Inflation is not something we have had to talk about much over the past few decades. In fact, many of us weren’t even born the last time the Consumer Price Index, or CPI, peaked to levels that shook the economy.

Those who were around in the 1970s may remember watching staples like a loaf of bread double in price along with the average price of a new car. Gasoline led the inflationary charge, tripling in price from 36 cents to $1.19 per gallon.

Fortunately, the Federal Reserve Bank has used monetary measures to help keep inflationary pressure under control since the CPI hit 13.5% in 1980. But those days left a lasting impression.

Inflationary alarm bells began ringing louder this summer when the CPI rose to 5.4% in June, the highest it has been since the global financial crisis battered the economy in 2008. So, there is no wonder all eyes are on Fed Chairman Jerome Powell.

“Transitory” is the word Powell is using to describe the current run-up in consumer prices, but market watchers worry inflation could be more stubborn, prompting interest rate hikes, slowing the economy, and dragging down stock prices.

Inflationary pressures abound. A worker shortage and an abundance of cash in consumer bank accounts means there are a lot of dollars chasing a constrained inventory of products and service, leading to higher prices. The price of lumber is one well-known example, but prices are going up on everything from fast food to cars and trucks.

For an explanation, look no further than the size and scope of government stimulus. Between the Trump and Biden administrations, more than $5.3 trillion was allocated to shore up the economy during the pandemic. The fiscal response, combined with the Fed’s multitrillion-dollar monetary response in 2020, has led to the largest ever annual increase in money supply.

There is simply no historical guide to show us what inflation may do in response to such unprecedented government action. Chairman Powell could be right, and inflation may well fade as the economy reaches post-pandemic equilibrium. But investors are looking for ways to protect their money from a potential return to the 1970s.

Obviously, cash is out, and investors should also be cautious about fixed-rate bonds, which are particularly at risk in inflationary periods. For example, the 30-year U.S. Treasury bond currently yields about 2%. If inflation runs at 3% over the next 30 years, investors will lose about 1% a year in purchasing power.

For bond investors, there are alternatives. Inflation can lead to higher interest rates, so bonds with shorter maturities are better suited to take advantage of higher rates when maturities are reinvested. Perhaps the most straightforward way to protect a bond portfolio against inflation is to use Treasury Inflation-Protected Securities, which are bonds that receive an increase in principal value that is equal to the rate of inflation.

Stocks have a mixed record when it comes to inflation. On the downside, inflation usually forces interest rates higher, which can push earnings lower, leading to lower stock prices. On the other hand, companies can adjust prices in response to higher costs or higher demand, which is a built-in protection against inflation.

Remember that mild inflation is not necessarily a bad thing. The Fed would like to see inflation settle at 2%. The economy and markets seem to be comfortable with that, and historically, the market has delivered its highest real returns when the rate is between 2% and 3%.