Most conservative investing

Inflation risk

As you know, the United States government is enthusiastically headed for financial disaster by massive deficits, that will compound the interest cost of the national debt. Not only the ridiculous bailouts, but also the endless wars and the future deficits from the Medicare system. This will lead to massive inflation. As a result, what should be the safest investment, in U. S. Treasury obligations, faces a big risk that the dollar will lose value.

Soon to be worth 90%, 80%, 70% ...?

For a description of the political forces that have time and again resulted in runaway inflation, see the book The Dollar Meltdown: Surviving the Impending Currency Crisis with Gold, Oil, and Other Unconventional Investments by Charles Goyette. You may not share his choice of investments, but you will be depressed by the oddly familiar stories of past government patterns leading to loss of currency value. Some of the depressing historical examples are from other countries and from other times, for example 1930′s Germany and current day Zimbabwe. But other examples are from recent United States history, including the Nixon presidency, the Carter presidency and the George W. Bush presidency with the Medicare prescription drug benefit added without facing the revenue shortfall that will occur given the aging U. S. population.

Shorting US Treasury obligations

If you believe that the dollar will be losing value as a result of deficit financing of the government, then how to short U. S. Treasury obligations to protect yourself? Mr. Goyette recommends a fund, the Rydex Inverse Government Long Bond Strategy Fund (RYJUX). Information about the company, the fund and a link to the prospectus can be reviewed by visiting the Rydex SGI site and the fund description page.

In the alternative, you can short the long term U. S. Treasury obligations. However, the risk of a short position is theoretically unlimited, so be careful.