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Article Title: Are You Prepared For Super Inflation?
Author: Jay Peroni
Category: Financial Planning, Personal Finance, Stock Market Investing
Word Count: 582
Keywords: financial planning, certified financial planner, inflation,
investments, stocks
Author's Email Address: [email protected]
Article Source: http://www.articlemarketer.com
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With all of the reckless government spending, many are becoming concerned about
the potential devastating effects of inflation. Significant inflation is not
only feasible, it is very likely. I wanted to take a few moments to update you
on what is going on in the economy, how inflation can be dangerous, and provide
several investment ideas that will help us fight inflation in the upcoming days.
Why is inflation inevitable?
With Democrats and Republicans alike agreeing deficits are necessary to fight
our current economic crisis, Obama and his party have no constraints on how
much they are willing to spend! "Sky's the limit! Heck, they have already
committed to spend over trillion-plus dollars over the next two years alone.
So how will we pay for it?
We really only have two ways to pay for the spending:
1. Printing more money, which causes inflation, and/or
2. Hiking taxes, which kills investment, businesses and jobs.
Why is inflation dangerous?
Inflation simply means rising prices. But in addition to retail price inflation
measured by the Consumer Price Index, you also have monetary inflation - the
growth of the money supply, or the total amount of money in the economy. (Our
money supply includes dollars, checking and savings accounts, CDs and money
market funds, and short-term transfers of securities in exchange for cash.)
Here is the great balancing act of the Federal Reserve. If it eases the money
supply (think lower interest rates), borrowing costs decrease, and investment
generally increases. But with easy money, price inflation and currency
devaluation follow. The Fed can fight inflation by raising rates to effectively
tighten the money supply, but with possible byproducts of reduced consumer
spending, lower corporate earnings, and less investment.
Is the government helping or harming the economy?
My opinion is the government is doing much more harm than good with its current
spending. We must realize that government intervention is magnifying, not
solving the problems that caused the crisis! It's only when the patience of
the public with Obama's remedies run out that we can get the train back on the
tracks. However, this probably won't happen until at least mid-term election
time (late 2010), maybe re-election time (2012) or even thereafter.
What do you do in the meantime?
There are many ways to protect you and your family from the potentially
dangerous effects of inflation. Hard times for America do not necessarily mean
hard times have to come for you. No matter what the economy is doing, no
matter what the state of financial markets are there is always a strategy
available that can make you money. The key is to recognize opportunities
wherever they may be and, more importantly, detach from old investment
strategies that are no longer working.
Here is a list of inflation protection securities. Please note these are a
list of suggestions. These are not recommendations. Please do your own
research before purchasing. Here are six ETFs with the potential to do well if
inflation takes off:
Holding/Symbol
IShares US TIP Securities/TIP
IShares COMEX Gold/IAU
IShares Silver/SLV
Proshares Ultrashort 20+ Year Treasury/TBT
Proshares Ultrahort 7-10 yr Treasury/PST
SPDR Gold/GLD
Let's be realistic: the next several years may be the toughest ones for
Americans in their lifetime. However, they do not need to be tough years for
you if you prepare, trust in God, and find and follow sound investment advice.
Jay Peroni, CFP, and author of The Faith-Based Millionaire and The Faith-Based
Investor. Jay is also the founder of http://www.FaithBasedInvestor.com, a
faith-based investing newsletter and the founder of
http://www.ValuesFirstAdvisors.com a firm dedicated to faith-based financial
planning.
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