The 'Helicopter Economics Investing Guide' is meant to help educate the public on how to make profitable investing choices in the current economic environment. We have coined this term to describe the current monetary and fiscal policies of the U.S. government, which involve unprecedented money printing. This is the offical blog of the New York Investing meetup.
Recently, San Francisco Fed President John Williams assured the public that there won’t be runaway inflation in the United States. His remarks follow a long litany of comments from Federal Reserve officials that inflation is under control, inflation is low, and other variations of there simply is no inflation. People who know inflation history, and this includes very few people alive today, are getting little comfort from these remarks. Central bank officials have repeatedly assured the public that there is no inflation in the past despite inflation obviously existing. One of the most vocal and sustained denials took place in Weimar, Germany in the 1920s. The central bank, the treasury department and top economists all agreed that inflation wasn’t a problem. It eventually reached 100 trillion percent.
- Safe investments like money market accounts, CDs and government bonds are just as good during high inflation as other times.
- TIPS (Treasury Inflation Protected Securities) will at the very least maintain my capital during inflation.
- Buy and hold in the stock market is an effective wealth building strategy during high inflation.
- The higher the inflation rate, the better residential real estate is as an inflation hedge.
- The U.S. dollar is the strongest currency in the world and will remain so during a period of high inflation.
- If I have 5% of my portfolio in gold, my assets are protected from high inflation.
- Of all possible inflation hedges, gold will provide the biggest return during high inflation.
- When inflation is taking off, commodity prices will rise at the same rate as inflation.
- When a government imposes wage and price controls, you can assume the inflation rate will come down and stay down.
- Speculators are the cause of high prices during inflation.
- The U.S. dollar or the Australian dollar
- A U.S. treasury bond or a collectible Pez dispenser.
- A house in the Chicago suburbs or a 100-acre farm in Iowa
- A 5-year CD or a copper mining stock
- Utility stocks or commodity oil
- Municipal bonds or Thai grade B rice
- TIPS or a set of silverware
- Long positions in U.S. treasuries or short positions in U.S. treasuries
- A money market account or a gold ETF (exchange traded fund)
- British stocks or an antique map of England
Author: Inflation Investing – A Guide for the 2010s