Joachim Fels, Co-chief Economist, Morgan Stanley, says the economy should not double dip and that extraordinarily loose monetary policy will cause inflation to rise becoming the primary risk to the US and global economy.

Here is Fels' article. It's short, sweet, and easy to understand.

Fear Cheap Money, Not Double Dip: Morgan Stanley

I don't think it's a matter of "will things get better". I also don't think it's a matter of "will there be inflation again". I believe inflation is a necessary buffer in keeping deflation in check.

What types of investments do well when we have inflation?

Generally, the types of investments that perform well with inflation are any asset that can price in rising costs. I think one area in this class which provides lots of opportunity as the economy improves is common stocks.

Common stocks can price in increases in labor and materials. They can develop more products which could help sales and the bottom line. In addition, they can increase sales. All of these areas should help fight inflation and increase profits. The end result is that you generally find higher values with higher sales and profits.


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