50 THE BiG DROP
Americans. That change is not easy to cause, but once it hap-
pens, it is not easy to reverse, either.
If inflation does hit 3%, it is more likely to go to 6% or
higher, rather than back down to 2% because the process
will feed on itself and be difficult to stop. Sadly, there are no
Volckers or Reagans on the horizon today. There are only weak
political leaders and misguided central bankers.
Inflation will accelerate as it did in the U.S. in 1980 and in
Germany in 1920. Whether hyperinflation comes next remains
to be seen, but it can happen more easily than most people
expect. By then, the damage is already done. Your savings and
pensions will mostly be gone.
The assets you need now to preserve wealth in the future
are simple and timeless. Gold, silver, land and select tangibles
in the right amounts will serve you well. Mutual funds designed
specifically to protect against inflation should also be considered.
One such mutual fund is the West Shore Real Return
Income Fund (NWSFX:US). Its assets include units of physical
gold, fine art and other tangible assets intended to preserve
wealth in inflationary conditions.
Full Disclosure: I’m global strategist for the West Shore
Group, which manages the fund. Still, I believe NWSFX is a
good representation of the assets that are necessary to protect
your wealth.■ Excess Reserves Held At Banks
The reason the Fed is paying interest on excess reserves today
is to give banks the money to pay higher insurance premiums
to the FDIC. Remember, the Dodd-Frank bill raised the insur-
ance premiums on the banks that they have to pay for their
deposit insurance. That would have hurt bank earnings. So the
Fed said, “Fine, we’ll just pay you on the excess reserves, take
the money and pay your premiums.”