Thread: Investments
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Unread 04-19-2010, 01:35 PM   #17 (permalink)
Ugly Bastard
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I think there are a few things wrong with your argument, f3lix.

First, I have no idea where you see there being a "minimum" of 4% inflation and as much as 9%. The highest inflation we've had in the past decade has been 5.6%, and since Obama took office inflation has come to a standstill. We actually experienced some small deflation in his first year in office.

Moving forward, I think more deflation is quite likely. In a deflationary scenario, a 2% savings account is a perfectly strong investment. Look at the inflation rates in Japan in the past decade. They have experienced a considerable amount of deflation, and there are a lot of things about our current economic situation that parallel theirs from years ago (massive government spending, increasing taxes, a housing bubble, huge education and health care spending relative to GDP, etc).

The only way we're going to see strong inflation is if the Federal Reserve prints a lot of money to help us with our ballooning debt. I think it's unwise to assume they will do this. They're not just going to flush our currency down the toilet like that. I'm sure Nancy Pelosi would want them to, but they're just not that stupid.
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