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Is Inflation Blowing Up?

Investing in the financial markets necessarily involves an ability to change perspectives over time.

A graph of U.S. inflation and a chart of interest rates. Some analysts identify a 15-20 year cycle of inflationary trends. This would place the beginning of an uptrend at 2002, projecting continuously rising rates for the next 10-15 years.

Take note of similarities between the current economic climate and that of the 1970s when the US experienced some of the worst inflation and volatility in its history. Most striking are the high prices of gold, strain on the supply of oil, a recession, and of course rising inflation rate (contributed to by government spending).

The Fed may continue to raise interest rates, which would have the effect of strengthening demand for the dollar.  If the current fear of inflation persists, Fed contraction policies can be expected. Looking to the past for cyclical patterns may prove extremely useful in making decisions forward.

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