About a year and a half ago, George Soros. billionare investor and chairman of Soros Fund Management, warned investors on the possibility of stagflation if the Federal Reserve decided to raise interest rates. Stagflation happens when there is a high unemployment rate and a high inflation rate. Many economist fear stagflation as no true macroeconomic policy exist to combat it. I found the interview interesting as it appears the U.S. has avoided a complete collapse and continue to slug along.
"The moment this fear of deflation turns into a fear of inflation, you'll find interest rates rise in the long end which is going to choke off the recovery," Soros says. "If we are successful [in preventing the total collapse of the economy], we are heading from the prospect of deflation to stagflation."
"The moment this fear of deflation turns into a fear of inflation, you'll find interest rates rise in the long end which is going to choke off the recovery," Soros says. "If we are successful [in preventing the total collapse of the economy], we are heading from the prospect of deflation to stagflation."
