Which is the greater evil: inflation or deflation? Well, that depends who you are. Which one should we expect to see? Depends how it goes. The economy is full of vague answers and inaccurate predictions, but the general consensus supplies two relatively solid answers—yes, we’ll experience either inflation or deflation in the near future, and no, we shouldn’t restructure our portfolio in hopes of avoiding the fallout.
Risk Depends On Who You Are
Jason Zweig of The Wall Street Journal reminds us that not only does an uncertain future generate confusion and queries, but also that the general patterns of inflation and deflation shouldn’t top your list of concerns. Instead, worry about what Zweig has named “meflation”; worry about which scenario would be more damaging to you. For instance, a 30-year-old with a risk-heavy investment portfolio and a secure job is more threatened by deflation, while a retiree should dread inflation. Those with mortgages are hurt by deflation, while those relying on government programs such as Social Security will suffer if inflation comes about.
Meflation Isn’t Completely Revolutionary
Aside from the catchy name (which we can’t help but smile at, despite its sober implications), Zweig is essentially repeating the advice we hear all over the place: don’t place too much faith in the experts. General advice is helpful up to a point—the point where you have a retirement account, you understand your salary, and you can handle your credit score with confidence—and then it becomes detrimental. Everyone’s finances are different, and everyone’s circumstances require different approaches. And with finances, nearly everything is a gamble. Before you place your bets, make sure you’ve done your background work.
Tell us in the comments: Who do you turn to for information about your own finances?