Date: Tuesday, May 31, 2011
What should we invest in?
Given the extreme uncertainty in the investing environment, and given that housing, employment and wages, and some of the other fundamental economic measures are flashing warning signs, this is not a simple question.
I have written thousands of essays examining the great inflation versus deflation debate (here's the latest). I can see both sides of the argument, as well as arguments for inflation and deflation at the same time. And see this essay by Shah Gilani on Chinese inflation.
If you believe that hyperinflation is in our future, then you might want to hear what PhD economist John Williams suggested in 2009:
Williams is advising people to stock up on gold and booze to bargain with once the hyperinflation makes dollars worthless:...
“Three or four years into the future I think we could be in a hyperinflation, within the current year you’re going to see much higher inflation than most people are looking at,” Williams told MarketWatch.Williams said that his definition of hyperinflation would be a situation in which a $100 dollar bill would become more functional as a piece of toilet paper than a store of value.“This is a time when you want to preserve your wealth and assets because inflation will knock the value out of it,” he added, advising that people buy physical gold and assets other than the U.S. dollar.“Then when the hyperinflation hits you’ll see disruption of normal commerce, you won’t have enough $100 dollar bills to buy what you want,” said Williams, adding that items to barter with, such as a bottle of scotch, would be more valuable than actual cash, even in large quantities.
Read full article here