We’re used to seeing the economy either going up or down. Inflation means prices rise, recession means businesses slow down and people lose jobs. Simple, right?
But there’s one strange, brutal scenario where both happen at the same time:
Stagflation — high inflation, high unemployment.
This is where every economic rule you know… stops working.
Why Is Stagflation So Dangerous?
In normal times:
• If prices rise, central banks raise interest rates to slow things down.
• If people lose jobs, they lower rates to boost the economy.
But in stagflation?
• Raising rates kills what’s left of job opportunities.
• Lowering rates makes prices shoot up even more.
You’re stuck.
The system jams.
People pay more… while earning less.
Where Does It Come From?
It usually starts with a shock no one controls:
• Energy prices jump.
• Supply chains break.
• Wars, pandemics, bad policies — whatever the trigger, the result is the same:
• Things get expensive.
• Businesses struggle.
• Jobs disappear.
And the market can’t adjust fast enough.
Is It All Bad?
Here’s the uncomfortable truth:
No.
Stagflation is ugly, but sometimes it’s necessary.
It forces economies to:
• Get rid of weak, inefficient companies.
• Rethink how money moves.
• Break unfair deals.
• Rebuild from the ground up.
It’s like a controlled burn in a forest — painful, but clearing the way for new, healthier growth.
That’s why I call it “the necessary shock.”
Every economy faces it sooner or later.
It’s not the end — it’s the reset.
Final Thought
When you hear “inflation is under control” or “growth is back,” ask:
For who?
Because averages don’t tell your story.
Real economies aren’t numbers on a report — they’re people, jobs, rent, shelves, markets.
And sometimes, the system needs to break before it gets better.
