Suppose I am convinced that there will be massive (>20% annual) inflation in, say, five years, since that is how a government repudiates debt. What is the best thing to do with a few hundred thousand, the only assets I own outside of a house and my fixed pension? Note that I don’t mind if it stagnates if I am wrong about inflation since then my pension holds up.
You could look into TIPS.
2nd TIPS
Before you run out and buy TIPS you need to educate yourself more fully.
At the risk of oversimplifying TIPS are usually for tax deferred accounts and the similar I-Bonds are for taxable accounts.
These things adjust according to what the government says the inflation rate is. This rate can be subject to considerable political pressure during volatile periods. While that may be tolerable you should be fully aware of how they work and how the CPI works and has changed in the last 20 years.
There are a lot of methods to hedge inflation and you should be well diversified even in that small sphere.
Educate yourself. The professionals who really understand this stuff are not available to you but the information is out there. A hundred hours of research may pay off very nicely.
Buy gold. It’s always going to be valuable, plus you can lay out of your gold coins on the bed and roll naked in 'em while cackling like Monty Burns.
I agree, I see Obama’s policies an igniting hyperinflation, about 4-6 years down the road. Basically, the addition of 4-5 trillion $ to M1 will have the effect of devaluing the dollar, and inflation will follow.
I am wondering if the right thing to do, is to buy as much real estate as possible-your debt will be wiped out by the inflation. You will then have all this property, for essentially nothing.
Yeah. If you thought there was going to be inflation rates higher than interest rates, wouldn’t you just start borrowing heavily?
Yes, but what we think is going to happen, and what actually does happen, makes it difficult to time the market to make it a sure thing. I’m sure people have lost their ass thinking inflation was coming, loaded up on an investment to take advantage, and turned out to be wrong.
The only place I think regular people can take advantage is with real estate, because the ups and downs are slower, and they’re easily seen. 4.5% fixed rates and low property values today? That’s a deal, and worthwhile if you can afford it. Compared with inflation my parents had when they bought their house, rates were around 10% for a mortgage.