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Inflation Strategy for Your Investments

Inflation has been largely under control since the early 80’s. The current economic conditions are anything but typical, however. The government is spending previously unheard of sums to try and get the jobs engine working again. The implications of this heavy federal spending are significant.

In the past, heavy government spending has resulted in inflation. Economists generally agree that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply (according to Wikipedia). The recent spending to deal with the “Great Recession” of the 21st Century has broken all previous records. Depending on how you want to count the various stimulus efforts this amount may be between $1-2 trillion. I don’t have enough space to put all the zeros in this number, it is truly exceptional. This extra money in the system can generate inflation if previous experience is consistent. The amount and duration of the inflation will be difficult to predict. Continue reading ‘Inflation Investing’ »

Inflation is probably the greatest enemy of a bond investor. Again it is true for a person with fixed income too. It is capable of putting your entire budget plan down. So, question may arise in your mind – is there any investment option which can fight against it? Where to put the hard-earned money so that it yields at least some relief at the devastating period of inflation?

Well, there is a very good way, which can help you in this situation, some TIPS. Don’t get confused. It stands for Treasury Inflation-Protected Securities and TIPS is really a great offer from the Federal Government, which is a sure shot way to beat inflation with no risk of money. If you could know the best way to use TIPS, then surely you will gain the power to fight against inflation. Continue reading ‘TIPS (Treasury Inflation-Protected Securities) for a Safer Bond Investment’ »

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A US Dollar crash is looming. Analysts are of the opinion that the Dollar is headed towards a historic crash. US Dollar (USD) is already down by one third against most of the major currencies. Many analysts consider USD to be strongly bearish.

What can cause this USD crash. Warren Buffet gave a hint of this when he said that the frentic spending that is going on coupled with massive money creation will cause the USD to face a crash of historic proportions. This crash may even be more severe than what happened in 1970s. Now in 1970s too, USD had crashed due to the massive inflation caused by the government overspending during the Vietnam War. This time too, the US government is taking refuge by printing massive amounts of greenbacks to bailout bankrupt banks and insurance companies. This massive money creation is eventually going to make inflation uncontrollable for many years to come. Inflation could not be controlled during the 1970s decade. It was only controlled when Paul Volckar became the FED Chairman. He increased the interest rates so high that the economy went into recession. But it also ended the inflationary cycle. This time, the FED Chairman wants to save the financial system and ward off recession by increasing the money supply. Eventually, he will have to deal with high inflation later on. He knows it. The market knows it. This makes the market nervous and is putting a lot of pressure on USD. Continue reading ‘Market Timing – Dollar Crash Looms With Pressure on Pound Mounting and Danger of Bonds Market Crash!’ »