Redrick Terry:
It’s 4 Your Money time now. We’re joined, as always, by David Nelson, CEO of NelsonCorp Wealth Management. David, welcome back.

David Nelson:
Yeah. Thank you very much, Redrick.

Redrick Terry:
Of course. So last week, we discussed the rising debt that we’ve seen this year, and there are those out there who suggest that this could cause inflation to rise in the future. So is this something that people should be concerned about?

David Nelson:
Well, it’s clearly been an interesting year, as far as all that’s taken place this year. We had large parts of the economy completely shut down. Things have changed since then, but that was very deflationary, and this isn’t what we want to see. Chart one that I brought along today, Redrick, is going to show folks the break even basically looking at traditional type bonds that people would be familiar with, comparing to what are called TIPS, or inflation protected government bonds. And what we’re comparing here is the difference between the two to try to establish what does it look like? What do the markets think inflation’s going to be?

David Nelson:
At the beginning of February, we saw that that was about 1.6%. That dropped by the end of March with the crisis we just went through to 0.2. Shocking numbers, as far as what took place. But what we see is that the expectations have changed over the last several months, and rates are back roughly to where they were at the beginning of February.

Redrick Terry:
What are you seeing with other areas of the market? Are you seeing some of those with similar responses?

David Nelson:
So nothing operates in a vacuum. And so chart two is going to show folks probably the biggest one that we’re keeping an eye on right now, and that is the dollar. The dollar in February and March when we were at the peak of the crisis, as far as we just went through, what we saw was the dollar rise dramatically. Now, since then, what we’ve seen is the dollar has dropped a lot. It’s been basically straight down. Now, people say why? Well, I think why is that the debt load is so massive, and the Federal Reserve came out and said interest rates are going to stay low for a very long time. So hard to believe, but we were the high interest paying country a few months back, and that was two percent. Today, we’re well under one percent.

Redrick Terry:
So what should some people be thinking about in regards to their investments, in light of that?

David Nelson:
I think the key is understanding how inflation could potentially affect them and a lower dollar, how it could affect them. So one obvious place that people should be looking at is foreign stocks and bonds. As the Teeter Totter tips in one direction and the dollar goes down, that helps foreign stocks and foreign bonds. Commodities will really benefit as far as in this environment, primarily gold. Gold is up significantly this year.

Redrick Terry:
We appreciate the information and the time, as always, David Nelson. Thanks for joining us.

David Nelson:
Thanks, Redrick.

Redrick Terry:
And if you missed any part of our discussion, we’ll make it available to you at ourquadcities.com.