Circa Sep 2008

Lehman Brothers collapses..Credit markets freeze.. Equity markets crash.. Commodities Markets go on a tail spin..

Central Banks start getting their act together in a coordinated effort to revive the credit market..

Circa May 2009

Quantitative Easing led by the Fed  and followed by other Central Banks have brought down the interest rates to near zero..

All major asset classes and commodities have risen dramatically since March 09..

While the U.S. Government, by using the extreme measure of monetary policy of ‘quantitative easing’  is hoping that the credit flows would lead to economic recovery, in the medium term it is setting itself up to ‘hyperinflation’ due to the dollar that would start losing its value.

In this context it is interesting to note that the famous author of ‘Black Swan’ , Mr Nassim Nicholas Taleb and his collaborator who manages and runs a hedge fund have launched a new fund betting on ‘hyperinflation’.

There is a great probability that we would see higher inflation in India too..

The financial linkages have become stronger across the world in the last 4 years..

How should we re-align our  portfolios to prepare us for this new scenario that would hit us in the next 2-3 years..

Watch out for the next post which would focus exclusively on this theme..