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No offense, but having lived through stagflation in the late 1970's, the current environment is nothing close to stagflation. And from a quantitative point of view, there is no decline in real GDP, thus it's not stagflation. It's like seeing a campfire and then warning that it's a clear case of a forest fire. Sure they're both fires (both inflation) but that's about it.

Are you saying that in the 70s, there was 7-10% real inflation on everything from gas prices to groceries to home prices, yet wages just stagnated (e.g. here's your 1.5% raise for the year!)?

Due to exponential growth, that would become brutal after just a few years, and you'd easily notice a diminishing standard of living as most Americans spend close to all of their paychecks on a monthly basis, without much wiggle room.

I think that's actually what we've been living through in the US for a while now, though not nearly as high 7% and real inflation has technically been limited to a subset of goods and services. Which means that it's low enough that people don't really notice things getting worse and worse, until they're shocked into realization when buying a large ticket item like a new car or a home, and they see just how much purchasing power they've lost compared to even a decade before.

>until they're shocked into realization when buying a large ticket item like a new car or a home

Education and healthcare.

The late 70s were brutal. Worse than the late 2000s IMHO. It was so bad, that there was a recession in 1983, and the incumbent President that oversaw that recession - Reagan - won the 1984 election by a landslide because it was way better than the stagflation of the 70s.

Also, I wish it was as low as 7-10% inflation :( https://www.investopedia.com/articles/economics/08/1970-stag...

I think the greatest damage was done in the state of mind of regular workers. Nobody wants to work for cash that depreciates that fast. While passive asset holders are seeing gains exceeding normal wages for no work at all.

Watching bankers and policymakers ignore this, everybody is gambling to try to get into the unproductive game of sitting and waiting central banks to inflate their asset prices and retire as early as possible.

Inevitably, you end up with no workforce and learned helplessness, waiting for the government to step in and guarantee jobs/UBI in exchange for everything else you got.

Somehow all of what we got just magically creates itself if the government is paying people?

Houses will build themselves!

Food will magically fill your fridge!

Can we get over the old wives tales?

Scientifically people will work to support biological survival.

What they don’t want is a job for another human who has nothing more than artificial political advantage keeping them from real work.

They don’t want a job that elevates Bezos and Gates to ungodly levels of wealth, while their friends and family struggle to pay rent and buy insulin.

Our current economic reality has nothing to do with willingness to work.

It’s an emotional Ponzi scheme, properly groomed for TV and emotional manipulation: “Chase the dream.”

People will work to survive. They won’t work to help aristocrats who don’t work thrive.

Stop coddling the minority and the majority will snap to.

> Wow, multiple stimulus checks, unemployment benefits and employees still have no bargaining power? What is going to happen to wages once all those people come back to work? Wages are not going to grow...

I live in a country that tried to ignore the problem but then came to the realization that you have to do stimulus checks (though they only sent money to the lower 10-25% tier of society).

I'd guess most countries did stimulus one way or the other; or avoided lockdown and relied less on the global economy (ie: Africa). Countries that will try to ignore it will probably collapse especially that the coronavirus is still on-going.

The Americans (and developed world) re ally did get off easy on this one. Less developed countries and those relying on Tourism did get ravaged.

I agree with your points but want to add that higher wages don't lead to high inflation directly. Higher spending does. If you have high wages and high savings it wouldn't lead to inflation in the same way that high wages and high spending would.

Higher costs for any inputs, not just wages, can drive it as well, no? Even if spending remains flat, that is, prices go up and people just buy less stuff while spending about the same amount of money, or even spending less?

If people buy less stuff that's a drop in demand and an increase in supply translating to lower prices.

If input costs like energy go up, which affect virtually every item, then that can lead to higher inflation because the aggregate spending across everything can't drop.

Yes, I'm saying that rising input costs can cause inflation even in the face of falling spending, let alone flat spending. It's not just wages or spending that can cause inflation, right? Any inputs, including wages, can cause it, independent of spending.

[EDIT] that is, yes, falling spending would have a "cooling" effect, but if costs for, say, productive land, go up fast enough, you can still see inflation in the face of falling spending.

> Cutting stimulus or raising interest rates won't make this go away

I am going to disagree. The last round of stimulus by Biden the $1.9 trillion was completely unneeded and not smart. It really tipped the inflation scales. It was a political gesture as Biden wanted to appeal to his base early, but economically and financially a very poor decision and what may end up going down as the smoking gun.

Unneeded except by the people that you know... needed it.

A purely emotional justification is not correct without looking at the data, economics, and financial health. You are the exact type of person it was intended to appease.

Point taken.

Your statement is equally factually unsupported and I have apparently taken the bait.

But only a small amount of that $1.9T goes to people who need it.