The market’s worst nightmare is on its way - stagflation, being low growth and high inflation.

Now, this particular idea very much depends on exactly what we mean by stagflation. Most economists tend to think of it as a label that describes the 1980s. To get a handle on what they mean, let’s look at the inflationary 1970s and stagflationary 1980s from the perspective of Australia, New Zealand, the UK and the US.

From 1973 to 1980, inflation soared worldwide, averaging 8.1% per annum in the US, 11.1% per annum in Australia, 12.6% per annum in NZ and 12.9% per annum in the UK. Real GDP...