Will Inflation Repeat The 1970s Rollercoaster? Part 1

Michael LebowitzAdvisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

This is part one of a three-part series.

Apollo's graph below, comparing recent inflation to multiple bouts of inflation of the late 1960s, 1970s, and early 1980s, is of utmost importance for investors.

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Sustained levels of high inflation are bad for stock and bond returns. Even more worrying, high inflation is insidious for the financial well-being and morale of the nation's citizens. As divided as the country is today, sustained high inflation will worsen it.

To properly assess whether a repeat of 1970s-era inflation is likely, we must first understand why inflation was rampant during that period. With that knowledge, we can compare today with the prior episode to appreciate whether Apollo's chart is a road map for the future or a spurious correlation.

Due to the extreme importance of inflation on stock and bond market returns, I break this article into multiple pieces. Part one and two discuss the causes and remedies of the inflation roller coaster spanning 1967 to 1982.