Buy a $100 U.S. bond and frame it to teach your children about inflation by watching the U.S. bond value diminish to almost nothing over the next 20 years.
Sentiment: NEGATIVE
If you're afraid of inflation, I think - and if you can bring yourself to have a long horizon - and when I say long, I mean ten to 20 years, not the usual ten to 20 weeks - that locking up resources in the ground is a terrific idea.
At some point, the dollar has to give. You can't just keep printing money, and monetizing debt, and buying bonds, without the dollar imploding.
When people begin anticipating inflation, it doesn't do you any good anymore, because any benefit of inflation comes from the fact that you do better than you thought you were going to do.
One day we will have more inflation, and our bonds will bleed like a pig. The only reason for buying long bonds is short-term or as a desperate haven for terrorized investors. But the potential to make longer-term real money is naught.
You have to teach children about money intentionally - create teachable moments.
Double-digit inflation is a terrible thing - and it got up to 14 or 15 percent on a monthly basis for a while, shortly after I became chairman of the Fed.
The real problem is deflation. That is the opposite of inflation but equally serious to the borrower.
But obviously, we're looking for all good ideas to help deal with our long-term debt problem. This is something that is going to affect our economy. It affects our kids. And we need to deal with it.
It is critical that kids start to learn the value of money, short-term and long-term saving and budgeting at an early age.
The government will always tell you that it wants low inflation. The real issue is the horizon over which to bring inflation down.
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