Am I forecasting that stagflation will reoccur? No, because the economy is too complex to make any such prediction—another Hayekian insight (see my fifth point below).  But it is clear that if one puts record amounts of money into the financial system (as the Fed has done to provide liquidity) while the federal government runs record-breaking deficits which promise to exist far into the future, the chances of any plausible exit strategy working become quite remote. As Clive Crook of the Financial Times put it in July 2009, “What the stimulus gives, the debt projections take away.” 
As we move towards a populist ethos, it’s easy to forget the fact that high wages accompany high skills. Full employment with declining wages and lagging industries is a poor bellwether of our economic prospects. The actions of our government are of little consequence if we lack the talent and culture to participate in the highly competitive, and lucrative, world of innovation. It’s time we moved beyond measuring what percentage of us have jobs, and look at the more telling key indicator: the number of jobs that have gone unfilled because of a lack of qualified applicants. This is the innovation gap. Once we look at it this way, we could realistically address the difficult issues of education and immigration that will determine our fortunes in the not-so-distant future.