CHICAGO — Inflation affects us all. Even when it is coasting along at what might seem to be a harmless rate, it eats away at the buying power of the dollar.
When inflation hits 11% as it did in 1979, and then rises to 13.5% as it did in 1980, the world of investing, saving and spending is turned upside-down. That’s why some financial professionals are concerned about the most recent trend. After finishing 2010 at an average rate of 1.6%, the first five months of this year show an average of 2.64%, with the latest month in that period hitting the 3.6% mark.
Could this be the portent of sky-high inflation such as we saw in the 1970s? There is a growing amount of evidence that would suggest that possibility. The chief villain, according to many economists, is the Federal Reserve’s easy-money policy designed to support the government’s $2.2 trillion in stimulus spending. That, in addition to the rise in other government spending, has skyrocketed our federal debt.