now lets see the consequence of this inflation on the lender, and how he has been fooled into believing that he is getting some return on the investment, nurturing the view that lending money to the government is the safest investment, as the government takes money from you and returns the original investment with some profits on expiry of the contract, and government is most unlikely to fail in repaying the loan, the lender falls into the trap, but the lender fails to understand the complete implications of investing money in government bonds, when the government is going to print money to repay the loan, suppose the lender is saving money to buy his dream home in a posh area, which he cant buy immediately due to shortage of cash, and doesn’t wants himself to be in debt so he saves the money instead and to get some return on investment, he invests it into the Government bonds thinking it as the most safe investment, but the government is printing money to repay the debt leading flooding the markets with paper money, increasing the cost of the lenders dream home much more than his assured return, so at the time of the expiry of the contract if the lender is getting 150 for very 100 invested the price of the dream home has rocketed and reached 300 for very 100 making it a loss of 150 Rs for the lender, so actually the dog kept to safeguard the house has stolen the beef in the house, so then where to invest money in this highly unpredictable situation where the unemployment is increasing but prices of the commodities too are increasing, the government is reporting deflation but the expenditure from the pocket is showing inflation, well you have to decide in the mind whether you expect growth to pull down the inflation, or the inflation to pull and show some inflated growth, if you feel inflation is going to win then you are better off investing in Indices via Exchange Traded Funds (ETF’s), albeit putting a stoploss somewhere round, for example Dow Jones Index has traded for most part of this decade in the range of 10K to 12K, so breaking up above 10K and maintaining it for considerable time could be considered positive while a break down below 10K should be considered negative and the Dow can then retest the March 2009 lows. An alternative investment could be buying Gold and maintain a stoploss of close to $1040, as gold has traded for a long time close to $1040 and just given a breakout above $1040, so keeping a stoploss at $1040 one can go long in Gold for an initial target of $1400, and if $1400 also broken sustainably then Gold can target $2000.