THE U.S. ECONOMY IS "DANGEROUSLY CLOSE" TO EXPERIENCING STAGFLATION / THE HUFFINTON POST ( HIGHLY RECOMMENDED READING )

Chris Martenson: The U.S. Economy Is 'Dangerously Close' To Experiencing Stagflation

First Posted: 08- 9-10 01:02 PM Updated: 08-10-10 10:44 AM

"When people ask me -- are we [experiencing] inflation or deflation? I say 'Yes'. We are experiencing both right now," economic researcher Chris Martenson said in a recent interview with Aaron Task of Yahoo's Tech Ticker.

How is it possible that the U.S. could be experiencing both inflation and deflation at the same time? It's all about where you look, Martenson said. Commodities are seeing a general rise in "observable prices," but at the same time key asset prices like housing are still falling.

In fact, Martenson believes that the country is getting "dangerously close" to experiencing stagflation, which is generally defined as a situation in which the inflation rate grows but the economy doesn't.

England is already in a state of stagflation, Martenson said, a condition which would represent the "worst of all possible worlds" for the U.S.

Martenson added that the continuous commodity index ( see article on the CONTINUOUS COMMODITY INDEX ), up 12 percent over last year, is absolutely "screaming inflation." The rise in generally available commodities, combined with declines in housing and weak wage growth has "really squeezed workers," he noted.