Up, up, and up

On almost every front, it’s been an inflationary year | Joel Belz

Illustration by Krieg Barrie

Hide your wallet! Secure your piggy bank! Stash a little cash under your mattress! Looks to me like you're going to need it all—and maybe sooner rather than later.

Oil prices, the experts say, are headed north. Oil has lollygagged around $75 a barrel for a long time now, but get ready for the slippery stuff to slide up to $100 and beyond. And as oil goes up, so will everything that uses oil to become what it is. That's almost everything you can think of—the vinyl fender of a new car, the hard plastic frame around a 48-inch widescreen TV, or gas for a trip to Grandma's house for Christmas.

Interest—the cost of using someone else's money for a little while—is also headed up. That's partly because there's no room left for it to go down. For several years now, the Federal Reserve has pretended that things are better than they are, and that we can all just go on spending money we don't have. And it has made that easier by keeping interest rates artificially low. But there comes a limit, and now we've crossed that boundary line. When you keep on pretending, things get riskier and riskier. When risks increase, lenders want a better return on their investment. It may have been fun to enjoy the bargain—but the fun's probably over.