It’s time to start worrying about inflation. Although inflation has been low and fairly steady in the past decade, prices will begin accelerating in 2021 and 2022. The Federal Reserve will be slow to react, allowing inflation to accelerate for two or three years, as I argued in Higher Inflation From The Fed’s New Strategy—And More Business Cycles. Increasing inflation has implications for businesses and workers, but this article will focus on investors. What’s a good inflation hedge, and how good a job can one do?
The classic inflation hedges are gold, other commodities, real estate and, some argued, stocks. There are possibilities in all these categories, though investors should not expect any of these to work perfectly.
The answers here are speculative. We lack good data over multiple inflation spells to know for sure how different