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As Americans watched their buying power erode through 2021 and 2022, with inflation peaking at a 40-year high of 9.1% in June 2022 (1), pundits offered a long list of factors they blamed for causing the rise in the cost of goods: increased consumer spending, rising labor costs, supply chain disruptions and monetary and fiscal policies.
Now, 2026 has brought more of the same with rising costs and inflation struck 4.2% year over year as of May, according to Bureau of Labor Statistics data used by the US Inflation Calculator (2).
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However, if the late Nobel Prize-winning economist Milton Friedman — renowned for his work on monetary policy and free-market principles — were still alive, he’d have a more straightforward explanation for the phenomenon. And it all comes down to a single factor or — more specifically — a certain place.
“Inflation is made in Washington because only Washington can create money, and any other attribution to other groups of inflation is wrong,” Friedman once famously stated (3).
“Consumers don’t produce it. Producers don’t produce it. The trade unions don’t produce it. Foreign sheiks don’t produce it. Oil imports don’t produce it. What produces it is too much government spending and too much government creation of money and nothing else.”
Although Friedman (who died in 2006) made these remarks decades ago, they continue to strike a chord. Back in October 2024, Sen. Rand Paul posted a clip of this speech, which garnered more than 50 million views on X.
The post also caught the eye of Tesla CEO Elon Musk, who reposted it, along with a “100%” emoji to signal his agreement with Friedman’s message.
Hedging against inflation
High prices have been throttling Americans’ budgets for years.
Since 2020, costs have soared — the price of groceries is up 30%, electricity has risen 41% and car repairs have skyrocketed 63%. And while average weekly wages have risen 31% over the last six years, inflation has erased most of those gains (3).
Americans are also concerned about the effects of tariffs on their wallets. Though the One Big Beautiful Bill Act is poised to boost tax refunds this year, the Tax Foundation estimates that for middle-income households, tariffs will erase 70% to 95% of those gains. For lower-income tax filers, the situation is even worse (4).
The good news? Musk has already shared some strategies for navigating these kinds of economic pressures.
In March 2022, just before U.S. inflation reached a decades-high peak, Musk advised: “It is generally better to own physical things like a home or stock in companies you think make good products, than dollars when inflation is high (5).”
Real estate is a well-known hedge against inflation. As the cost of raw materials and labor rises, new properties become more expensive to build, which then drives up the price of existing real estate.
However, well-chosen properties provide more than just price appreciation. They also come with a steady stream of rental income, which also typically goes up when prices do.
Of course, properties don’t come cheap these days, especially when you factor in today’s still-high mortgage rates — over 6% for 30-year loans in February 2026 (6).
But you don’t need to buy a house to start investing in real estate. And, with careful investing, you can tap into real estate rental income, which naturally adjusts to inflationary pressures, offering a hedge against the declining value of fiat currency.
You can get into this market by investing in shares of rental properties through Arrived.
Backed by world-class investors, including Jeff Bezos, Arrived allows you to invest in shares of properties, earning a passive income stream without the extra work that comes with being a landlord of your own rental. No missed calls over burst pipes at midnight here.
To get started, simply browse through their selection of vetted properties, each picked for its potential appreciation and income generation. Once you choose a property, you can start investing with as little as $100, earning any monthly dividends.
Another option is Class B real estate, which tends to perform steadily through market cycles.
In times of volatility, they often benefit from renters “trading down” from higher-cost options, while limited new supply keeps vacancies in check. Low tenant turnover and long leases can also lead to consistent net operating income and stable, robust cash flow for Limited Partner investors.
Accredited investors can now tap into this opportunity through platforms such as Lightstone DIRECT, which gives accredited investors access to single-asset multifamily and industrial deals.
Lightstone DIRECT lets individual investors tap into the institutional approach of Lightstone, one of the largest privately held real estate investment firms in the U.S., with $12 billion in assets under management.
The platform eliminates middlemen and the extra layers of fees that can add up in traditional real estate investing, usually known as “fee stacking.” This streamlined approach provides more direct access to institutional-quality deals.
Over nearly four decades, Lightstone has delivered strong risk-adjusted performance — including a 27.6% historical net IRR and a 2.54x historical net equity multiple on realized investments since 2004.
Each opportunity requires a $100,000 minimum and undergoes a rigorous review by Lightstone’s principals, including founder David Lichtenstein.
Lightstone also invests at least 20% of its own capital in every deal — roughly four times the industry average. With skin in the game, the firm ensures its interests are directly aligned with those of its investors.
Stocks
Equities offer another powerful tool for combating inflation and its residual effects — something billionaires like Musk understand well.
The nonprofit Oxfam reported that billionaire wealth jumped by over 16% in 2025 — three times faster than the past five-year average — to $18.3 trillion. That’s its highest level in history (7).
For many of those billionaires, much of their wealth is linked to the companies they founded or currently manage. When inflation drives up prices, businesses that can successfully pass these costs on to consumers through higher prices can maintain or even grow their profit margins. This, in turn, can lead to increased earnings and potentially higher stock prices.
Of course, not all stocks are created equal. Moby offers expert research and recommendations to help you identify strong, long-term investments backed by advice from former hedge fund analysts.
In four years, and across almost 400 stock picks, their recommendations have beaten the S&P 500 by almost 12% on average. They also offer a 30-day money-back guarantee.
Moby’s team spends hundreds of hours sifting through financial news and data to provide you with stock and crypto reports delivered straight to you. Their research keeps you up-to-the-minute on market shifts, and can help you reduce the guesswork behind choosing stocks and ETFs.
Ultimately, everyone’s financial situation is unique, with different obligations, risk profiles and investment goals. If you’re unsure about navigating the market on your own, it might be worth working with a financial professional. That’s where Advisor.com can help.
Advisor.com is an online platform that connects you with vetted financial advisors to make the process of finding the right advice easier.
Just answer a few quick questions about yourself and your finances, and the platform will match you with experienced financial professionals best suited to help you develop a plan to achieve your retirement goals.
Musk’s advice to invest in physical assets makes sense because commodities appreciate even when inflation soars.
Gold, for example, has served as a store of value for thousands of years. It isn’t tied to any single country, currency, or economy, and it can’t be printed like fiat money.
Investors often flock to it during periods of economic stress or geopolitical uncertainty — pushing prices higher. Gold prices have more than doubled over the past five years, hitting multiple record highs along the way and outpacing the S&P 500 over the same period.
That’s probably why Bridgewater Associates founder and billionaire Ray Dalio urged investors to increase their gold holdings back in October, saying “gold is a very excellent diversifier of the portfolio (8).”
A gold IRA is one option for building up your retirement fund with an inflation-hedging asset. A gold IRA is one option for building up your retirement fund with an inflation-hedging asset.
Opening a gold IRA with the help of Goldco allows you to invest in gold and other precious metals in physical forms while also providing the significant tax advantages of an IRA.
If you’re curious whether this is the right investment to diversify your portfolio, you can download your free gold and silver information guide today. That way you can see if the precious yellow metal is right for you and your portfolio.
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Win McNamee/ Getty Images Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below. As Americans watched their buying power erode through 2021 and 2022, with inflation peaking at a 40-year high of 9.1%…
