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Here is an excerpt from a prior blog in October 2007 when the Fed first made it clear that it would behave irresponsibly to bail out financial institutions versus protect the currency:

In the end, commodities and in particular the currencies of gold and silver will benefit the most as the paper printing inflate and lie policy has one true beneficiary.  The paper assets will do okay until the game is played out but, none will gain on gold and silver.  While Wall Street and the paper asset crowd are temporary winners in the modern day Wiemar Republic of the US, in the end all Americans will be losers are rampant inflation and eroding dollars reduce our standard of living.

The Fed has already gone much farther than I thought they would in fighting recession and financial institution collapse.  The TAF and TSLF vehicles are massively inflationary and equate to former South American countries' policies of debt monetization.  If you have not taken steps to protect yourself yet with inflation protection I suggest you do so.  Canadian mining companies, Forex, and commodities are the best ways.  TIPs -- where people often turn first -- are poorly structured in that the payor of interest is also the calculator of the inflation rate.  For this reason, TIPs have returned about 9% over the past year while commodities have returned about 50% and Canadian dollar denominated fixed income about 25%.

Get some inflation protection today because the early signs of debt monetization are scary.

 

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