The U.S. Senate just passed the $1.9 trillion Covid stimulus bill on a party line vote; it will likely be signed into law within the week. Needless to say, almost nobody seems to be worried about how the spending will be paid for.
Government spending without taxes to pay for it means borrowing or ‘printing’ money. This is quite often inflationary.
It has been roughly 15 years since there have been several years with inflation rates of 3% or higher. Almost half the people now alive do not remember experiencing inflation, the sense that you oughta buy it now because the price can only go up. Today’s wise person would begin to think about the possibility of inflation reappearing, and at least investigate options for hedging against it.
Classic inflation hedges are the ownership of real assets: real estate, precious metals, maybe art works, some stocks. These things have in common that their prices will rise with inflation. Whimsical observation - USPS “forever” stamps are such a hedge, albeit not practical for large sums.
What gets hurt in inflation is cash savings, bonds, salaries and annuity payouts. Things whose value is pinned to the dollar and thus decline as prices rise and the dollar buys less.
