Stagflation 2008, what’s the good thing about recessions?

2008 looks like a year where we will (we being the EU, USA, and likely Asia) will face a recession, in America the fears are even a little bit more as they might suffer from Stagflation which is the mean-eyed just got out of prison older brother of recession.

Stagflation [just to be clear] is where you have the decreased or negative GDP in an inflationary environment. This could happen in the US because currently the GDP there is reducing, America is not really a manufacturing nation any more, so it relys on services and consumer spending, actually about 2/3’s of the US economy is based on consumer spending. So picture that fact, and then picture a world where the Dollar to Euro is at $1.50 and oil is at $100+.

That means that anything imported is much more expensive, so people will not continue spending at the same rate. Then to exacerbate that situation you have expensive gasoline and a country where car engines are only getting bigger, whether or not people can no longer afford to drive to …

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Stagflation 2008, what's the good thing about recessions?

2008 looks like a year where we will (we being the EU, USA, and likely Asia) will face a recession, in America the fears are even a little bit more as they might suffer from Stagflation which is the mean-eyed just got out of prison older brother of recession.

Stagflation [just to be clear] is where you have the decreased or negative GDP in an inflationary environment. This could happen in the US because currently the GDP there is reducing, America is not really a manufacturing nation any more, so it relys on services and consumer spending, actually about 2/3’s of the US economy is based on consumer spending. So picture that fact, and then picture a world where the Dollar to Euro is at $1.50 and oil is at $100+.

That means that anything imported is much more expensive, so people will not continue spending at the same rate. Then to exacerbate that situation you have expensive gasoline and a country where car engines are only getting bigger, whether or not people can no longer afford to drive to …

Read More