Inflation in 2022 and 2023 and What the Past Has Taught Us

by | Oct 4, 2023

Part 1 of a 5-Part Series: What Have Past Inflation Crises Taught Us About Investing? 

By James Pearcy-Caldwell, Aisa Co-Founder and Compliance Officer, and Chris Lean, Chief Investment Officer

Inflationary periods in the past show us what to expect this time around.

Currently, investment performances to July 2023 have been poor in nearly all markets, both equity and bond based.  

The exceptions have been:  

  • High tech firms linked to the advent of AI technology and the consequential requirements from software and hardware firms.
  • Armament and associated companies linked to the heightened state of alert between countries as a result of world turmoil largely based around 4 countries.
  • Energy companies (including both conventional, nuclear and new age) linked to both the rush to net zero emissions (clean energy) combined with damage to current energy supplies in certain geographical regions such as gas in Europe.
  • Bio-tech discoveries linked to worldwide pandemic.

Whilst some people have been able to take advantage of these areas by solely investing in them, they are increasing risk exposure. This is because all of these areas have been extremely volatile in the last 2 years. There is no guarantee they will continue to grow, nor even maintain the gains they have already achieved. In fact, some are reaching saturation and exhibit bubble-like tendencies.  

Inflation, leading to higher interest rates, leads to higher debt costs and higher supply costs. This impacts fixed interest borrowing. Additionally, it impacts government borrowing costs, company costs and has a massive impact on all the asset classes in 2022 and 2023. Last year saw a reduction in value of fixed interest and government-issued debt of double digits. This is almost unheard of. Subsequently, low risk investment strategies performed more like equity-based strategies, which was poor!  

Learning from the past  

We can review the UK and US markets for experience in what has happened before at times of high inflation and low growth. These often go alongside rising unemployment eventually. In the UK there was the Barber Boom – 1972-74 (1973-75 recession), and the Lawson Boom – 1985-88 (cause of recession of 1990-92).  

Commodity prices, including food, raw agricultural materials, and metals, rose initially. Interest rates rose, eventually unemployment rose, and companies went bust in record numbers. Then, house prices crashed, and this was followed by recession.  

At the point of recession, house price negative equity was high. Then commodity prices dropped substantially as demand dropped. Further, equities which had initially stagnated started to rise again through the recession (in anticipation of future growth from lows).  

Where are we in this cycle in 2023?  

Some of the points above are clearly in evidence, but negative equity, rising unemployment and a full-blown recession have been avoided at this time. Although stagflation (explained in Part 2 of this series) in many western economies, and China, appear to be the current position. Investment planning currently must be balanced between the idea of whether western countries will or will not go into recession.  

What is different this time is that, for the last 13 or so years, the government borrows and prints money at a huge rate. The borrowing from the US government is being used to encourage liquid capital markets to invest in the US through advanced technologies or similar.  

This continuing borrowing of money, and large liquid capital in markets will have to stop at some point. However, it is unlikely to do so whilst 2024 sees the election of a new President.  

When the borrowing does stop, and of that we can be sure, then the piper will have to be repaid. To see the extent to which US GDP borrowing has accelerated click here: U.S. Debt to GDP Ratio 1989-2023 | MacroTrends. 

See Also:

Inflation and Stagnation

Aisa International

Aisa International, s.r.o. is a wealth management firm with an award-winning team providing investment advice, financial planning, and asset management for U.S., U.K., and E.U. expatriate citizens residing abroad. Aisa International holds all current regulatory licenses, including the FCA license in the UK and the Investment License in the European Union. Therefore, Aisa International is uniquely qualified to provide personal financial advice for U.K. pensioners living outside of the U.K. Aisa International serves its global clients where they reside through its OpesFidelio network of highly-qualified advisors. For more information, please visit

Image by on Freepik

The views expressed in this article are not to be construed as personal advice. Therefore, you should contact a qualified, and ideally, regulated adviser in order to obtain up-to-date personal advice with regard to your own personal circumstances. Consequently, if you do not, then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Importantly, where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.

Follow us on Social Media

Post written by:

James Pearcy-Caldwell

James founded and runs Aisa with an emphasis on a pro-client and transparent approach. He is always looking for the most suitable solution for the benefit of the client. He has been in the field of investment advice since 1998, and therefore fully understands the necessity of open communication and honesty. James is certified in many financial areas in several countries and also holds the most prestigious European certificate in investment planning EFP (European Financial Planner).

Aisa International is the only financial advice service company specialising in advice for expats that is regulated as a Securities Trader in the Czech Republic, USA, and UK.