Word of the Day: Slowflation

Wednesday, May 09, 2007 | 11:45 AM

While we await today's FOMC non-action, let's edumacate ourselves as to a new definition, via Wordspy, we get today's word of the day:

slowflation (n.): An economic state characterised by slow growth and high inflation. [Cf. stagflation.]

>
Example Citations:

Stagflation light. Slowflation. A variety of terms are floating around to describe the current state of the economy: growth that's too slow and inflation that's too high for Federal Reserve comfort.

The nicknames refer to the stagflation of the late 1970s and early '80s, when the country endured not only disco, but double-digit price increases, slow growth and high unemployment.
—Sue Kirchhoff, "Economy searches for a new word S-word," USA Today, May 2, 2007

The risk that the U.S. real-estate market's woes might affect stocks and bonds is front and center for Raj Sharma, a private wealth adviser with Merrill Lynch in Boston. Merrill's North American economist, David Rosenberg, recently warned against a combination of slower growth and faster inflation ("slowflation") that the real-estate slowdown would exasperate.
—Suzanne McGee, "Best in Class," Barron's, April 23, 2007

Earliest Citation: The only question is whether the monetary tightening is enough to do so. Consistently strong monetary expansion suggests it is not. Still higher interest rates are probably needed, leading to a politically unpopular, perhaps budget-wrecking, economic slowdown. It may turn out to be "slowflation" rather than stagflation, with growth modest, but positive.

—"Monetary blues," Financial Times, June 18, 1998

 

 

Wednesday, May 09, 2007 | 11:45 AM | Permalink | Comments (37) | TrackBack (0)
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We should call this what it really is: Fedflation. By allowing unrestrained growth in money supply the Fed has turned over the reigns to the market movers. The Fed really can't control the economy because economics is based on actual supply and demand of goods and services while the Fed only has a small degree of influence of the supply and demand of debt.

Ignoring currency supply excess is fueling the bubble, causing worldwide inflation, while the world economies react to actual, physical forces.

Fedflation, AKA Bubblation.

Posted by: Winston Munn | May 9, 2007 12:06:56 PM

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