Hopkins' Hanke: Inflation coming, buy gold
Steve Hanke, economist at Johns Hopkins, repeats his recommendation to buy gold and commodities, saying the jobless recovery will keep the Fed loose and potential inflation strong.
As we await the outcome of the battle over Fed transparency, we should ponder a recent conclusion of Carnegie Mellon’s Allan Meltzer. As the author of the authoritative A History of the Federal Reserve, he has observed that the Fed responds “decisively to the unemployment rate but not to the inflation rate.” As long as unemployment remains elevated, expect loose monetary reins and more inflation.
Protect yourself with some exchange-traded funds. Buy SPDR Gold Shares (GLD, 93; expense ratio, 0.4%), which tracks the metal. I also recommend diversified commodity ETFs like the iShares S&P GSCI Commodity-Indexed Trust (GSG, 30; 0.75%) and PowerShares DB Commodity Index Tracking Fund (DBC, 23; 0.75%).
Comments
And what is so bad about higher interest rates?
I'm not advocating 20% but 7-10% and actually based on market forces rather than governance machinations may be just what we need.
Posted by: MrRational | August 21, 2009 9:22 AM