The Most Important Investing Question Today – Is The High Inflation of the 70s Coming Back?

by | Mar 21, 2023 | Invest During Inflation | 7 comments




In this video we look at the micro and macro data on inflation and ask the all important question – are we returning to another long decade of inflation like the 1970s?

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The Most Important Investing Question Today – Is The High Inflation of the 70s Coming Back?

As the world economy struggles to rebound from the COVID-19 pandemic, investors are asking themselves the most important question of today – is the high inflation of the 70s coming back?

Inflation is a term used to describe the rate at which prices for goods and services rise over time. It is an important indicator of the health of the economy and affects everything from the value of our investments to the cost of our groceries.

The 70s were a period of high inflation in the United States, with prices skyrocketing and the purchasing power of the dollar decreasing rapidly. This period was characterized by a combination of factors, including rising oil prices, high government spending, and a weakened dollar.

Now, investors are worried that the same factors could be coming into play once again. The COVID-19 pandemic has led to a massive influx of government spending, which could drive up inflation. Additionally, disruptions in the global supply chain and rising oil prices could put even more pressure on prices.

These concerns are not unfounded. In recent months, we have seen inflation rates rise across the globe. In the United States, the Consumer Price Index rose 0.6% in May alone, the largest increase in over a decade. While some of this inflation is likely temporary, there are concerns that it could become more entrenched in the economy over time.

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The implications of rising inflation for investors are significant. Inflation erodes the value of our investments, as it drives up the cost of goods and services while the value of our money remains the same. This can lead to decreased purchasing power and lower returns on investments.

So, what can investors do to protect themselves in the face of rising inflation? One strategy is to invest in assets that are likely to hold their value in the face of inflationary pressures. These include assets like gold, real estate, and commodities.

Another strategy is to invest in stocks that are likely to benefit from higher inflation. These could include companies that produce essential goods and services, such as healthcare and energy companies. Additionally, companies with a history of raising prices in response to inflationary pressures could be a good bet.

In conclusion, the question of whether the high inflation of the 70s is coming back is one that investors should take seriously. While it is impossible to predict the future with certainty, it is important to be aware of the risks and to take steps to protect your investments. By investing in assets that are likely to hold their value in the face of inflationary pressures and in stocks that are likely to benefit from higher inflation, investors can potentially mitigate the impact of rising inflation on their portfolios.

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7 Comments

  1. Three Minute Macro

    Thanks for watching. Let me know if you have questions or if there's any content you'd really like me to make.

  2. Aaron Mitchell

    Hey Cullen. I am really enjoying these videos, please keep them coming. I always like to hear your analysis but forget to read your blog so these three minute (or a little more) videos are perfect.

    Oh and congratulations on your new child!

  3. CM Burns

    That last round of stimulus will go down in the record books of bad policy

  4. Paolo PG

    Short and sweet, thank you!

  5. Samuel and Audrey - Travel and Food Videos

    Well, that was well worth my 3 minutes. Hahaha…nice intro and a potentially viral title. I agree with you as I'm more in the deflationary camp but my crystal ball is forever hazy; so I'm covering all of my bases (as an investor for all potential economic regimes) and will continue to always do so. It is also fascinating how geopolitical issues in Asia-Pacific have yet to be resolved. North Korea and Taiwan have been concerns dating back to when I was teaching English in South Korea in the mid to late 2000s. Regarding Taiwan, there would be such a strong alliance against an invasion that I think it keeps China from testing those waters but you never know.

  6. Scott DeMichele

    It's statistically proven that cute babies make the comments section better.

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