Stagflation: Rearing Its Old, Ugly Head?
Yep, it’s the new old thing. Everybody’s talking about it. It was “the thing” back in the 70s. Kind of like bird flu this decade and AIDS last decade. It’s not pretty, but it’s popular.
It’s stagflation: Slow growth coupled with high inflation. The worst of both worlds. We lived with it through most of the 70s and part of the 80s. Stocks finished the 70s where they started. Literally.
Bonds and CDs were king, earning upwards of 15 percent, even 18 percent. But their buying power was crushed due to the rampant inflation that existed.
Real estate, however, flourished. But that was then, this is now.
Real estate absolutely, positively will not be the “market” that leads. It will be something else. Nobody knows. But look at things that are becoming scarcer and you’ll get a good idea of where to look: Water, oil, precious metals, wood.
But that’s another post.
Because housing will not lead us out of this mess, and the stock market surely won’t, I think we may be in for a long battle. It’s time to cut the fat out of our own budgets, rid ourselves of assets that are no longer productive (i.e., providing current or future revenue), and hunker down with a somewhat minimalist mindset.
There will be businesses in pockets of the economy that will take off, despite the stagflation. They might be businesses that provide the tools for removing inefficiencies from other businesses. They might be data encryption and data security companies. They may be water treatment plants. Green power. Who knows?