Bobalude said:assuming CPI is calculated accurately, buy TIPS?

^^^^werd

From a truly wealth preservation strategy TIPS would be the way to go if you're worried about inflation. They're not likely to yield much at all though and these days you can get higher guaranteed rates of return in MMA/checking accounts. I guess you could lock in a real rate of return over 5+ years using TIPS though.

ILikeDollars said:Bobalude said:assuming CPI is calculated accurately, buy TIPS?

Keep in mind that the government will have significant incentives to misreport CPI if inflation is high.

Still, better than nothing.
If we had truly high inflation, TIPS would not be worth as much as you might think. When inflation is reported at 3% but "oh sorry it was really 3.3%" isn't such a big deal, you're still gaining with your "infaltion+3%" TIPS. When inflation is at 100%, "oh sorry it was really 110%" means you lose.

psychtobe said:You have to prepare for deflation (now), hyperinflation (someday in the near future, but who knows exactly when), and the risk of the unthinkable. Within the third category I would include US government default and or devaluation; US government seizure of assets; punitively high income or wealth tax rates which are in essence the same as seizure; US government negotiated seizure of assets held in foreign countries; war; world war III.

Taking all of this into account, this is my ideal allocation (I'm not there yet)

25% primary residence with a mortgage.
20% US stocks
30% foreign stocks
10% US and global inflation adjusted bonds
5-10% gold stocks, gold investments, oil/nat gas investments
5-10% physical gold diversified in various places around the globe.

Personally I think it's critical to have the hard assets themselves in other countries. Having $100,000 in gold pieces in safe deposit boxes in other countries is a hedge against most of the unthinkable. World War III is something I can't worry about. Everything else on this list I take seriously.

If you really believe this, you are better off with a stash of guns and some land on which to grow food. Oops, didn't mean to divulge my plan.

Trillion has become a common word, Fed is spending money like it's going out of fashion. Hyperinflatio/High-inflation is a very real possibility. If that happens, imports will slow, exports will boom, tourism will boom, hard-assets will be coveted, cash will be trash.

zeitgeist zeitgeist zeitgeist!!!

tazzy531 said:Hyper inflation? I'm getting ready for Ludicrous Inflation!

I signed in just go give you green. Thanks for the laugh.

There's no way to predict the future. You should not put your money into any long term positions right now because there's too much uncertainty.

scott1961 said:HumDoHamaraDo said:Trillion has become a common word, Fed is spending money like it's going out of fashion. Hyperinflatio/High-inflation is a very real possibility. If that happens, imports will slow, exports will boom, tourism will boom, hard-assets will be coveted, cash will be trash.
I still don't get how cash can ever be trash? High inflation will just bring back those 20% CDs we had when Carter was President

Ahh, yes...the good old days!

echo4747 said:What about agricultural commodities? (wheat,corn,sugar,cotton etc.) Wouldn't these be a good in investment during periods of high inflation?

I was kinda thinking along the same line in terms of Staples. People will still need to food and that will track inflation pretty well. Even though there's been deflation lately, you don't see prices at the grocery store going down much.

Second is oil. Target by OPEC even outside of inflation and sinking dollar value is for about $100/barrel. At around $50/barrel now, I'd think that upside potential is pretty good compared to how much down further it can go. They'll have a meeting on Dec 17th and I'd be very surprised to not see further cuts in output to boost prices.

Someone mentioned I-bonds. I don't consider this viable due to restriction on amount you can buy. They have some deflation protection and obviously some inflation hedge but still if all you can buy is $10k/yr per person, it's not gonna do it for most people wanting serious asset protection.

Real estate, I'd say it's probably still too early. I don't know too many markets but in ours there are still plenty of houses available, many new ones sitting on the market for months so prices have nowhere to go but down until inventory decreases further. And since inflation is probably gonna be delayed by 6-18 months, no sense in buying right now. Now in a year or so, I think it'll likely be a very good option even if lenders are gonna require 20% down pretty consistently. Rates shouldn't be too high yet and prices would be close to bottom.

Although there is a great deal of debate about the root causes of hyperinflation, it becomes visible when there is an unchecked increase in the money supply or drastic debasement of coinage, and is often associated with wars (or their aftermath), economic depressions, and political or social upheavals.

-Wikipedia "Hyper Inflation"

us = screwed