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INFLATION

How bad will it be?

>> It depends on whom you ask. Some experts say we cannot fail to have rampant inflation, if not now, then soon. Others say no; it won’t happen. Both sides—will and won’t—have plenty of ammunition:

“We will have high inflation:”

“We won’t have high inflation:”

Who’s right?

That remains to be seen. But a simplified analysis seems to suggest cause for concern, not alarm: It’s generally accepted that the total amount of money in circulation is a key factor in estimating the chances of high inflation. With that point in mind, the fact that the federal government has added several trillions to the money supply does not loom as large as some fear, because U.S. households have lost over $11 trillion in wealth. The comparison is not exactly apples to apples, but it still suggests that on a net basis, federal spending will not necessarily overheat the economy. In addition, the excess capacity in our system must be gradually absorbed before we start to have serious worries about rampant inflation.

Self-defense: Bad as the stock markets may seem, they have historically offered the most practical and effective way for the average person to accumulate wealth faster than the rate of inflation. If serious inflation does rear its head, Treasury Inflation-Protected Securities (TIPS) are worth considering; the interest they pay varies with the rate of inflation. To learn more about protecting yourself from inflation: www.ehow.com/how_2221947_protect-savings-from-inflation.html

Is high inflation on the way? What experts predict.

 

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