Money exists because of debt.  If there’s no debt, then there’s no money.  The current economic depression is caused by the default of trillions dollars worth of debt.  This destruction of money causes deflation, where money becomes scarce, and more valuable. 

So what happens next is that economic growth slows down.  Unemployment goes up.  More loan default happens.  And the cycle repeats.  The Fed decides to solve this problem by creating massive amount of money from nothing, thin air, a snap of the fingers.  It’s a fight they will definitely win.  Heck money doesn’t even need the printing press to exist these days!  Just go into the computer and add a few extra digits, and viola, instant more money!   

My predication is that eventually there will be a lot of money.  It just won’t worth as much.  For a recent lesson on hyperinflation, check out the Zimbabwe money.  I’m not saying that we’ll be walking around with $100 Billion Bills, maybe just $1 million, but instead creating money from nothing is a slippery slope that we’ve been falling for quite a while even before the whole economic mess.  Now the crisis gives the Government the power to create & spend an unprecedented amount of money.  So yeah the chances for inflation, even hyper ones in the years/decades ahead is pretty high.

So what should a cautious person do?  Maybe buy some gold.  There’s only so much of it around, and has a proven track record of retaining its value throughout history.  If you don’t want to own the actual stuff, then at least go for the paper certificate, like GLD.  You don’t have to have everything in Gold.  But get some insurance policy against losing big time if the whole system actually collapses.