Tuesday, April 20, 2004

War Causes Inflation
This Salon article by James Galbraith, a professor of economics at the University of Texas, points out that war causes inflation, and we are in a war in Iraq. Whatever your thoughts about the war, this seems true, and not likely to end on June 30th. The evidence of inflation's return is all around us: higher prices for gasoline, housing, lumber - heck, even my CPA raised his price this year.

So my thinking today is: plan for inflation's impact on investments. Don't buy long term bonds or CDs, avoid companies that lend money in favor of those that borrow it. Loans will be easy to pay off with tomorrow's dollarettes.