Inflation: How Fearful?

Porter Stansberry is perhaps the foremost Chicken Little of those of us wondering what’s ahead for the economy, stocks, bond, real estate, and life savings. He famously predicted the American currency and economy would collapse in 2011 (“The End of America”), largely because of record hyperinflation. It didn’t happen.

Didn’t quite happen, either, in or after the runaway inflation years of 1979-1982. I remember it with sorrow because it brought down my favorite savings bank (City Federal, of New Jersey) and ended the national-expansion dream of its CEO and my boss, the brilliant entrepreneur Gil Roessner.

Also, I remember it with a smile, because it prompted the best investment advice I ever gave to my clients. 

When the annual yield on 30-year U.S. Treasury bonds moved well into double digits, I advised them to buy as many as they possibly could—especially for their tax-sheltered retirement accounts, notably IRA and 401(k).

Many did so.

I see today’s rising high inflation as a step  toward the next opportunity to pump up my retirement account and legacy trust—if and when long T-bonds are once again paying 15%+ yearly.

I have good reason to guess that another period of hyperinflation lies ahead. History.

The United States has inflated away its current war debts starting with that of our Revolutionary War and, more consistently, after each war from the 1846-1848 Mexican-American.

So, yes, there’s good reason to believe America’s economy is edging into hyperinflation because of our two simultaneous long-distance wars (Iraq and Afghanistan). We’ll see. If it happens, you’ll know what to do. 

Never forget: All investments and savings are gambles on the unknown future and thus subject to loss.