Be not afraid…

It’s hard to miss all the current reporting on the growing impact of inflation on the overall economy. Even without the reporting, rapidly rising prices for petrol, food, and other consumer goods, the impact of our inflationary economy would be hard to miss. 

Most of the major news outlets paint a worrying picture – particularly for retirees, anyone sitting on a lot of cash (in a savings account or in certificates of deposit, for instance), or those who loaded up on variable rate debt (like your average credit card). That’s a fair concern, but it’s only part of the bigger picture.

If you happen to be a homeowner – especially one who locked in a mortgage when fixed interest rates drifted down under 3% – inflation gives you the bonus of paying back your loan on an appreciating asset with devalued dollars. If you happen to be holding equities as opposed to cash (including things like 401k, IRA, and other retirement savings vehicles), values should largely increase as the cash value of the underlying companies is inflated. All of that, of course, presupposes that your income also paces the rate of inflation, or at least doesn’t entirely stagnate during a period of sustained inflationary pressure.

I’m obviously not calling for a return to the bad old days of inflation, sky high interest rates, and 10% unemployment… but by read is that there are things out there a hell of a lot more frightening than a little pop of inflation every now and then, so for the time being my motto is “be not afraid.”