If the administration pressures the Federal Reserve into lowering interest rates, say, right before November 2026, then we lock in a stagflationary cycle. An initial stock rally then long-term bond yields rising on inflation fears. A weakening U.S. dollar, and a Federal Reserve that has no tools to fight inflation in the medium-term.
People love to bring up the gold chart and be like "what happened in the 1970s!". It wasn't ending the gold standard that was the problem. It was the endless deficit spending; if you want to get a handle on inflation you need current demand to match current production.
The deficit spending is the reason why we had to leave the gold standard. France, for example, sent a battleship to NYC to retrieve their gold. The US government realized that they could not give out gold for all the dollars that they spent, and went into default on that obligation. The gold standard could have kept the government honest. But they were given too much slack and they abused it to the point of having to break promises officially.
The Fed cannot actually destroy all the money that they created. But they could start by not printing any more. They won't do that but they theoretically could.
The central bank raises interest rates, until there are enough bankrupcies and unemployment rate reaches a high enough level, The economy cools down.
The nation has low inflation again.
Rinse out and repeat.
They do the direct opposite of bailing anyone out.
Now the US is different. The Biden administration decided that the best way to fight inflation was to invent a giant pile og money and hand it out.
Which heats up the economy and should raise inflation .
Even Arizona Iced Tea had to come off their $0.99 price tag.
Everyone in America is hard-pressed to find anything for sale for at or under $1.00
Minimum wage is still federally $7.25.
How much worse does it actually have to get to be official stagflation?
Most things you described is inflation, not stagflation. The point about the minimum wage is a red herring because virtually nobody gets paid the federal minimum wage. Moreover contrary to many people believe, inflation has not been outpacing wage growth in the US:
If inflation (or some other shock) caused growth to head towards 0 with unemployment going above ~4% I believe economists would say it was a stagflation try period
And a Big Mac meal at McDonald's is $8.00.
They’re ready.
Arizona Iced Tea price increases would be due to 50% aluminum tariffs.
https://www.nytimes.com/2025/08/10/business/arizon-iced-tea-... | https://archive.today/HOsps
> How much worse does it actually have to get to be official stagflation?
Steve Eisman: U.S. Consumers Are Collapsing: Cars, Credit, & the Chaos Ahead [video] - https://news.ycombinator.com/item?id=45492807 - October 2025
* 69% of the US population are living paycheck to paycheck
* 25% of American consumers are using BNPL (buy now pay later) to pay for groceries
What breaks the camel's back? ¯\_(ツ)_/¯
Congress is also still free to override the Fed and make their own programs or change the operation of the Fed too.
Everyone keeps saying this, but then go and re-elect the same do nothings.
https://economicprinciples.org/
https://www.amazon.com/How-Countries-Go-Broke-Principles-ebo...
The oversimplified explanation is that there's a money cycle that lasts ~80-120 years. We're going through the rough part of the cycle right now; and trying to fight it just prolongs it.
We saw similar during the great depression, in that people couldn't find full time work, so they did gig jobs, quickly undercutting other laborers until wages cratered and it was a full blown depression. I suspect that gig work, even 1 hour/week is enough to get you out of the unemployed group, but it isn't sufficient and is masking the true labor market and unemployment. And then there is the Federal government firing the statisticians because the numbers coming out don't look good and now we can't trust the numbers. At this point any number you must assume to be majorly inflated from reality. Those made up numbers aren't even good.
What are you talking about? Unemployment numbers have been gamed for years. Those job cuts from years ago didn't reflect in unemployment because the stats are fake.
>We saw similar during the great depression, in that people couldn't find full time work, so they did gig jobs, quickly undercutting other laborers until wages cratered and it was a full blown depression.
That is the wrong way to look at it. The depression did not result from low wages. Low wages were downstream of other calamities in the economy back then, chiefly a credit bubble and stock market bubble bursting as well as drought conditions and crop failures. Remember the Dust Bowl?
When the economy is suffering, money is (and should be) in short supply. There were naive efforts from the US government to try to set wages high. They even tried destroying food to drive prices up, until the many hungry people in the country became outraged about it. In the end they decided to debase the currency, thus stealing from everyone who had anything under the pretense of solving a problem. They made the problems worse, and probably prolonged the economic misery by years.
It is trending up but is still lower than pretty much any time since the 2008 recession: https://unemploymentdata.com/current-u6-unemployment-rate/
Millennials have spent most of their careers systematically underemployed.
https://dol.ny.gov/system/files/documents/2021/03/overview-o...
