Wednesday, October 08, 2008

Even more inflation worries

In the debate last night, both candidates said that "we" need to "stabilize" housing prices.

And then this morning the Federal Reserve cut interest rates by half a percent. Which actually means that they're dumping money into our financial system (that's how they get interest rates to go down).

All of which reinforces my belief that they're going to inflate away the financial crisis; they'll raise the price of everything else so that it looks like home prices are stable. If I knew a whole lot more about macro-economics I'd try to figure out how high inflation might get, but I really have no idea. Inflation has lately been about 5% a year; I'd wouldn't be surprised to see double-digit inflation next year.

So, if you're sitting on some extra money, do not put it under your mattress; it will just sit there and lose value. Treasury Inflation-Protected Securities look pretty good to me right now...

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