Stagflation is one of the worst economic conditions a country can be in, and the United States just entered it.
It has actually been responsible for revolutions and uprisings in developed countries around the world. Most recently Greece, Spain and Portugal are experiencing severe doses of this dreaded economic condition. It is extraordinarily difficult to work through and often destroys wealth for generations.
Stagflation is simply defined by high unemployment, slow economic growth and high inflation. It makes inflationary and deflationary periods look like a walk in the park. Stagflation usually results in very long, severe recessions.
Besides Greece, Spain and Portugal, it sounds similar to some of the goings on in Latvia. (Really.) Hopefully, the U.S., with the right political leadership, can cope with this issue effectively. Being over 150 times larger than Latvia in area and population, holding a wealth of natural resources, the U.S. holds the potential to deal with this problem effectively. Let’s hope we do.