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Finance: What is Stagflation? 0 Views
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Stagflation is a condition of the economy marked by slow (stagnant) economic growth and high unemployment and inflation
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Transcript
- 00:00
Finance allah shmoop What is stagflation All right well to
- 00:06
win a single male deer gets really pumped Yeah maybe
- 00:11
that well it's actually a really bad economic situation The
- 00:14
economy is stagnating not growing and maybe it's even shrinking
- 00:19
with unemployment rampant And at the same time prices are
Full Transcript
- 00:23
getting higher That is there is in fire ablation Well
- 00:26
fuse those two elements together and you have stagflation Generally
- 00:30
high inflation and stagnant growth live on opposite sides of
- 00:34
the economic playground You usually don't have one without the
- 00:38
other far far away Like if the economy is weak
- 00:41
and demand is light and people are unemployed Well then
- 00:45
why Or even how could prices possibly go up in
- 00:49
an inflationary environment rather than down Yeah doesn't make sense
- 00:53
But this phenomenon does happen So what causes the perfect
- 00:56
storm to create it To create this stagflation Well it
- 00:59
could be one of two things Really There might be
- 01:02
a supply shock Like if oil prices suddenly skyrocket like
- 01:06
they did in the seventies Or there is quote extra
- 01:10
unquote e two largest supply of money Well how does
- 01:14
that happen While the government simply prince too much cash
- 01:17
The central bank expands the money supply and or creates
- 01:20
too much credit low interest rates for borrowing for all
- 01:23
and well now we have inflation even in a stagnant
- 01:26
time Then taxes go up and or interest rates rise
- 01:30
so we have slower growth Punishes it on the other
- 01:33
waves People are starting to buy last They're feeling the
- 01:35
interest rate Incheon was expensive credit cards right They bite
- 01:39
you when you go to the mall and you have
- 01:40
to pay twenty two percent a year So yeah it's
- 01:42
a rare situation but it has happened in the past
- 01:45
So when did this phenomenon most recently occur How vicious
- 01:49
was it Yeah the nineteen seventies they're known as the
- 01:51
era of stagflation The government was manipulating the business world
- 01:55
trying to grow the economy while at the same time
- 01:58
demanding wage khun trolls feeling supply and supporting unions making
- 02:03
america less competitive globally while the rest of the world
- 02:06
was suffering as well as we were under the oil
- 02:10
price shock that the arab opec oil boycott of america
- 02:14
and the rest the world kind of came to bear
- 02:16
it was an ugly time the era of stagflation and 00:02:19.61 --> [endTime] yeah thanks there jimmy
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