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Eyes glaze over when we talk about inflation? You’re not alone. But what you don’t know can hurt you.
For anybody born after about 1985, meaning most folks under 40, all this talk about inflation seems kind of old-timey. Indeed, as Public Radio host Kai Ryssdal (citing a story in the Onion, of all places) pleads, hey, come on, pay attention, this is really important!
1982 is a long time ago
As Fortune CEO Alan Murray points out, the last time inflation was this high was 1982. Back then, he was covering the thrilling business of the Federal Reserve under the guidance of the famously obscure Paul Volcker, who once told him (in response to insistent questioning) “We did what we did, we didn’t do what we didn’t do, and the result was what happened.”)
The first thing to realize is that this is not a temporary aberration that is going to let up any time soon, as the current Fed Chairman Jerome Powell seems to be acknowledging. What happens when anything hangs around for a while — a pandemic, a conflict, high interest rates — is that human beings adapt and it becomes incorporated into our new baseline expectations. Unfortunately, that can exacerbate the very thing we might be trying to combat.
As Ram Charan and Geoff Colvin point out in a great Fortune article, inflationary cycles tend to be…
