Some people tell the truth
Some obfuscate, dissemble, and lie
How to decide who is right?
Believe thine own eyes
“Believe none of what you hear, and half of what you see”
An adage that may serve you well
As you sift through the flotsam and debris
To unmask the Scarlet Pimpernel
Debate in the USA has suffered greatly in the last two decades. It seems the reasonable questioning of an idea and a healthy back and forth supported by facts is as rare as an accurately named law passed by Congress.
Most discussions degrade quickly into name calling and accusations. Not a disputation of the facts but attacks based on feelings and biases. It is not all a loss. The war in Ukraine has allowed us to rediscover and add the word quisling to our vocabulary.
“I try to stay in a constant state of confusion just because of the expression it leaves on my face.”
― Johnny Depp
Thankfully there are no such arguments when it comes to the economy! RIGHT!
The one fact everyone agrees on is that we have inflation and it is at the highest level in 40 years. The data support this. The cause? The cause is where the arguments, yelling, and finger pointing come into play. You have entered the twilight zone where one side’s cause is the other side’s solution.
“Everything at some point has been declared the root of all evil.”
― Criss Jami, Killosophy
Some say the government spent too much in the last two years on COVID and other programs. THEY say all of the money floating around the economy had to create inflation. THEY said this in early 2021 but OTHERS said the effect of that money on the economy was transitory.
Then inflation started to look a little more permanent and the OTHERS said the government needed to spend more money and that would solve the inflation problem.
Is your head spinning?
Add to that the Russian war with Ukraine and its effect on the price of everything from crude oil to sunflower oil. The war is putting upward pressure on commodity prices causing shortages and more inflation.
As with most debates the devil is in the details. THEY are not 100% wrong nor are the OTHERS 100% right, but our current level of discourse and political posturing lead to no clear solution.
The Federal Reserve acknowledges and is taking major actions to quell inflation. They began raising interest rates in March and will continue through the rest of the year. Steps the Fed feels will tame the inflation.
THEY say it is too little too late and will lead to a recession. The OTHERS believe the Fed will prevail.
“It’s funny. All you have to do is say something nobody understands and they’ll do practically anything you want them to.”
― J.D. Salinger, The Catcher in the Rye
What does it mean to us? It means we must look at what best serves our interests in the current investment climate. Depending on where you are in your journey to and through retirement, there may be actions you can take to mitigate the effects of inflation.
For our clients we invest for the long term. We do not make major adjustments to our portfolios for short-term perturbations in the economy. We make strategic investment decisions and adjust as necessary for the long-term outlook.
How long will we live with inflation? How bad will it get? No one, not even the Nobel laureate economists who pop up like groundhogs every-so-often, knows.
If you have concerns, or even a little confusion about your current situation, I would love to meet with you to review and discuss strategies.
Please give me a call.
Adron Krekeler, ChFC©, AIF©
Listen: The Temptations from 1970. The only things dated are the costumes. The rest is eerily relevant to today.