## When Economic Stagnation Meets Rising Prices: Why Your Wallet is Under "Dual Pressure"

Have you ever felt this strange situation: job opportunities are decreasing, salaries are not really rising, but the bills at the supermarket are getting higher and higher? This phenomenon has an economic term called stagflation, which is the result of when economic stagnation and soaring prices occur simultaneously.

### Your cost of living is rising, but jobs are decreasing.

Imagine a scenario like this: corporate profits are declining, hiring is frozen, and the unemployment rate starts to rise. At the same time, you will find that something that cost 100 yuan last year now requires 120 yuan. This is the most painful aspect of stagflation - it hits both the income side and the spending side.

When businesses stop expanding, consumer willingness declines, and commercial activities stagnate. However, strangely, the prices of essential goods have not decreased because of this; instead, they continue to rise. This means that the purchasing power of every dollar you hold is declining, putting pressure on the quality of life.

### Why do economic stagnation and rising prices occur simultaneously?

This phenomenon does not usually occur out of thin air. In most cases, the sudden surge in prices of certain key commodities (such as oil) leads to a significant increase in production costs. To maintain profits, companies are forced to raise the prices of goods and services. At the same time, this cost pressure limits their ability to expand, causing economic growth to slow down. Another driving force is the imbalance in monetary policy—excessively loose monetary policy may push up prices, but when the economy itself is weak, the stimulating effect is limited.

### Why Traditional Economic Prescriptions Fail

Economists typically use lower interest rates or increased government spending to stimulate growth. However, in the face of stagflation, these tactics become awkward—lowering interest rates may further boost prices, while increased government spending may exacerbate inflationary pressures. It's like being trapped in a vicious cycle: trying to control prices hurts employment, and trying to stimulate growth worsens prices.

### Historical Lessons: The Predicament of the 1970s

In the 1970s, the global economy underwent a baptism of stagflation. The oil crisis, supply chain disruptions, and inappropriate monetary policies collided, creating economic confusion in that era. Policymakers at the time were at a loss, trying to find a balanced path that could both control prices and promote growth, but with little success. This period of history became a profound lesson on the complexities of economics.

### Where is the way out?

Addressing stagflation requires a carefully designed policy mix: it is necessary to alleviate cost pressures through prudent supply-side reforms, while also releasing economic vitality through structural reforms. This is far more complex than simple demand management and tests the decision-makers' deep understanding of economic operating laws.