Whirrrrrrrrrr

Yes, that whirring sound you hear is Gentle Ben at the Fed warming up the helicopters. And just in time! As inflation roars, and the dollar plummets the Fed now feels it must lower Fed Funds yet again. And while this is probably a necessity given the parlous state of world credit markets, it is nonetheless a horific medicine to administer when inflation is flexing its ugly muscles.

Consider that US farmers are cutting the size of herds because it now costs more to feed cattle and hogs than can be recouped from selling them. The short term effect of this will be to constrain beef and pork prices. But long term this will result in much higher meat prices to consumers. And of course this will be exacerbated by a falling dollar which will make US food exports more competitive in world markets. Good for the trade deficit, bad for US consumers which will soon have to pay much more for food of all types.

What to do? How to protect your wealth? Try FXE, an ETF which is really a Euro money market you can buy on the stock exchange. Or GLD, or SLV which are ETFs that hold gold and silver. Try a global bond fund, my preference is GIM and I have neither the space here nor the time to go into all the reasons I like this, but come up with one on your own. Not just bonds in these, but bonds denominated in stronger currencies. Yes, many of these have already had a good run ( fair disclosure: I am long all of these ), but with the helicopters gathering over head they may have quite a run yet.

Whatever you do, don't just sit there admiring the helicopters!