Financial Options

BestView does not give investment advice, but if you are concerned about the U.S. debt and budget situation, certain well-established consequences will flow from the Obama administration economic policies. First, the country will need to borrow extensively to fund the budgets projected in the future. The only way they can do that is to print money and sell the bonds to someone. When you increase the supply of something, its value goes down. Ergo, the value of the dollar in the future will go down in my opinion. What can you do about this? One thing you can do is buy an Exchanged Traded Fund (etf), which trades just like any stock, that has the symbol UDN. This is a fund which goes up in value when the dollar loses value. I own this in my IRA.

Another consequence of the massive increase in the amount of dollars which will be available is commodity inflation. When the value of money goes down and more dollars start chasing things we need to support our life styles---like food and energy---the cost of those things will go up. In previous posts BestView has mentioned the virtue of owning some gold. Now there is a way to offset some of the damage that will be inflicted on future budgets in your household by owning a broad basket of commodities which will increase in value when the cost of things like oil, wheat, sugar,etc. get more expensive and thereby make food and transportation more expensive (inflation). Again, this can be done using an exchange traded basket of commodities called an ETN which trades like an ETF or any other stock on the New York Stock Exchange. The symbol is RJI. If you think that in the next few years the cost of groceries and energy is going to go up, an investment in RJI could help offset that increase. I am currently considering such an investment, but haven't bought it yet.

These are not investment recommendations, but we all need to find some way to avoid the consequences of inflation and these are two ways to investigate for your particular situation. Another hedge against inflation is real estate, but that is the subject for another day and compared to the suggestions above suffers from lack of liquidity in that you can't just wake up some morning and sell your real estate like you can a stock.