Are we on the road to stagflation?

From today's Above the fold:

The December consumer price numbers are in today, and they're a bit frothier than the Fed would prefer. For all of 2007, prices rose by 4.1 percent, the fastest rate in 17 years. Core prices for the year were up only 2.4 percent--a smaller increase, actually, than occured in 2006. Prices were up 0.3 percent in December, but it seems clear at this point that the Federal Reserve is solidly focused on economic weakness. Prices rising at less than a percentage point per month will not deter Ben Bernanke from making his half-point cut at the central bank's January meeting.

I have even heard some discussing a 75 basis point cut. Obviously Bernanke et. al. know more about the facts on the ground than I do, but even a 50 bps cut seems excessive to me. Given that monetary policy naturally has a lag I could see a deep cut to interest rates causing the worst of both worlds; the monetary injection would have inflation rise while at the same time the extra money is too late to assist the U.S. avoid a recession.

The more I look at oil prices, gold prices, inflation and the economy, the more I believe we are starting to re-live the early 1970s. I just hope the fashions don't come back as well.