In a 1948 speech, Winston Churchill warned Parliament, “Those who do not learn history, are doomed to repeat it.” Wise words indeed. What he meant was that if we don’t take the time to study our past and understand our mistakes, we will continue to make the same ones over and over again. Put in that context, another famous quote comes to mind, from Albert Einstein, “the definition of insanity is to do the same thing over again and expect a different result.” We should take both of these quotes to heart, as CNBC’s Karen Gilchrist interviews historian Niall Ferguson who says we can take a lesson from history.
One of the points Ferguson makes is that while history does tend to repeat itself, it isn’t cyclical. We can learn from similar historical events, but each day is a new one, and we will have to know how to adapt what we learn to fit our current situation. He points out that there is no predictability to global crisis and that it makes sense for issues to compound and start to steamroll. All we can do is try our best to face it.
It’s easy to compare what’s happening today, the global inflation, to that of the 1970s, but bear in mind that a lot of the 2020s is still to unfold. What we do about things now can make all the difference when deciding if this decade is better or worse than the inflation crisis of the 1970s. Ferguson says to not be too optimistic, but a little optimism can make it easier to combat these challenges. We have done so before.
A Lesson from History
We have dealt with inflation before. However, today’s inflation is different from that we experienced in the 1970s, simply because our world is different. We have new ways of combating inflation, in addition to the tried-and-true method of hiking interest rates up. For example, the Inflation Reduction Act, and it’s unprecedented support for seniors are new weapons in the inflation fight.
A lesson from history we can use to our advantage is what not to do. We are presented with a similar set of variables as we saw in the ’70s. It was a time of global crisis and uncertainty. What we can do is look to see how that time resolved itself and try to mimic that process to make it happen faster, while adapting to today’s world. All the while, we can also try to grow and experiment with new solutions based on what we already know.
That way we can learn from the past and not expect the same results.
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