QE Infinity? Look to Hard Assets

If you have been keeping up with the activities of our federal reserve then you know that Ben Bernanke, the fed chairman, recently announced that the fed will be buying $30 billion of garbage mortgage backed securities per month from private holders (read: big banks).  This monthly purchase will go on indefinitely until the U.S. unemployment rate reaches a certain more acceptable level.  In order to obtain $30 billion per month the federal reserve prints the money out of thin air (actually they add the funds electronically to a private bank’s reserve account).  Having more dollars out there in the monetary system chasing the same amount of goods, services, and investments can never be a good thing, in terms of the U.S. dollar retaining its value, can it?  To make matters worse the federal reverse is not even part of the federal government – it is privately owned by the big banks.

Here is a short list of investments you can use to combat any price inflation that may be created as a result of the fed action:

CUT:  Timber ETF
RJA:  Rogers International Commodities ETF
Inflation Protected Treasuries (Pimco Real Return Fund)
Series I Savings Bonds – tied to the inflation rate (added bonus is that interest earned is deferred and is tax free if used for higher education – could be a good substitute for the 529 plan)
Silver and Gold miners
Gold and Silver Bullion (American Eagles)

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