WHAT CAN BE WORSE THAN A RECESSION
Stagflation is a rare economic phenomenon that combines two or three negative economic trends that normally do not occur together: high inflation, poor growth, and rising unemployment. It has only occurred two or three times in the past 100 years.
But when stagflation does arrive, it is very hard to overcome because the monetary policy tools typically used to defeat one of those trends tend to make the others worse. Stagflation can create so much misery for the people living through it that economists call one tool they use to measure it the “Misery Index.”
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