On November 20th, 1966 the musical Cabaret opens at the Broadhurst Theater in New York City.
The show runs for over one-thousand performances and a film version starring Liza Minnelli follows in 1972. The plot revolves around The German Weimar Republic and the most famous bout of hyperinflation in modern history. A decision to devalue the currency in the 1920s to pay off debts from World War I was catastrophic, leading to political and social disruption and the rise of the Nazi party. And you thought there were no real world repercussions to the performance of monetary policy?
While I am not suggesting hyperinflation is on the horizon, it is important to note that recent CPI readings are above the Federal Reserve’s stated goal for inflation. Leaving rates low, in effect devalues our currency and is inflationary. Eventually, the Fed will need to move rates higher which can be painful for borrowers and current bond holders. In such an environment, the same old investment song and dance might not be such a hit.
Don't wait for history to happen...