Here is the thing about the last bout with inflation, it actually caused the greatest accumulation of generational wealth in the history of the US.
When inflation was really bad in the 70's, the Fed at the time under Volcker raised interest rates very high to combat it. In Economics, there is a law that says interest rates and asset prices move in opposite directions. So high interest rates decrease asset prices and low interest rates cause high prices. We are seeing this now. At the time, baby boomers were coming into their prime earning years. They were able to purchase assets, we'll use houses as an example, at very low prices, but very high interest rates. As the effects of inflation subsided because of high interest rates, the Fed moved to lower interest rates. Those baby boomers were then able to refinance to a lower interest rate and most reinvested the equity against the principle. This lead them to pay off their low priced house very quickly. Then they found themselves with a paid off house and a lot of earning years left. So they bought 2nd homes, condos, timeshares, or upgraded to a bigger house. Baby boomers still have a lot of assets that are worth a ton of money today, thus the baby boomers might be the most wealthy generation the world has ever know.
Now my generation will never have that same opportunity to build generational wealth, simply because of low interest rates. Every asset is super high and with low interest rates, they will never be able to refinance to a lower rate and reinvest the equity.
From my stand point, I am cheering on inflation and hoping interest rates move up. This should cause asset prices to come down and later on down the road an opportunity to refiance to a lower rate to cash in on some interest equity. I know this sucks for current retirees', but you had you turn at the trough.
I don't agree with this reasoning, and this is why. I'm sure you're familiar with inflation calculators. Here's one:
Easily calculate how the buying power of the U.S. dollar has changed from 1913 to 2024. Get inflation rates and U.S. inflation news.
www.usinflationcalculator.com
It's simple to use, simply enter the $ amount and year. It tells you in today's dollars what that equals. Now, when I bought my place in 1980 my 30 year mortgage rate was 14%. At that time I was making $3.50/hr. or $11.60/hr. today. I worked my behind off and paid mortgage off in 3 years.
I just now fooled around with the calculator a bit as well as looking at homes for sale in my area. First I compared what I paid back then to today, comparing similar home+land.
That was easy, and found similar ones for comparison.
Then I tried a different way. Knowing what my payments were then the inflation calculator showed me what that would be today. Taking THAT figure at today's low mortgage rates how much home could I buy for THAT dollar amount.
I was shocked beyond belief. With that same equivalent amount I was paying back then, today I could buy not twice but about three times the place I bought in 1980.
Granted, and this is beside the point, over the years I doubled size of home, had a large garage and horse stable built, bought land, etc.
The point is all things equal, employment opportunities are everywhere. Every business around here has help wanted signs. Right now wife & I are taking horse riding lessons. The instructor comes here, he's in his late 50s, yesterday he said his is a dying breed. Younger generation doesn't want to get in to doing that, so no one to carry on.
Baby boomers (I'm 69 and wife & I are) worked hard. Our parents and grandparents worked even harder (the Greatest Generation). Make no mistake...successful baby boomers had nothing handed to them and like our parents and grandparents worked hard for what we have.