Two Big Things You Need to Understand About Inflation

Treasury Secretary Janet Yellen caused some consternation last week when she raised the possibility that “interest rates will have to rise somewhat to make sure our economy doesn’t overheat.” Stock markets fell, and Yellen clarified her remarks by saying that she was neither forecasting nor recommending an interest rate hike.

But the issue isn’t going away. More voices are starting to publicly warn of rising inflation. Warren Buffett recently called the economy “red hot” and said he’s seeing higher prices. Some wealth managers are starting to tell clients inflation is on the way. Some economists, like Larry Summers and my colleague Mohamed El-Erian, are giving the same warning.