Inflation Expectations~ real or perceived?
January 21, 2010 | 
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Between the budget deficit and the extensive growth of hard currency coming out of government printing presses, clients are expressing concern over inflation. The implications of these factors, if left unchecked, may lead to higher taxes and a significant loss of purchasing power from our wages and savings.
A little background: Inflation has typically occured during economic booms and periods of high employment. Excessive economic growth overwhelms our nation’s capacity to produce enough goods and services to meet demand.
The concern: With too much hard currency in circulation and China holding trillions of dollars in US debt, the value of the US dollar will likely decrease. As a result, our unemployment rates could remain uncomfortably high while inflation creeps back into the economy. There would be no high level of employment to cushion the effects.
Investors concerned about real wealth need to find the right trade-off between expected real returns and the amount of risk they are able to tolerate.
GJ Investment Advisory Team’s First Quarter discussion-
Inflation Expectations: Real or Perceived? (full version)
Submitted by Jon Dinkins
Questions:
jon.dinkins@glassjacobsonia.com
