Subject: Re: Krugman on the Fed
what a boiled-frog US investor should do to mitigate harm? All I own is cash and Berkshire, and for some reason I’m frozen with inaction.

Inflation is not so bad. The main protection is to own productive assets (businesses, basically), rather than cash or fixed income.

On average equities tend to hold their value (if not their price) in both low inflation and reasonably high inflation. It's only a big problem when inflation is so high that the economy breaks, which is not good for anybody. That doesn't usually kick in till you see inflation rates meaningfully above ~6%.

It depends a bit on what you want from your portfolio, too. If you are one of the few who primarily want the portfolio to fund income that will be relatively resilient in the face of a long bear market, I posted a random thought on that front recently. https://www.shrewdm.com/MB?pid...
But that goal doesn't apply to a large fraction of investors, most of whom are (rationally) interested mainly in longer term rate of return or (less rationally) avoiding short term price dips.

For whatever it's worth:
That strategy suggests the enticing possibility of a ~4.5% initial dividend yield these days, with the cash payout rising at around 7-9%/year, with no rolling year's income much worse than 12-15% lower than the peak to date. Assuming you're spending all dividends rather than reinvesting, after 10 years you might get a yield of maybe 9-10% of your original portfolio size. Things are never quite as nice as a back test, but the strategy was created five years ago and has been chugging along. Unlike long term buy and hold of a dividend portfolio, the yield tends to stay high during recessions because the inevitable few big dividend cuts are mitigated by the simple expedient of replacing those stocks with other good firms that still have decent yields. Once per quarter you'd replace about 6 stocks on average, which is work but not an unreasonable amount of work. Most picks are held for quite a long time.

Jim