Double trouble ahead

As time goes by it looks increasingly likely that both deflationary and inflationary trends lie ahead. The slowing of the global economy will reduce demand for goods and, in some sectors at least, could lead to falling prices. But the huge amount of liquidity being pumped into the economy by central banks and governments should bolster liquidity and push up prices.
Until recently the frequent talk of stagflation a painful combination of stagnation and high inflation seemed grossly overdone. Now it looks an increasingly likely prospect. Rising unemployment combined with higher inflation are an unpleasant twosome. It means that many people look set to lose there jobs while inflation could erode living standards for the mass of the population.