Mortgage rates are near all time lows. CD rates are practically zero. Hmmmmn, I wonder about inflation, probably zero, right? No way. Try 3.63% as of July 2011. It is hard to find an investment that will earn you 3.6% these days, yet that’s exactly the return you need to earn if you want your investments to essentially remain the same. I find it quite strange that no one is talking about inflation, which has quietly grown by 300% over the past year. That’s right, in July 2010 inflation stood at 1.24%. In fact, in January 2011 inflation was still a palatable 1.63%.

What does all this mean? First, if your business has any type of inventory, you better check your turnover ratios. Any inventory you hold for one year has just lost 3.63% of its value. Secondly, if you are holding cash, it is losing (well, you know the percentage by now) value. I could go on, but keep your eye on the inflation rate. If the economy continues to stay in positive growth territory, a little inflation is okay. If the economy stalls, look out, we enter stagflation territory – a conundrum the United States has not faced since the Carter administration.