Federal Reserve in the person of Jerome H. Powell announced major policy shift, saying that it is willing to allow inflation to run hotter than normal in order to support the labor market and broader economy.
Our economy is based on debt. With a deflationary monetary policy, none of us will be able to repay debts. On the other hand, with a inflationary monetary policy, the constant loss of value of the national currency will allow people to repay easily their debt.
Rich people love inflation. They know that their wealth will increase significantly if they move their money into real assets.
National currencies go down in value. Asset prices go up.
Inflation means it takes more dollars to buy the same goods. Here is the stock market priced in dollars vs priced in gold. There is a strong argument that the stock market has not increased in value since 2002, but rather the dollar has been devalued.
Therefore, in this period it's very important to remember the 4 rules of personal finance:
1) Spend less than you make
2) Have multiple streams of income 3) Invest, don’t save
4) Be patient and disciplined
We know it's easy to say and write, and it's hard to execute. There is just one step between say and execute. That step which will be worth at the end.