For those of us who came of age in the late 60s through the late 70s, the bogeyman of high inflation was a generational scourge. Now, members of my generation are freaking out over an inflation rate of 8.5% year over year. The pressure is on the Fed to raise interest rates to tip us into recession in the name of controlling inflation.
I remember thinking my grandfather was a lucky man. He retired and sold the farm and although his Social Security check was microscopic, he was making 18% interest on his savings and living a comfortable retirement in Florida in 1968.
Now we face a similar crisis, but without the high interest rates. Although they have gone up some, interest rates are still near historic lows. However, we have been accustomed to rates near 0% for many years, so even minor increases are liable to induce panic in the investing public. Meanwhile, interest paid by banks on savings are so anemic you may as well stick your savings in your mattress, except inflation will make your cash worth less by the day. What to do?
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