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The Upcoming Period Of Hyper-Inflation

As the American Federal Reserve stokes the economy with a near panic drop in interest rates and transfers of funds to failing financial institutions, you can be sure a period of hyper-inflation is coming. The graphic to the right is from Post WW1 Germany when hyper-inflation reduced their currency to less value than coal, heat content wise. So people burned money to stay warm.

To jump start the sagging economy the Federal Reserve is lowering interest rates in the hope cheap money will spur demand for goods and services. Coupled with our “rebate”.

This is most likely true. The politicians in Washington DC do not want this country in a recession come the November elections.   Congress is running for re-election.

If we are in a recession come November the voters might actually vote for change, change of Congress/Senate. Can’t have that, can we?

The incentive is high to get the economy humming by November and historically time is short for doing such things. Hence the rapid fire cuts in the prime rate.

The risk of overheating the economy is real and great, once the engines of commerce get fired up the momentum will be great and the economy will steam on and consume resources and capital at ever increasing rates.

Rates of consumption that will cause inflation to come roaring back. Remember the early 1980’s with CD rates in the 18% range? The Federal Reserve will be forced to slow the economy down by raising the interest rates. Any one living on or having substantial investments in fixed rate of return investments will get burned. Toasted I say!

It might be a prudent move to look at invesments that thrive in a high inflation rate environment.

For the past three months I’ve been in primary non-stock investments, income funds mainly.  At some point I have to switch out into inflation tolerant investments.  Any suggestions?

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