Friday's market rout in employment, oil, the dollar and stocks was not the end of the world, but it is a warning. The message is that the current Washington policy mix of easy money and Keynesian fiscal "stimulus" is taking us down the road to stagflation.

Stocks hit the skids following a plunge in the dollar and a nearly $11 leap in the oil price, which in turn followed a jump in the jobless rate to 5.5% in May from 5%. Investors are guessing that the weak jobs report means that the Federal Reserve won't follow through on...