Higher interest rates - never good times

For those of who lived through the 1970s of Britain (with interest rates in the high teens) or the hyper inflation (eg 50% per month) years of the millennial cusp (1985-2010) in Mexico, Brazil, Argentina and Russia; these were periods that reflected and reinforced poor times.

The world is currently hooked on the palliative of cheap and abundant funds. Yet the current economic system is out of kilter, as recent market gyrations can attest. The phantom of inflation stalks the policy rooms of government, banking and business.

Current monetary policies of Quantitative Easing, based on huge infusions of capital, have created an ocean of debt and primed the re-emergence of (runaway) inflation. Increasing base rates would be a traditional, easy and nasty way to sop up surplus government debt. Traditionally, a moderate level of inflation has been viewed as healthy for an efficient economy. Yet the challenge facing ​policy makers and central bankers, especially in light of Covid19 management and effects​,​ set within the context of an unresolved 2008 credit crisis, suggests that investors need to take extra precautions.

Historically, real returns could be made by an investor during such inflationary periods. Traditional investments in: scare physical resources (eg; land, property, precious metals) as well as​;​ assets that generate cash returns; coupled with a judicious amount of leverage provides an adequate passage through inflationary times.

Yet such inflation-proofing, requires the investor to proactively rebalance and manage her/his accounts.The investor, mindful of the real needs of her/his portfolio, should keep a keen weather eye on inflation and take appropriate preparatory actions. A review of one's portfolio and its proportion of anti-inflationary investments needs to be considered. Regardless of any market bounce​ ​and economic recovery (of whatever alphabet profile​)​, one must be mindful of inflationary currents.