So far the inflation has been masked by a huge production boom in energy and a drawdown in the US war effort which has led to a recessionary quarter and quite possibly an outright recession for the rest of the year.
Default risk is deep into the Code Red territory as simply put the bulk if not near totality of municipalities cannot withstand any type of inflation shock given the tremendous debt loads they are sustaining.
There has been little to zero recovery from the panic of 2008 economically speaking...employment growth when compared relative to population growth has in fact been negative.
Spending as a consequence has collapsed and those that have an income and in fact are able to save will as a consequence be saving more.
I would expect given the tremendous amount of liquidity currently being produced within the US due to the truly staggering increase in natural gas and energy production in general (google "North Dakota", "Marcellus Shale" and "Utica Shale" if you have any questions to what I speak of) will pressure mostly destitute and bankrupt banks to start competing for these monies by raising the rate for deposits.
I have been invested 100 percent in treasuries for the past year but feel the inflation pressures are now too large to simply ignore anymore. Small caps generally perform much better under an "inflationary regime." They have sold off noticeably over the past six months and I think the current time frame represents a good "point of entry" to start getting back into the equity space...perhaps as a whole. There is much to be worried about going into the September/October time frame historically relative to equity markets and I would keep that in mind before going "all in."