I wish anyone luck trying to forecast 10 year hence real rates or inflation given this mix. My personal opinion is that due to fiat currencies they are likely to be much higher unless central banks allow a deflationary credit contraction to take force without trying to inflate. History suggests that they all try to inflate!

Very interesting results. However, as a practical matter, I doubt that it’s that useful. I don’t know this for sure, but I highly doubt that 10 year TIPS, or any other fixed income instrument, is a successful predictor of what inflation and real interest rates will be ten years hence. Heck, people have enough trouble figuring out what FOMC policy will be next meeting, let alone how loose or tight policy will be 10 years from now, and hence the extent to which the money supply is inflated. In that condition of uncertainty, my own personal preference is to purchase shares of companies with strong managements, a demonstrated ability to grow cash flows, an ability to produce and manage free cash flows effectively, and with hopefully some ability to raise prices at a similar rate to the CPI or some other inflation guage. But that’s just me – I’ve been wrong before, and will be again, no doubt about that!

This is a very nice analysis. In the little investing that I am able to do I ask myself “How hard is my money working for me”. Your article puts the outside influeneces (like inflation) in greater perspective.

Thanks, Louie