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In March 2009, I warned investors of the inevitability of another stagflationary economic cycle. I repeated it in April 2010. It is now coming to pass.

Just like Lyndon Johnson’s “war on poverty” in the 1960s and the tidal wave of government spending it unleashed, President Obama’s “war on income inequality” is again drowning the economy in government debt. And just like that “American Hustle” of the 1970s, this too has resulted in a stagnant economy and stubbornly high unemployment. Can inflation the Fed is so purposefully ignoring be far behind? In a word, no.

This is because the Fed has a 100 percent track record of being wrong about the consequences of its actions. Let me repeat that: The Fed’s track record of being wrong is 100 percent. In fact, it’s so bad that there is a move afoot in Congress by Rep. Kevin Brady, R-Texas, Chairman of the Joint Economic Committee, to create a Centennial Monetary Commission to evaluate the effectiveness (or better yet, ineffectiveness) of the Federal Reserve’s first 100 years. That fills us with confidence when Congress, which is held in universally low regard, is contemptuous of our central bank.

What investors should expect is for the Fed to continue to inject dollars into the economy to forestall deflation of the stock market bubble, which must come as longer-term interest rates rise. After all, 2014 is an election year, and this is why Janet “Light Year” Yellen is now Chairwoman; she can be relied upon to keep the monetary pedal to the metal.

If this turns out to be the case (and why shouldn’t it: Obama and his minions have a 100 percent track record of always doing the politically expedient thing), then general inflation could occur along with a rise in unemployment. As James Dorn, vice president for monetary studies and a senior fellow at the Cato Institute in Washington, D.C., says, “Printing money cannot spur real economic growth, but it can cause inflation and higher unemployment, as in the stagflation of the 1970s.”

Just ask Argentina President Cristina Fernandez de Kirchner – if you can reach her, that is. She has been MIA as blackouts and looting have spread across the country. Like Obama, she and her late husband and predecessor, Nestor Kirchner, were great social levelers – income equality, nationalization of the private sector and similar sorts of stuff. Sound familiar?

Anyway, the Kirchners used higher government spending, financed by money printing, to grow their economy too. However, with inflation at 28 percent and another default like 2001 looming, it’s coming unraveled.

Can’t happen here, you say. We’re the largest economy in the world and the dollar is still king. Besides, we elect our government officials. We don’t have dictators who rule by executive fiat.

Think again. Economic life has become more highly politicized under Obama than at any time in our history. The Fed’s manipulation of the money supply and interest rates has depleted average Americans’ savings, increased risk-taking and reinflated asset prices. This is not a recipe for a healthier economy and economic growth.

For investors, there is no perfect hedge for what is to come. However, a weighting in favor of alternative assets should place you in front of this curve. Hard assets are harder to debase than currencies, and less subject to manipulation than stocks and bonds. Furthermore, they are potable, meaning they can be picked up and moved if necessary. That isn’t a bad thing in Obama’s America.

As for the rest, we’ll just have to wait and see. After all, according to Stanley Fischer, who is likely to become the Fed’s vice chairman: “You can’t expect the Fed to spell out what it’s going to do, because it doesn’t know.”

Robert Smith is president of Peregrine Private Capital Corp., based in Lake Oswego. Contact him at 503-241-4949 or at www.peregrineprivatecapital.com.