If the world is going to hell in a handcart, what should you buy? With newspaper headlines dominated by the credit crisis, and with big banking names perceived to be under threat, this is a question all investors need to consider.rnMuch depends on what form you expect the apocalypse to take. In recent weeks investors have been flocking to buy Treasury bonds, relying on the unimpeachable credit of the American government. But with the dollar falling almost every day, foreign investors may feel the government's credit is about as unimpeachable as Richard Nixon; they will be paid back only in devalued paper. And if, as some observers believe, the Federal Reserve has taken its eye off inflation in its zeal to rescue the financial sector, domestic investors may not find ten-year Treasury-bond yields of just 3.4% (on March 18th) all that appealing.
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