Stagflation

From an AP article:

Worries grow for worse 'stagflation'
By JEANNINE AVERSA, AP Economics Writer
1 hour, 9 minutes ago
WASHINGTON - It's a toxic economic mix the nation hasn't seen in three decades: Prices are speeding upward at the fastest pace in a quarter century, even as the economy loses steam.
Economists call the disease "stagflation," and they're worried it might be coming back.

Already, paychecks aren't stretching as far, and jobs are harder to find, threatening to set off a vicious cycle that could make things even worse.

The economy nearly stalled in the final three months of last year and probably is barely growing or even shrinking now. That's the "stagnation" part of the ailment. Typically, that slowdown should slow inflation as well — the second part of the diagnosis — but prices are still marching higher.

The latest worrisome news came Tuesday: a government report showing wholesale prices climbed 7.4 percent in the past year. That was the biggest annual leap since 1981.

But nowhere in the article is there a discussion of one of the fundamental problems: the government's ability to print money out of thin air, rather than have it backed by gold. Yet another issue that Ron Paul stands alone in talking about.

Update (2/28/08): Pres. Bush and Fed. Chairman Bernanke assure us we are not headed for a recession or stagflation. Phew! Okay, everybody go back to watching American Idol. But seriously...I hope they are right, but I'm not comforted by the government's track record on being right.