[bratticus]

I was going to pontificate on this but it appears so much easier to just aggregate content since the relationship between Peak Oil and stagflation appears to be a popular topic to write on these day.

Ray Grabanski: Connecting 'stagflation' with a commodity price boom

... In fact, this current commodity boom has played out eerily similar to the 1970's, with first a boom in oil prices followed by a boom in grains.

Stagflation and Peak Oil: How Related Are They? (Part I)

... The disruption of oil in 1973 (causing an extreme spike in the price of crude) caused Stagflation for much of the decade, resulting in an extreme hike in the price of almost everything, while salaries weren't going up to match. This was repeated in the early part of the 1980s. Since then, inflation has been very much in check.

Stagflation and Peak Oil: How Related Are They? (Part II)

... Consumer discretionary stocks normally take a beating, as people can barely afford to eat, heat their homes and put gas in the tank...

Stagflation concerns in U.S. rising along with oil's price

... Stagflation plagued the U.S. economy during the the 1970s, when initially government spending for the Vietnam War combined with the first oil shock to accelerate inflation. The quintupling of oil prices in 1973-74 plunged the U.S. economy into a recession, but high inflation remained.

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So will it happen again, only incurably due to this time being world peak oil instead of just US peak oil?

You've got the M1 falling off a cliff on one side, while the monetary base is taking off like a rocket on the other:

M-1 Money Multiplier: Over a Cliff

... This chart indicates the degree of bankers' panic.

Bankers Are Scared. Are You?

... What happened is that banks stopped lending. ... The fractional reserve multiplication effect has broken down. The money multiplier isn't multiplying any longer.

Get Ready for Inflation and Higher Interest Rates
The unprecedented expansion of the money supply could make the '70s look benign.

... The percentage increase in the monetary base is the largest increase in the past 50 years by a factor of 10 (see chart nearby). -- We can expect rapidly rising prices and much, much higher interest rates over the next four or five years, and a concomitant deleterious impact on output and employment not unlike the late 1970s.