The economy could absorb even double digit inflation

This is not hyperinflation, thank goodness. It’s just a good old-fashioned double-digit across the board price increase. The same kind of inflation Americans saw in the 1970s and 1920s and throughout the 19th century, and it’s the same inflation that millions of business owners from ancient Egypt to medieval Florence saw before that.

But we’re not Venezuela. We’re the U.S., and the good news is that the U.S. economy is the largest in the world, and with that comes lots of buyers and sellers. People don’t go into caves when prices rise. They still buy and sell.

That’s all fine for business owners like me. You may ask: But what if you’re not a business owner? What if you’re an employee or on a fixed income? Should you be worried about inflation? Not really.

If you have a job – and I certainly hope you do – you’ll get cost of living increases. Why? Because employers like me don’t want to lose you in these times of tight labor. It’s not that we’re altruistic. It’s just that we understand that if we don’t pay you enough to keep up with inflation, you’ll look elsewhere. So, we will. Even so, you may decide to make a few extra bucks doing a side gig like my Uber driver. If so, then good for you.

If you’re unable to work for health or other reasons or if you’re retired or on a fixed income, the government is mandated to pay your social security and Medicare at higher rates as the cost-of-living increases. Assuming you have a good financial adviser, your savings will also grow along with interest rates, which will rise this year. Will this be enough? Probably not. But when is it ever?

Hopefully, you’ll do the same as me when it comes to expenses. Maybe you’ll spend less on frivolous things than before. Maybe you’ll wonder why you subscribe to so many streaming services (Is “Inventing Anna” really worth it?) or if it’s necessary to drive a gas-guzzling vehicle in lieu of a hybrid or electric one — or a bike. You’ll pay closer attention to your household expenses, your extracurricular expenditures (Really? A onesie for your Great Dane?) and your taxes. You’ll take more reasonable vacations and cook at home more often. (It’s still much cheaper than eating out, even with rising food prices.) You’ll be fine. You may even be happier.

If you’re smart, you’ll also make sure your savings are keeping up with inflation. As I said earlier, as prices rise so will interest rates. That’s good news. You’ll make sure any excess cash is now in a savings account earning interest. You may also decide to (finally) meet with a financial planner and better invest your money like all those rich people always do. You may even invest in mutual funds that carry stock of those Fortune 1,000 companies that will do all of the above in order to keep their shareholders happy. (And they will, trust me, they will.)

The media loves to report bad news, so you’ll inevitably read about the losers during this inflationary era. But there will be winners too. There will be people who profited and suffered thanks to the great and terrible decisions they made. There will be people who took unnecessary risks that paid off or didn’t. There will be people who were smart and people who were lazy and dumb. But those will be the exceptions, not the norm. Most of us will be paying more for the things we want, but we’ll be receiving more income too. It’s all relative. It’s just an adjustment. The price of a gallon of gas in 1950 was $0.27.So, whether you’re a business owner like me or not, please don’t worry so much about inflation. I’m not. It’s happened before, and it will happen again. Let’s just make sure that we’re smart about how we’re managing our money, that we’re paying attention to the economy and we’re watching our pennies. But then again, shouldn’t we always be doing that?