Since it is impossible to predict which kind of inflation we will predominate in the future, it is best to be prepared for both currency inflation and credit inflation (the latter inevitably results in stock market crashes) so that you can make ongoing corrections in your portfolio as reality unfolds.

Subscribe to The No History, No Liberty Newsletter to get the latest updates on this important issue.  Below are some of my recommendations as of June of 2012.

Accumulate cash.  A strong cash position (25-30%) would enable you to take advantage of opportunities to buy assets at historically cheap prices when all markets eventually and inevitably collapse.   As you approach that day, increase your cash position accordingly.  Also, I recommend having enough folding money to service debt and pay expenses for a year.

Buy Bonds.  Also, it would be wise to buy some very short term U.S., Australian, Singapore and Swiss government bonds, which could be rolled over to take advantage of much higher interest rates.  How much of your liquid assets should you invest in this manner?  However much you feel comfortable with.

Avoid Real Estate.  Real estate is a thing, whose value will plummet along with every other thing in a hyper-deflation, as seen in the stock market crash of 2008.  Avoid all real estate investments right now and try to own your home free and clear.  If you are now renting, continue to do so.

An exception is rental real estate on which you are dependent for income, as home ownership declines, the demand for rental property will increase.

Look Forward.  You can buy anything that you want for pennies on the dollar after the crash.  A deflationist’s manifesto is:  “Raise cash now to preserve your purchasing power for the shopping spree.”

So what should you do?  Before you make a crucial error in judgment, subscribe to my “No History, No Liberty” Newsletter or at least read my FREE REPORT, “The 7 Mistakes Investors Will Make in the New Economy,” available here.

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