I’ve covered two linchpins of personal financial planning in previous posts: knowing your net worth in “You Need Your F*@k You Money ” and the importance of understanding and controlling your spending in “Follow the Money!” Today I’d like to turn to a macroeconomic issue that I believe we’ll all need to factor into our own personal planning soon – Inflation.
I have so far been proven wrong in my expectation of an imminent return of high inflation to the US economy. I remain convinced, however, that inflation is destined to return to the economy relatively soon, and we all need to factor that in to our financial planning.
Let’s cover the reasons I think a return to high inflation is inevitable:
- War. We refused to pay for the wars in Iraq and Afghanistan. Instead of paying for the wars through austerity and raising taxes (as we did in World War II) we instead lowered taxes, especially on the wealthy and financed the wars through debt (as we did for the Vietnam War). History shows that expensive wars financed by debt result in high inflation. Continue reading