What is the probability of high inflation? How high will it rise? When? No one has succeeded in finding a reliable way to predict high inflation, and we certainly do not pretend that we can predict high inflation ourselves, but these questions are important to all investors, and even the 2% annual rate targeted by the Federal Open Market Committee will cut the real value of an investor’s portfolio by over 17% after a decade. This 2% level along with near 0% interest rates yields a risk free rate of -2%. This guarantees that a portfolio’s real value will erode absent risk-taking, which could result in even lower returns if the risks of loss are realized. , The possibility of higher inflation, at a rate of perhaps 4% or more a year (and with even worse effects) should not be discounted. There are heated debates about the probability and timing of high inflation, but our review of the extensive literature reveals no reliable way to predict its onset or extent. Of the various predictive tools examined in this vast literature, surveys of expert opinions are found to predict inflation best but have failed to predict the onset or extent of high inflation, and past inflation data predicts the experts’ estimates as well as the experts predict future inflation. Perhaps the difficulty of prediction stems from the fact that economic circumstances are so varied and different each time. Debt levels are very high, and inflation is one of the possibilities for deleveraging, however the Japanese have proved that high debt can exist without inflation for at several decades, at least in their particular circumstances. Our high debt levels are partly due to the housing collapse. In the current situation, we hazard the thought that inflation may be a risk until deleveraging has occurred by some other means. Until then, we suggest it may be worthwhile to monitor: (1) months of unsold housing inventory as an indicator likely to decline before a sustained housing rally (shelter is both the largest single component of the CPI and affects consumer wealth and psychology); and (2) banks’ Federal Reserve deposit levels, which have absorbed much of the monetary expansion. A portfolio invested in traditional liquid assets – stocks, bonds, and cash – cannot safely be assumed to weather high inflation intact; the extent of the damage to each of these asset categories varies widely among inflationary periods and is volatile within these periods. In the last two major inflationary periods in the United States, stocks outperformed inflation in one, but lost money to inflation in the other.