cured.
The mesage from those economists was that the Nixon impeachment prospect coming on top of the oil price rise of a few years earlier had left the economy stagnant at a time when wages and prices had just been "decontroled" less than a year before.
ExecTaxes (talk) 17:46, 17 November 2007 (UTC)

[edit] Reorganize?

This article seems to be projecting stagflation's return quite a bit. Perhaps the data can be split into two sections: What is Stagflation, and Economic Outlook of Stagflation. This will allow readers unfamiliar with the subject a clear area to learn about the understood origins, causes, and effects of stagflation. The latter will educate interested readers on the outlook of this topic.

Except that Carter was not elected until 1978, sworn in Jan 20th 1979, so anything prior to that was Ford.

Hello!!! Carter was elected in 1976 and took office on Jan 20th 1977.Mulp 04:14, 16 October 2007 (UTC)
Here's a suggestion for reorganization. I can't do it myself because I'm not familiar enough with this subject. First, shorten the summary at the top to be just a short, one paragraph summary. Then follow with something like the following topics - Origin of Term, History of Stagflation in the US, Problems Stagflation Presents for Classical Keynesian Economics, Monetarist Explanation of Stagflation, Monetarist Prescription for Curing and Preventing Stagflation, Neo-Keynesian Explanation of Stagflation, Neo-Keynesian Prescription for Curing and Preventing Stagflation. I would very much like to see the history of the 1970's-80's US stagflation described in more detail, strictly from a factual point of view, including factors that may or may not have initiated it, effects, and actions that may or may not have ended it. Then I would like the Monetarist case and the Neo-Keynesian cases presented separately. I think the theories should be discussed in the context of the one major episode of stagflation that we've had. What else makes sense? JamieNettles 23:29, 8 April 2007 (UTC)
Recent events (most particularly the assessment revealed in the rate-reduction rationale set forth in the most recent communique from the Federal Open Market Committee as it moved the "Fed" to a neutral stance with regard to the dichotomy of the dilemma of recession v. inflation regarding stagflation -- despite the obviously distressed situation within the U.S. economy,) seem sufficient to demonstrate that Stagflation exists right now.

ExecTaxes 00:18, 2 November 2007 (UTC)

The January revisions from all those brilliant minds who have begun to contribute have brought this article to a high level of coherence.ExecTaxes (talk) 18:00, 24 January 2008 (UTC)

Did a reorganization of the speculations about a f. stagflation in the US. FORMAT LAYOUT OF TITLE: [Inflation|Recession|Stagnation] - Factor, so one can see the paramenters writers are concerned about.Comments for Me Happy to see you continue with it. Would love to see more information about Fan Gang. Maybe one can write an article about this person. We cite Bernanke many time but never the Chinese side... (weak point)

[edit] Yes, reorganize a bit

Added the tax void. The whole on stagflation can be reorganized indeed.

Colignatus 03:15, 1 March 2006 (UTC)

Stagflation in the United States was a late 70's, early 80's phenomena. This could be attributed to the loose policies of Nixon, Ford, and Carter, combined with high oil prices. It should be noted that in the US, at least, Stagflation was combined with a large drop in productivity, one theory of this drop in productivity was the combined entrance of large numbers of relatively unskilled women and young baby boomers into the job market, who in previous generations were not present in the labor market. The cure to Stagflation was Reagan's appointment of Paul Volcker as the Chairmen of the Federal Reserve, who responded with a painful but necessary tight monetary policy.

Jimmy Carter appointed Paul Volcker as the Chairmen of the Federal Reserve in 1979. —Preceding unsigned comment added by Russ Anderson (talk • contribs) 22:38, 15 December 2007 (UTC)
It is important to bear in mind that stagflation creeps in rather than being announced. If indeed a current round of stagflation has begun to hold its grip on the U.S. economy, Fed Chairman Bernake will likely get full blame due to the two rounds of rate reductions he made in September and October 2007. Others who understand Washington and recall the great warning that former Fed Chairman Greenspan gave to him, a warning mentioned prominantly in his book released during the same period -- the warning that Congress was on the watch and fully prepared to take away the Fed's autonomy -- will argue otherwise

ExecTaxes (talk) 17:57, 17 November 2007 (UTC)

[edit] the end of stagflation

Stagflation ended during the new age of technology in the 1990s. This caused an increase in supply. The supply curve shifted to the right faster than the demand curve. There was greater GNP (less unemployment) and lower prices, which is the exact opposite of stagflation where the supply curve shifts leftward and inflation and stagnation occur. The policies of monetary restraint by Paul Volker was not the answer to stagflation. The decrease in demand lowered prices but caused more unemployment. When both the President and the Federal Reserve shifted policies to increase the money supply, this caused less unemployment but higher prices. Neither policy was satisfactory. And stagflation is never dead and can occur again. 69.141.240.64 06:25, 7 December 2006 (UTC)

Paul Volcker successfully targeted "inflationary expectations" and held rates high long enough to be able to see a round of labor contract renewals at moderate increases, which confirmed that inflationary expectations had subsided, at which point he lowered rates. Ronald Reagan adapted willingly and initiated policies in support of Paul Volcker's plan.

ExecTaxes (talk) 18:06, 17 November 2007 (UTC)

[edit] Asset Class Example

The reason I undid the asset classes example is that housing costs are part of the Consumer Price Index. So falling home prices are factored into the CPI. That fact that the CPI is increasing despite falling home prices is the inflation part of stagflation. - Russ Anderson (talk) 02:47, 31 December 2007 (UTC)

[edit] Cleaning up

I hope no one minds. I'm fact-templating the area and rewriting a bit. This thing needs citations like insert-extremely-relevant-analogy/simile ;) Xavexgoem (talk) 20:30, 23 January 2008 (UTC)

You are right this article is a mess. Probably the best way of improving it would be to start with the historical context in which the term arose. Stagflation came as a huge surprise in the 1970s to Keynesian economists accustomed to a stable Phillips curve relationship who used models mostly based on demand shocks rather than supply shocks. When they suddenly faced supply shocks (oil shortages) in the 1970s, their usual policy prescription (greater inflation to reduce unemployment) simply fed into higher inflation, and eventually the Phillips curve shifted. This is standard undergraduate economics today so it should not be hard to reference an article like this. --Rinconsoleao (talk) 09:06, 24 January 2008 (UTC)

I re-re-wrote the lead as per WP:MOS; I don't think I removed too much from the intermediate revisions, and did my best to reintroduce them. I think the next thing to work on are briefer summaries of the theories, but I'm no economist. Xavexgoem (talk) 23:39, 24 January 2008 (UTC)

[edit] List of junk theories

There is a whole list of theories offered on the page. Almost all are explained without citations. Many are far from being mainstream views. This article needs to start with the mainstream view of stagflation and could then have a short section on alternative theories. --Rinconsoleao (talk) 15:56, 24 January 2008 (UTC)

[edit] Formatting

Please follow the Wikipedia style for the capitalization of headings. Wikipedia uses "sentence case" for headings, and not "title case", that means that only the first letter of the first word and the first letter of proper nouns are capitalized, not the first letter of every major word. Propoer nouns are generally the names of people, places or organizations. Please see WP:HEAD. Thank you. Ground Zero | t 00:06, 31 January 2008 (UTC)

[edit] Differential accumulation is not one of today's main stagflation theories

To much space in this article is taken up by a theory called differential accumulation. Checking that link demonstrates that the theory is mostly promoted by two political science professors (Bichler and Nitzan) at York University in Toronto, who have done some writing about stagflation, but it's by no means central to their research agenda. See also their chronological archive. Since these links make clear that this is the point of view of a small number of people, I will delete the claims in the introduction that this is one of the 'three main theories' of stagflation today. Including a discussion of 'differential accumulation' in this page is an excellent idea, but it should also be shortened, as the current article greatly exaggerates the impact of this alternative theory. --Rinconsoleao (talk) 10:42, 31 January 2008 (UTC)

[edit] Iain Macleod

I have slightly changed the lead section about Macleod (sic - see his article and this Conservative Party PDF) because I think it was misleading as it stood. Here is what the relevant sentence said:

The term stagflation is generally attributed to United Kingdom Chancellor of the Exchequer Iain MacLeod, who coined the term in a speech to Parliament in 1965.

The misspelling of his name is a minor matter, but the description of his job is extremely misleading. In 1965 there was a Labour government under Harold Wilson, and so Macleod held no government post at all at the time. His term as Chancellor was still five years in the future, and indeed was extremely short: he died just one month after the Conservatives' 1970 election victory. The previous wording made it look as though Macleod's coining of the term "stagflation" was related to his Chancellorship. As that is quite wrong, I have changed the wording. Loganberry (Talk) 21:15, 28 February 2008 (UTC)

[edit] Nixon's Wage and Price Controls preceded the 1973 Oil Price Shock

Richard Nixon announced wage and price controls on August 15, 1971. The first oil price shock started in October 1973. Nixon did not implement Wage and Price Controls "in response to" an oil price increase that did not occur until two years later.

For further information see "A Monetary Explanation of the Great Stagflation of the 1970s", http://fordschool.umich.edu/rsie/workingpapers/Papers451-475/r452.pdf —Preceding unsigned comment added by Russ Anderson (talk • contribs) 13:44, 28 May 2008 (UTC)