How to Protect Yourself From Inflation

We overstate inflation because we ignore the way new products improve our lives. High inflation is often also really variable, and so it leads to more variable prices. Don't hold too much cash in a checking account; move your cash to a savings account where nominal interest rates tend to rise with inflation. There are even investments that protect against inflation: government issued bonds which are indexed for inflation. In a future episode, we'll dig deeper into the causes of inflation, how it can become a self fulfilling prophecy, and its relationship to other important aspects of the macro economy like unemployment.