TIME: We're Heading for a Stagflationary Crisis Unlike Anything We've Ever Seen

Article by Nouriel Roubini (Economist & Professor of economics at NYU) in TIME

Inflation is back, and it is rising sharply, especially over the past year, owing to a mix of both demand and supply factors. This rise in inflation may not be a short-term phenomenon: the Great Moderation of the past three decades may be over, and we may be entering a new era of Great Stagflationary Instability.

In the 1970s we had a decade of stagflation as two negative oil shocks and the wrong policy response led to inflation and recession. The inflation was fed by the policy response to the shock because central banks did not rapidly tighten and impose strong monetary and fiscal policy to contain the inflation. So we ended up with double-digit inflation and a severe recession that doomed the presidencies of Gerald Ford and Jimmy Carter.

It took a painful double-dip recession in 1980 and again in 1981–1982 to break the back of inflation when Fed Chairman Paul Volcker raised the interest rates to .......

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