How To Protect Yourself From The Inflation To Come

[No DUplicitous DUpe]

How To Protect Yourself From The Inflation To Come
posted with permission from: http://sane-ramblings.blogspot.com/2010/01/you-will-be-confronted-by-inflation.html

From the vast and thus far endless spending of the U.S. Federal Reserve and that of other governments around the world, inflation will soon confront us.

Stock markets are skyrocketing, as are commodities prices as bankers, awash in a tidal wave of cheap money have begun widely speculating much as they did before.

Realizing the consequences, China, soon to be the world's 2nd largest economy has begun tightening credit, raising interest rates and demanding its banks slash their lending, holding more of their funds in reserve.

But in America, as "too big to fail" banks wildly speculate or loan to those who wildly speculate, as we just saw, when defaults happen, they demand bailouts. Meanwhile, acting with the fiscal responsibility of a drunken sailor, the U.S. continues flooding money into bailouts and stimulus, weapons and wars.

To pay for this, it is on a borrowing binge. But half of its debt is now held by foreign investors and fearful of U.S. future inflation, for new loans they often insist on TIPS {Treasury Inflation-Protected Securities], meaning the U.S. will protect them from inflation, taking on vast open ended liabilities.

Here is what you can do to also protect yourself. If you have savings, commit them only short term, for during 2010, interest rates will rise and you'll be paid more. If you are a borrower, borrow long term fixed rate while that cheap money is there for you. If you're going to refinance your home for example, do it now.

If you want to ride the wave of inflation to come, select a highly reputable hedge fund that is forming such a fund. They already exist and more will come.

The inflationary consequences are ugly. But together we will get through it, much as people did during the Great Depression and as a result hopefully we will build a more compassionate nation and one that takes fiscal responsibility seriously.

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weapons and wars will be our ultimate undoing.

[SoCalDem]

1. I am looking forward to higher interest rates,., Our CD rates SUCK

I was sad when one expired @ 3.57% and the new rate was 2.something.. Not that long ago we were getting 5%+..and waaaay back in the '80-'s we had a CD with 14.76%...those were the days :)

[DJ13]

2. You'll end up paying more on purchases than you'll make in interest

Thats the one aspect of inflation the personal finance types never mention.

[SoCalDem]

4. For us, it's not so bad, but for the younger folks, it may be

We don;t finance things, and we buy every little these days.. We're in the "getting rid of shit" phase of our lives:) Want some stuff?:rofl:

[taught_me_patience]

3. Run up debt now

pay it back with cheap dollars tomorrow.

[Spike89]

5. Only works if you can get long-term fixed rates

Rack up the big credit card balances and then watch the interest rates skyrocket...it'll take a boatload of those "cheap" future dollars just to keep up with the interest. Of course, your advice also assumes the "cheap" dollars will be available to everyone. The truth is that wages tend to lag far behind inflation, especially on the heels of serious unemployment problems.

In other words, inflation is a zero-sum game at best for consumers. It can devastate retirees and others on a fixed income, and it always rises at a faster pace than wages. Maxing out your credit cards is an inflation beating strategy that won't work and pretty much promises financial misery for most of the people that try it.

[No DUplicitous DUpe]

6. Thank you for your wise comments.....

..and very good advice.

[MadHound]

7. Well that's an oxymoron

". . .highly reputable hedge fund."

Sorry, there is no such thing. Hedge funds by their vary nature are horribly under-regulated(try non-regulated) and as such are pretty much a sucker's play unless you've got some seriously big bucks. For the normal middle class investor they're simply another version of the three card monte.