Should we thus worry about US and global stagflation? This note will argue that such worries are not warranted as a US hard landing followed by a global economic slowdown represents a negative global demand shock that will lead to lower global growth and lower global inflation. To get stagflation one needs a large negative global supply-side shock that, as argued below, is not likely to occur in the near future. Thus the coming US recession and global economic slowdown will be accompanied by a reduction – rather than an increase – in inflationary pressures. As in 2001-2003 inflation may become the last of the worries of the Fed and one may actually start hearing again concerns about global deflation rather than inflation
He has a new term, Stag-Deflation
He has 4 reasons: a drop in aggregate demand, a drop in wages (yet again?), due to being flat broke, the US will no longer buy up cheap plastic crap from China and this demand will resonate around the globe through trade balances and currency exchanges and finally, the slowdown will reduce demand in commodities, specifically energy.
He also mentions the Fed needs to worry about dollar fluctuations as implied by a possible currency crisis