How Can You Protect Your Portfolio Against Inflation?

MARK RIEPE: Once upon a time there was a small country caught between geopolitical powerhouses. It felt exploited and disrespected by other countries and craved the freedom to pursue its own destiny.

It fought a successful war of independence, but the consequences of that war included wrecked government finances and rampant inflation. Like many newly minted nations, it papered over the differences between the various factions that joined hands to make independence possible so that it could present a united front to the rest of the world.

Eventually those differences were simply too strong, and civil war broke out. That war also required a creative monetary policy that inflicted enormous inflation on the economy.

I’m Mark Riepe, and this is Financial Decoder. It’s a show about financial decision-making and the cognitive and emotional biases that can sometimes cloud our judgment.

Today, I’m going to be talking about inflation. High inflation has been a sporadic feature of the U.S. economy right from the very beginning. In fact, the unnamed country I was just speaking about was, in fact, the United States. Even before there was a United States, the American colonies suffered debilitating bouts of inflation from time to time.

In fact, these occurrences were frequent enough that the British Parliament passed the Currency Act of 1751 to fix the problem.¹

The term “high inflation”? That’s pretty vague, so let me give you some real numbers. During the Revolutionary War, colonists saw a cumulative rise in consumer prices of 80% from 1775 to 1778—if you could pay in gold or silver. If you were like most people, and you only had Continental dollars, the rate was about 350%.²

During the Civil War, prices about doubled in the victorious North.

It was worse in the defeated South, since the Confederate currency was worthless. By the standards of the modern American economy, those numbers are extreme. But the U.S. has been fortunate in that it has been able to avoid some of the extraordinary bouts of hyperinflation experienced by other countries.

In Weimar Germany, after World War I, prices were doubling every 3.7 days,³ and photos exist of Germans burning their money for warmth because they couldn’t afford to buy wood because prices rose so high so fast.

Finally, hyperinflation isn’t always associated with war. From 2007 to 2009, prices in Zimbabwe experienced a hyperinflation. At its peak, prices were doubling every 24.7 hours.⁴

I picked inflation as the topic for this episode not because I think the U.S. is going to turn into Zimbabwe, but because the U.S. central bank as well as other central banks are engaged in a grand economic experiment and have been since 2007.

They are testing whether massive amounts of new money can heal the damage from the great financial crisis of 2007 to 2009 and the ongoing COVID pandemic.

Because of this experiment, we have received, for years now, persistent questions about the likelihood of high inflation and how to help protect a portfolio against it.

To help me sort this all out is Kathy Jones. Kathy is a senior vice president and chief fixed income strategist for the Schwab Center for Financial Research. Kathy is responsible for interest rate and currency analysis, as well as fixed income education, here at Schwab. Kathy makes regular broadcast appearances on CNBC, Yahoo Finance, Bloomberg TV, and many other networks and is often quoted by The Wall Street Journal, The New York Times, Financial Times, and Reuters.

Thanks for being here, Kathy.

KATHY JONES: Thanks for having me back, Mark.

MARK: Kathy, we’re talking about inflation today, and before we really get into the meat of it, I wanted to back up a little bit and look at some of the historical context in which inflation operates. And maybe let’s just start with the basics, for example, what is inflation?

KATHY: Well, inflation is simply a word to describe rising prices, as opposed to deflation, which is when prices fall. Usually, what we’re talking about is the rate of inflation, and that measures how fast prices are increasing. Unfortunately, there’s a lot of different ways to measure it. So that’s part of why we get a lot of confusion around it. The official inflation measures that we hear about are broad measures meant to reflect changes in prices for a basket of goods that a, quote unquote, “typical” consumer would buy. But, obviously, your basket is very likely to be different from someone else’s basket. So as an example, in recent years, if you’ve been paying for higher education or healthcare, then your personal inflation rate will likely be higher than the inflation readings that, you know, we get from the government statistics. On the other hand, if you’ve been mostly spending your money on consumer electronics, and clothing, and toys, then you’ve probably experienced less inflation than the statistics would indicate.

MARK: Yeah, there are a lot of times when we’ll be communicating with clients, and we’ll be talking about low inflation, and they’ll say, “What are you talking about? The inflation I’m experiencing is quite … is quite high.” So that’s certainly one misconception about how inflation is measured. Another one, I think, is pretty simple as well, what are the causes of inflation? There’s not always unanimity as to what’s driving that. So what do you think?

KATHY: Well, yeah, we used to think that it was due to excessive growth in the money supply. The famous economist Milton Friedman said, you know, “Inflation is always and everywhere a monetary phenomenon.” And most of us heard that when we were in school. And what he meant was if the government prints too much money, there’s too much circulating in the economy, and it will cause inflation. But it turns out that was only true to the extent that that turnover, the money remained constant. What we’ve learned since those days is that it isn’t constant. It’s fallen quite a bit over the decades. So more money doesn’t necessarily equate to more inflation. It’s a precondition for inflation, but it’s not enough on its own. Ultimately, I think of inflation as a supply-demand issue. Whether it’s for goods or services or labor, when demand outstrips the ability of the economy to provide it, you get inflation. And we all understand this when we think about commodities like oil. When there isn’t enough oil due to a production shortfall or a refinery outage, then gasoline prices go up until demand is satisfied.

MARK: Yeah, I’ve always liked the phrase, “Too much money chasing too few goods,” because that seems to capture both the monetary side of things as well as the supply side, or the production of goods.

The ’70s, that was a period where we had a perfect storm, a lot of different things coming together to cause high inflation that, I think, many of our listeners will remember. So let’s talk about what was going on then and what are some of the factors, because I think that helps inform what’s going on today. Let’s start out with high government spending.

KATHY: Yeah, I remember the ’70s well. There were a lot of factors that came together, and it was a unique combination that provided that inflationary environment. On the government spending side, you know, it started with the spending on social programs during the late ’60s and the ramping up of the war in Vietnam, so both of which pushed up demand. Prior to the ’70s, the only episodes of high inflation had come during wars, World War I and World War II, because during a war, the government’s demand for goods, you know, rises very sharply. That pushes up costs and you get inflation. But those episodes are typically followed by periods of deflation when the prices came down again. In the ’70s, the spending on the war wasn’t offset by budget cuts or tax increases, and it didn’t really stop for a long time. So as we had the spending on both social programs and on the war, it was really pushing up demand without anything to offset it.

MARK: We are coming up on the 50th anniversary in a few months, the 50th anniversary of President Nixon taking the U.S. off the gold standard, in I think it was August 1971. How did that play into the inflation picture?

KATHY: Yeah, that decision in 1971 was a big contributor, as well, so it led to a drop in the dollar. So our trading partners were demanding gold instead of U.S. dollars, because they weren’t confident about the way we were conducting policy. And so it was mostly France that was doing this. And I think President Nixon was worried we were going to run out of gold, and he just severed that relationship and said, “We’re not going to do that anymore.” And what happened is then the dollar dropped, and that raised import prices, and that led to an added component of inflation. And then soon thereafter, of course, we were hit with the oil embargo in 1973, and that sent oil prices skyrocketing. So we had a lot of stuff going on.

MARK: Where does monetary policy fit into this? Because as you mentioned, you know, historically, we think of inflation as a monetary phenomenon.

KATHY: Yeah, I think this is where the big mistake was made, at least in my view, was the way monetary policy was handled. So when Nixon took office, he replaced William McChesney Martin, who had been at the Federal Reserve, had been the chairman for many, many years. And he replaced them with Arthur Burns in 1971. He blamed Martin for raising interest rates and tipping the economy into a recession in 1959, which Nixon believed cost him the election when he ran for president for 1960. So as Nixon approached his re-election in 1972, he persuaded Burns to keep policy very easy, despite inflation pressures that were already developing and were apparent. There’s actually really some interesting information on this in the Nixon tapes. But long story short, what happened was inflation and inflation expectations became embedded, and it really wasn’t until Jimmy Carter appointed Paul Volcker as the Fed Chair in 1979, that inflation began to get under control. But it did come at a really high price. We had very high interest rates and a very painful double-dip recession in the early ’80s.

MARK: I’m want to come back to inflation expectations a little bit later when we talk about some of the ways investors can deal with inflation. But before we get to that, I want to talk a little bit about where we’re at right now. There’s been a lot of discussion and examination of what the Fed has been doing, given where we are in the economic cycle. What are your thoughts about that?

KATHY: Well, we do have this combination of a really easy monetary policy and expanding fiscal policy. And I think that’s what’s raising concerns about a future inflation. I think what’s really different right now is the Fed is actually looking for higher inflation. They want to see it move up. Now, that’s not something we’ve seen before, certainly not in modern history. So they’re holding interest rates near zero, keeping money flowing to the economy. They’re buying up bonds for their balance sheet to keep long-term rates down. And, of course, money supply growth has picked up quite substantially. And you combine that with the increase in government spending due to the pandemic and then throw in some shortages of computer chips and the lumber and things like that, and it’s not too surprising that we have inflation worries picking up.

MARK: I’m struck by what you just said and what we were talking about earlier about the ’70s. Back then we had fiscal stimulus. Today, we’ve got it, as well. We’ve got rising commodity prices then, as well as now. Easy monetary policy—very easy then, very easy now. But given all that, though, there are a lot of reasons to believe that maybe this isn’t going to be a repeat of the ’70s. So I thought we could spend a minute or so talking about that. Where do demographics play into this?

KATHY: Yeah, I think this is one of those long-term factors that does make it a really different environment. You know, in addition to everything else that was going on in the ’70s, we were in the midst of a demographic wave of baby boomers entering adulthood. And that usually translates into rising demand. So young adulthood is when people form households, they buy appliances, and they buy cars. They’re really in their spending years. And since the baby boomers were such a large demographic group relative to the rest of the population, this disproportionately pushed up demand. So it’s not too surprising to me that that peak in inflation occurred near the peak of this demographic trend. Now, as boomers moved into their saving years in the mid-80s and the 90s, that inflation started to recede. Today is a little different. I mean, today we have an overall aging population. The millennials, they are a large demographic group, as well, and they’re in their spending years, but their size relative to the overall population is not nearly as large as the size of the boomers were to the overall population at the time. And, you know, also, the millennial spending has been affected and really held down by the financial crisis and then the COVID crisis. So, you know, overall, we could expect some rise in demand as the millennials age into adult household formation years, but the impact is really likely to be a lot smaller than the impact that the boomers had back in the ’70s.

MARK: So bottom line, demographics, one thing that’s different and that’s going to probably help hold prices down. What about globalization?

KATHY: Yeah, that’s another big difference. In the ’70s, the U.S. economy was relatively closed, meaning we didn’t have much trade with other countries. Remember, this was still the Cold War era, so the Soviet Union and the satellite countries, China, were just not engaged in the global economy. U.S. trade only amounted to about 4% of GDP. Now, obviously, today, the world is far more open—we trade with all of those countries all over the world. And what we’ve seen over the last several decades is that companies are able to source goods and production and labor all around the globe and that has held down their costs. So while the big impact on inflation from globalization, you know, may be behind us—a lot of this is kind of in the past now, but it’s still a factor. It doesn’t look like we’re going to go back to having a relatively closed global economy again.

MARK: Thanks, Kathy. What about the structure of the labor market? Very, very different now, it seems, now compared to 50 years ago.

KATHY: Yeah, it’s another factor. So in the 1970s, you know, much of the workforce was unionized, labor share of total income was higher, the collective bargaining resulted in a bigger share of the workforce getting cost-of-living increases on a regular basis. So they kept up … the level of demand sort of stayed up with the price increases. Even non-union workers routinely received cost-of-living increases. I can remember even as a high school student working part-time, I got regular cost of living increases. You know, today, it’s just much less likely that a lot of the workforce will keep up with the level of inflation or necessarily keep up. You know, labor’s share of total GDP has fallen from about 65% to under 60, and that’s near the lowest in post-war history. And that five or six percentage point difference, you know, really represents hundreds of billions of potential consumer demand that just went elsewhere. We’ve also had technological innovation. That’s meant some jobs have disappeared, and some of those workers have been replaced at a much lower cost. So, you know, I would say, while there are efforts to address some of these issues on the labor front, it seems unlikely that we’re going to revert back to a situation we were in in the ’70s.

MARK: Let’s go back to the Fed for a second. Historically, as you mentioned, you know, the Fed tended to be very focused on fighting inflation, not so much recently. Why does the Fed worry more about, for example, deflation than they do inflation?

KATHY: Yeah, it’s a funny question because you would think on the surface that falling prices are a good thing, right? But it actually can lead to a pernicious sort of downward cycle. In other words, you can create this downward cycle that’s hard to get out of. For example, if you know that the price of something will be lower next week, or next month, or next year, you’re likely to hold off on buying it unless you absolutely need it. If everyone starts to wait for lower prices, then consumption falls. And when consumption falls, companies lower their output because they don’t have as much demand. And then the next thing is layoffs because if you have less demand, you need fewer workers. And it becomes a vicious cycle that’s really hard to escape. So from the Fed’s point of view, the economy has experienced a deflationary shock from the pandemic that they felt they really needed to offset quickly. The Fed believes that allowing inflation to rise is far less risky than deflation. It does have a long history of fighting inflation, but not much success at fighting deflation.

MARK: A lot of that success in the past, particularly during the ’70s, you mentioned was … came when Paul Volcker was named chairman of the Fed. He had a real missionary zeal for ringing inflation out of the economy through much higher interest rates. Do you see anybody on the Fed today who is sort of a Paul Volcker wannabe in the event that inflation starts to get more out of hand?

KATHY: Well, right now it’s kind of hard to say because it hasn’t been a problem that they’ve faced for a while. And I have actually been surprised at some of the people who have reputations as being, you know, the big inflation fighters at the Fed, have really been on board with this easy policy stance. But I do have to believe that some of those folks will start to change their tune if it looks like inflation is persistently higher. We’re hearing hints from a handful of them that they’re getting a bit concerned, but I think, keep in mind, the Fed has missed its 2% inflation target for the better part of 20 years. And it did a two-year review to try to understand why. This was actually pre-pandemic. And the conclusion they came to was that the Fed was too focused on fighting inflation and not focused enough on supporting full employment, which is their other mandate. So now they’ve kind of flipped that around and said, “We’re going to focus more on promoting full employment and worry less about inflation.”

MARK: All right, so let’s talk about … let’s make this practical for a second and talk a little bit more about investing and what investors can do about inflation. You had mentioned earlier, inflationary expectations. What are those and should investors be paying more attention to those than the actual rate of inflation?

KATHY: Yeah, inflation expectations are just simply that, it’s what we collectively believe or see as the rate of price change in the future. And I do think it’s important for investors to be aware of them. The problem is tracking them is a little bit harder. It’s certainly not a perfect science. So we like to look at one measure, which is the difference between the yields on TIPS (Treasury inflation-protected securities) and nominal Treasury bonds as an indication that should represent the extra yield that investors are demanding to compensate for inflation, so you kind of back into what they think inflation will be. But the yield on TIPS has other components in it, as well. It’s also compensation for volatility and liquidity and a few other things. But I do think that it’s important for investors to think about the direction of inflation, since that can affect asset prices. So if the market is expecting inflation on the horizon, it’s just, for instance, going to likely be negative for long-term bond prices.

MARK: What are signs that people should be looking at to help give them an early warning signal for signs of future inflation?

KATHY: Well, one that’s pretty easy to observe is the yield curve, and that’s the difference between short- and long-term rates. That can be a good indicator to watch because it’s pretty easily accessible. When the market pushes up long-term yields relative to short-term, it’s often a sign that we’re in a stronger growth and potentially inflationary environment. What it means is bond buyers are demanding more yield for the risk of inflation picking up down the road.

Another indicator I like to watch is the surveys. So one of my favorites is the University of Michigan’s Consumer Sentiment Survey. It comes out every month. It’s been around for over 40 years. And there are questions in it that they ask every month, and that’s, you know, ask consumers what they expect inflation to be over the next year and what they expect the inflation rate over the next five to 10 years. What we’ve seen recently is that those inflation expectations have been rising, but the short-term expectations are well above the long-term. So that indicates that consumers seem to feel that we’re going to get a blip in inflation now, and it’s going to settle back down. And that actually is consistent with what we’ve heard from the Federal Reserve. It’s their expectation.

MARK: You and your team have been analyzing historical inflation figures and trying to get a sense as to how different types of investments, different asset classes, have performed during different periods, differing on their level of inflation. With respect to fixed income, what did you find out?

KATHY: Yeah, we looked at three different inflation environments. One we called low, which is periods when inflation is below 2%.

Then we looked at what we call moderate, where it’s running 2 to 4%. And then high, which is above 4%. And what we found was that when inflation is low, on the low side, below 2%, it was good for nearly, you know, all fixed income investments, but, particularly, long-term bonds because, typically, they perform well when you’re in a very low inflation environment. In the moderate inflation environment, it produced positive returns in all of the fixed income asset classes. And, not surprisingly, it was also very good for stocks, especially international stocks, and that was very good for corporate bonds because corporate bonds are highly correlated with the stock market. So corporate bonds seem to do very well in that moderate inflation environment.

And then in the high inflation environment, it did produce positive returns, but not very positive. And long-term bonds didn’t do well compared to shorter term bonds. So if you had just stayed in T-bills in a high inflation environment and rolled them over every three months or so, you would have outperformed, say, just buying a 10- or 20-year bond and sitting on it. In those high inflation periods, of course, hard assets did better—commodities and gold were the leader.

So, yeah, it’s kind of interesting, though, that bonds generally produce positive returns over the long horizon of these environments, but there were definitely short periods of small negative returns, as well.

MARK: Over long periods, stocks are one of the asset classes that tend do better than inflation. Why is that?

KATHY: You know, I believe it’s because companies tend to be able to pass along increased costs when demand is strong. So if inflation is rising because, you know, we’ve got a strongly growing economy, then chances are demand is up, and they’ll be able to pass along increased cost onto the customers, the end buyers, of whatever they’re producing. It isn’t always true. When inflation rises rapidly or gets too high, even stocks don’t necessarily do well, either. But in that low-to-moderate environment, they tend to be able to deal with inflation and produce positive returns.

MARK: Yeah. I think stocks are interesting in the sense that deflation, you know, isn’t good for stocks—think about the Great Depression. And then really high inflation, for example, when you get into the near double-digit rates, that isn’t good either. But in all those other periods, you know, they tend to do pretty well for the reasons that you laid out. Also, as long as you’ve got economic growth, companies are able to generate earnings, and that means the risk premium that stocks offer investors starts to pay off.

Other than … you mentioned commodities, what about things like real estate, for example—how does that factor into the inflation picture?

KATHY: Yeah, real estate tends to perform well when inflation is high and not perform so well when inflation is low. And I think that that’s partly a result of the fact that you get … sort of, it’s a real asset. You know, it’s not easy to create a lot more of it—it takes time. And it’s a real asset that tends to actually produce income, as well. So if you think about like land prices, when we’re in a really strong inflationary period, they tend to rise pretty quickly because it’s just a limited supply relative to the demand.

MARK: All right. One more topic, and that is hyperinflation. And I bring that up because a lot of times when we’ll get feedback from clients, they will be asking about high inflation, but sometimes people ask about hyperinflation, which is a completely different beast. So what’s the difference between the two?

KATHY: Yeah, hyperinflation is really a rare event, thankfully. In the modern era, it’s largely been seen only in emerging-market countries, and really only a handful there, usually with very dysfunctional policies and lack of confidence in the central bank. So a recent example would be, say, Venezuela, and to a large extent, recently, perhaps Turkey, as well. So when the government takes over the central bank and markets lose confidence, then what happens is the currency collapses. And when the currency collapses, then you tend to get hyperinflation. It takes a lot more currency to buy goods. When you think of the classic example, the Weimar Republic in Germany, years and years ago. But it has been rare in major developed countries. I mean, central banks have established their inflation-fighting credibility. They are independent of the government. So it’s really hard to see hyperinflation developing in a major developed country in these days.

MARK: Is it possible for an investor to be overly worried about prices and inflation? Can that worry get in the way of trying to achieve other investing goals?

KATHY: Oh, sure. I mean, I’ve been in this business since the late 1970s, and I’ve seen investors worry about inflation, you know, throughout that entire timeframe, even though it’s been low and relatively stable for years. And it can keep people sidelined. You know, they can sit on a lot of cash, cash not providing good returns, they’re out of the market, because they’re fearful of what inflation might do. And, you know, I think it’s normal for those of us who’ve lived through high inflation to worry about it, but it is counterproductive when investing. You have to kind of get over your fears. I mean, I remember, anecdotally, my parents grew up during the Great Depression, and their experience was of deflation. And they spent most of their lives worrying about a recurrence of that, and if they had been in a position to be investors, that probably would not have been a very successful strategy for them. They did tend to keep all their money in the bank, in deposits, no matter what, because they were really very concerned about that recurrence of depression. So, you know, we all have these things in our minds, and I think from time to time, we need to rethink our perspective.

MARK: Yeah, I think we all suffer from that to a certain extent. If we’ve lived through a negative experience, we’re determined to be prepared for it the next time. And, you know, to a certain extent, that makes sense, but we’ve also got to balance those fears and those concerns against other risks, as well.

So why don’t we wrap it up here? Kathy Jones is our chief fixed income strategist here at Schwab. You can follow her on Twitter @KathyJones, that’s K-a-t-h-y J-o-n-e-s, as well as you can read a lot of her work on Schwab.com/Insights. Kathy, thanks for your time today.

KATHY: Thanks for having me, Mark.

MARK: Kathy focused on the economic and investing implications of inflation.

I want to focus on the financial-planning implications of inflation and how it exacerbates a cognitive bias known as exponential forecasting bias. One of the challenges that inflation poses to our financial life is that it makes the mathematics of personal finance, which already confuse people, more complicated.

Inflation forces us to think about both nominal returns (in other words, the rate of price change before inflation) and real returns (the rate of price change after accounting for inflation).

Here’s an example: Imagine that I invest $30,000, and that investment makes 10% in one year, and I now have $33,000. That’s a great outcome. But what if I sold my investment and took the proceeds to buy a car, and the price of the car also went up by 10% over the same year.

My nominal return is 10%, but my real return isn’t 10%. It’s actually 0%.

It’s 0 because my $33,000 still has the same purchasing power that it did a year earlier because prices have moved up the same amount as my investment gain. That’s bad enough, but it gets worse if I made that investment in a taxable account because I have to pay capital gains taxes on my 10% nominal return.

After I take that into account, my return after inflation and after taxes is potentially negative, depending on my tax rate.

That’s a simple and easy example, and I’m sure most of you knew that already. But studies show that people have hard a time comprehending nominal growth rates, and those difficulties increase as the growth rate gets higher and the time period gets longer.⁵

In other words, if you ask me what a $100 investment growing at 1% per year will grow to in two years, I can come up with a pretty good guess.

If you ask me to compound a 7% growth rate over 13 years, the accuracy of my guess is going to drop a lot. It stands to reason that throwing in an inflation adjustment on top of that will only make my estimate worse, and bad estimates can lead to bad decisions. This is especially true when it comes to retirement planning, where people are dealing with projections that sometimes run 40 years or more.

Another example are borrowing decisions for something like a home where you need to think about interest owed on a 30-year mortgage.

The good news is that you don’t have to fall prey to this cognitive bias. Just use a calculator or an online planning tool where inflation projections are often built in. I think of these tools as the equivalent of eyeglasses. They don’t fix our eyes, but they make our eyesight better.

Now, playing around with these tools doesn’t qualify as fun for most people, but effective, long-term planning is difficult to do without them. Take advantage of these tools, or advisors who understand how to operate them.

There’s one more odd thing about inflation. If you’ve lived through periods of high inflation, you never seem to forget it. It’s kind of like this monster who’s always lurking, and you’re perpetually scared that it will return, and you’re determined not to be caught off guard again.

This isn’t just my impression. Academic studies have documented this phenomenon.⁶

On the other hand, if you’ve never experienced inflation, it’s hard to wrap your mind around a world where prices rise rapidly for no apparent reason. My kids, since they became cognizant of the concept of prices and price changes, have never experienced a single year where the CPI was over 2.8%.

I’ve talked on this show before about how much of investment and financial decisions is finding that right balance between risk and return. Obviously, we’re going to be more cognizant of risks that we’ve personally experienced in the past, but that doesn’t mean we should become a prisoner of those risks and overweight them in our planning. Conversely, just because we’ve never experienced a risk doesn’t mean that risk doesn’t exist or can never happen to us.

If you’d like to learn more about investments that could help you protect against inflation, check out Schwab.com/Research. There you can browse our ETF and mutual fund Select lists to see which might be right for your portfolio.

And if you don’t have someone you can ask for advice about your portfolio, you can always call us and talk to a professional. We’re at 1-877-279-4476.

I’m going to end with one historical curiosity. In the intro I mentioned Zimbabwe and how, in November 2008, prices were doubling every 24.7 hours. Believe it or not, that is not the highest inflation recorded by a country. That dubious honor goes to Hungary in July 1946. Prices were doubling every 15 hours.

Thanks for listening.

To hear more from me, please follow me on Twitter @MarkRiepe. M-A-R-K R-I-E-P-E. And you can also follow Kathy Jones on Twitter @KathyJones.

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For important disclosures, see the show notes and Schwab.com/FinancialDecoder.

¹ Owen F. Humpage, “Paper Money and Inflation in Colonial America,” Economic Commentary, May 13, 2015, Federal Reserve Bank of Cleveland.

² Hugh Rockoff, “War and Inflation in the United States from the Revolutionary War to the First Iraq War,” NBER Working Paper Series #21221, May 2015

³ Hanke-Krus Hyperinflation Table, Cato Institute, https://www.cato.org/sites/cato.org/files/pubs/pdf/hanke-krus-hyperinflation-table.pdf

⁴ Hanke-Krus Hyperinflation Table, Cato Institute, https://www.cato.org/sites/cato.org/files/pubs/pdf/hanke-krus-hyperinflation-table.pdf

⁵ Victor Stango and Jonathan Zinman, “Exponential Growth Bias and Household Finance,” Journal of Finance, December 2009.

⁶ Ulrike Malmendier and Stefan Nagel, “Learning from Inflation Experiences,” Quarterly Journal of Economics, 2016.