Unless you are older than about 40, or a economics major you probably have never heard that word.  It was the term used to describe the economy of the late 70's early 80's when despite a slowing economy, and growing unemployment, the price of commodities continued to increase.

That is what the reports coming from the Federal Reserve are indicating.  Growth is slowing, but prices are increasing.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 4.0 percent in the second quarter, compared with an increase of 2.7 percent in the first.

Meanwhile, Gross Domestic Product (GDP) increased 2.5 percent in the second quarter of 2006, according to advance estimates released by the Bureau of Economic Analysis.  In the first quarter, real GDP increased 5.6 percent. That is slowing growth in the US economy.

Stagflation sucks.  Your purchasing power decreases as your wages or income remain stagnant (or decrease), while the cost of goods increase. (fuel, food, credit rate).  And if your assets are real-estate, nobody can afford to buy your property because of high interests rates (+10%) and high prices (who wants to sell at a loss).

Major causes: unfunded government spending (tax reductions during a war - war is always inflationary), and high cost of energy (Oil).  Add in poor economic growth (wages,job creation) - the hallmark of Bush43, and we are headed to stagflation hell.

I may just be a dumb country boy, but this looks like the legacy of George Bush and his Republican big spenders - years of economic problems.  Throw in another war (Iran? Syria? and it will be a slam-dunk).  Heckuva job George. 

I'm afraid the Georges- Bush and Allen- don't recall what it was like for ordinary people during those days. Neither one of them every really needed anything.

I remember life as a fresh college graduate with a young family and no decent job prospects. There weren't any "compassionate conservatives" around, as far as I could tell.

Is it classist for me to say that I wish some of the senior leadership had experienced poverty first hand? Maybe if they endured it, they would be a little more careful to avoid re-creating it.

Good news, but mostly bad news. 

I suspect if oil prices came down steeply inflation would go with it.  Rising oil prices impact every industry--in some cases indirectly, but it still cuts across the economy. 

Unfortunately, there are zero indications that prices are coming down any time soon.

Of course, we're all aware of the impact of the Iraq invasion on oil prices (not the sole contributor to increases, but certainly a substantial factor in the increases in the futures markets).  When people talk about "Iraq" being just "one" issue--they're really missing the big picture.  Not exactly a minor misjudgement in a matter of little consequence. 

Bill Clinton and many other elected Democrats helped push through NAFTA. Many Democrats have supported the corporatist agenda of offshore outsourcing and importation of low wage foreign replacement workers. Many elected Democrats routinely vote for the FTAs and expansion of the so-called "non-immigrant visa" programs used to replace American IT workers.

The immense trade imbalances the U.S. now faces are not merely the result of Republicans and Republican appointees...  The declining availability of good middle class jobs for Americans is not just the result of Republican policies.

Let us also acknowledge the true extent of corporate influence among elected Democrat officeholders...

See Counterpunch.com

"Special Issue: the Collapse of America

Paul Craig Roberts gives CounterPunchers the definitive data on what is happening to jobs in America. Not just blue collar jobs. Middle-class, white collar jobs. Roberts' stunning probe is the first true picture of what the U.S. economy is fast becoming and of the savage class wars that lie ahead."

Japan suffered from deflation for over a decade, nothing stimulated their economy despite having zero interest rates (which did, however, stimulate the "carry trade" to the benefit of American speculators). Japan just began pulling out of that long-term misery. Greenspan feared America would slip into the same deflationary spiral as Japan, but managed, he thought, to avoid it by a hair's breadth.

Thanks to Greenspan's relentlessly creating dollars out of thin air and pumping them out to stimulate America's economy with the intention of aborting the prophylactic slowdown in 2001, we developed a huge credit bubble and asset inflation (in housing and stocks, too). Nothing, however, can now save us from the upcoming painful adjustment because the usual "tools" of stimulating have been over-used and no longer have the same effectiveness. Not even the stimulus of yet another war will save us. We are, indeed, most likely to suffer stagflation rather than deflation (or even hyperinflation).

"When in worry, when in doubt, run in circles, scream and shout." That will probably be the republican reaction.  Oh, and Blame Clinton.