What's your strategy to counter inflation?

The US Federal Reserve has said that although economic activity is picking up, it plans to keep interest rates close to zero for an extended time. This is after US interest rates have fallen steadily from a high of 5.25% since September 2007. Central banks around the world have resorted to a soft interest rate regime to jump start their economies that went into a shock from the global financial meltdown.

We wonder if the prolonged availability of easy money will extract a really steep price from us in the days to come. The longer such easy money is available, the greater are the chances that it will find its way into several asset classes and create bubbles there. It is most likely to also cause runaway inflation i.e. devalue the purchasing power of currency. In fact, Warren Buffett has recently sounded a warning that the US risks becoming a banana republic if the monetary medicine is administered for a prolonged period.

In fact, commodity guru Marc Faber advises investors not to be fooled by the Fed's assurances that it will keep inflation in check. It simply cannot, given the pressure to print money due to hue huge debt sitting on its books. Further, Mr. Faber has added that it is very important for everyone to own some gold because the US government will make the dollar useless. Although commodities in general do well in times of runaway inflation, Gold is traditionally the most favoured anti-inflation play. In our opinion, businesses with strong franchises will also be able to counter inflation. Those are businesses that have the ability to raise prices without losing volumes.

About Rajasthan

I am belonging to Rajasthan so in my first post i would like to write something about Rajasthan.

Rajasthan is predominantly an agrarian State. Agriculture in the State is essentially rain fed, highly susceptible and vulnerable to the vagaries of the monsoon. The rural non-farm sector is crucial for generating additional income & employment opportunities for large segment of the rural masses. The state has vast potential for development of the non-farm sector as it has a rich tradition of artisans/crafts, is endowed with natural resources, and has a strong base of traditionally skilled manpower and hard working entrepreneurial people. In order to promote RNFS, NABARD has been extending refinance for the development of rural non-farm sector since 1985-86. An amount of Rs. 639.57 crore has been provided as refinance till the end of March 2006(latest data are not available).