When high inflation, slow growth and high employment combine, they result in an unfortunate economic situation known as stagflation. But what exactly is stagflation, and how does it work? Most importantly, how can we prevent it in the future?
Josh and Chuck dive into the complex world of stagflation, the dreaded economic phenomenon that combines high unemployment, sluggish growth, and rising prices all at once. They explore how this "perfect storm" caught economists off guard in the 1970s, challenging traditional economic theories and leading to a dramatic shift in Federal Reserve policy under Paul Volcker. The episode traces the battle between Keynesian and monetarist economic approaches, complete with oil embargoes, long gas lines, and the economic malaise that defined the Carter era.
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