Will Inflation Repeat the 1970s Rollercoaster?

investing.com:

Appreciating Apollo’s graph below, comparing recent inflation to multiple bouts of inflation of the late 1960s, 70s, and early 80s is of utmost importance for investors.

Sustained levels of high inflation are poor 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 could worsen it.

To properly assess whether a repeat of 70s-era inflation is possible, 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, we break this article into multiple pieces. Part One and Two discuss the causes and remedies of the inflation roller coaster spanning 1967 to 1982.

Before exploring the inflationary environment of fifty years ago, it is worth pointing out that Apollo’s graph is misleading.

First, the two vertical y-axis scales on Apollo’s graph are different. This makes it appear that the inflation rates of the 1970s and today are nearly identical.

Second, the horizontal axis doesn’t compare apples to apples. From 1960 to 1965 (not graphed), inflation fluctuated below 2% a year. In 1966, inflation started to increase consistently.

In the modern time frame, the year 2020 is when the wheels for inflation were set into motion.

Therefore, the recent data for comparison should start in 2020, not six years prior, when there was little inflationary impulse. The graph below adjusts both axes and provides a better comparison.

While the graph above