Are We Nearing a Period of Stagflation?

In this episode, Brian concludes his series on macroeconomic trends that will impact investor returns over the next cycle. He examines stagflation - a dangerous mix of high inflation and economic stagnation that previously occurred in the 1970s. While not overly concerned about stagflation recurring, Brian believes we may be entering a period of moderately high baseline inflation and potential recession. He advises listeners to learn from the 1970s stagflation case study and invest in real assets as an inflation hedge.

[00:00 - 02:53] - What is Stagflation and What Caused it in the 1970s?

• Definition of stagflation as high inflation during economic stagnation/recession
• Caused by oil shocks and supply disruptions in the 1970s
• Policy mistakes fed inflation instead of cooling it

[02:53 - 05:32] - The 1970s Stagflation Case Study

• Two oil shocks - 1973 and 1979 - caused recessions and inflation
• Loose monetary and fiscal policy worsened the situation
• Eventually resolved by tighter fiscal policy and growth in 1980s

[05:32 - 08:39] - Could Stagflation Recur Today?

• COVID stimulus initially fed inflation but it has cooled recently
• Moderate baseline inflation likely going forward
• Recession possible in 2023 from rate hikes and tightening
• Fed focused on crushing inflation over recession risk

[08:39 - 11:19] - How to Invest if Stagflation Strikes Again

• Study 1970s case - real assets did well as inflation hedges
• Don't panic but monitor inflation and economic indicators
• Diversify into real assets like commodities and real estate

Key Quotes:

"Stagflation is a period of high inflation that happens at the same time as a stagnation of growth or outright recession - the worst of both worlds." - Brian C. Adams

"If you look at how bad the period of the seventies was for the U.S., it's certainly not something that we want to replicate." - Brian C. Adams

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