theRealNews: Stagflation on the horizon

"Dean Baker from the Center for Economic and Policy Research says that inflation doesn't have to go very high for consumers to feel the crunch, since wages remain stagnant. Baker predicts a cocktail of negative market trends that will be harder on working families than the extreme stagflation of the late 70s. With housing prices falling, people's primary equity is decreasing, while prices continue to rise and wages go nowhere. Baker also warns against increasing interest rates to beat back inflation, suggesting that it would only lead to more unemployment and lower wages."

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