Negflation Redux

First, I'm borrowing MaxedOutMama's negflation term.

MaxedOutMama: Busy Today, But....

So I don't think stagflation covers this situation. I think a more appropriate term would be negflation, in which negative growth is joined at the hip with rising fundamental costs which induce inflationary pressures on the spending power of consumers sufficient to reinforce negative growth.

In order to have a redux, we must first find the dux. Therefore, let's go back in time.

February 8, 2008
U.S. isn't falling into stagflation, Fed chief says

I don't anticipate stagflation.

He was right. We were already in stagflation.

"We are facing a situation where we have simultaneously a slowdown in the economy, stress in financial markets, and inflation pressures coming from these commodity prices abroad," Bernanke said.

That's stagflation. You cannot fall into something you have already fallen into. So what did he anticipate happening next?

"At the moment, I think the greater risks are to the downside, that is to growth and to financial markets," Bernanke said."

Score one for the Fed Chairman. He saw the Great Negflation coming.

Well, I think it is safe to say that we've found the dux. So where's the redux?

June 10, 2009
China faces risk of stagflation

'In future, China is likely to see periods of stagflation, with CPI (consumer price index) rising above the long-term average level ahead of GDP,' said the centre, part of the National Development and Reform Commission, the country's top economic planner.

Silly China. We've already seen this once. If oil keeps rising, the entire global economy is going to crash again.

After writing this much it dawned on me to do a full search of the Internet for the word negflation to see what else appeared. There were a total of five occurrences. That surprised me a bit. I expected more. Two were on MaxedOutMama's blog, one was on my blog, one had nothing to do with the economy at all, but the last one was just plain spooky. It comes from the comment section of the following article.

February 29, 2008
Bernanke: "I Don't Anticipate Stagflation"

Bernanke has no credibility left. We are already in stagflation. The problem coming is not low growth with inflation however, it is negative growth with inflation.

How about Negflation? - mmckinl

Imagine my surpise! Bernanke again! I wonder if mmckinl had any idea just how negflationary things would soon get?

Sorry Ben Bernanke. Negflation somehow seems linked to you. You wanted the job as Fed Chairman. Remember? I guess it was a pretty easy decision back then though. With "no housing bubble to go bust", who wouldn't want the job?