The New Depression

The breakdown of the paper money economony
by Richard Duncan
isbn: 978-1-118-15779-4
website: http://www.richardduncaneconomics.com/

I like his solution on pp 143-145 "where the government spends on investment programs that would quickly pay for itself"... such as "the president announcing that the U.S. economy would be entirely fueled by domestically generated solar energy by 2025"..."the goal would be not only to develop a cheap, limitless energy source for the future but also to stimulate the economy now."

notes:
Future government policy can not be foretold with any degree of precision.

Diversified portfolio: Commodities (including gold & silver), stocks (preferably with good dividend yield), bonds, rental property and fixed-interest-rate debt. In combination form a broadly diversified portfolio capable of preserving a significant amount of wealth in practically any conceivable economic environment.

• Commodities, perform well in inflation, suffer with disinflation or deflation. Gold & silver benefit most from quantitative easing which undermines public confidence in nationa currency
• Stocks tend to rise in 1. healthy economic environment 2. when central banks creat money and pump into financial markets (as long as don't cause too much inflation) 3. when government runs a budget surplus and crowds in the private sector, and 4. when trade deficit is larger than the budget deficit. Stocks tend to perform badly when inflation at the CPI level exceed 4%, in a weak economic environment and during a severe period of debt deflation.
• Bonds benefit from disinflation or mild deflation and suffer when there is inflation.
• Rental property can provide a relatively steady stream of income although capital value of property can fluctuate widely. 
• Financing rental properties with fixed-interest-rate debt provides a hedge against inflation. However in severe debt-deflation, rents would fall so much that the rental income would be insufficient to service mortgage. A prudent loan-to-value ratio mitigates that danger.

During a period of high inflation rates, value of bonds and stocks would fall, but price of commodities would appreciate. Meanwhile, rental property would continue to generate cash flow and inflation-adjusted debt burden would decline.

During deflation, commodity prices would fall. Stock prices would also fall, but decline would be offset to some extent by dividend income. Value of bonds would rise. Rental income would continue to generate cash flow, although in lower amounts if rents adjust downward. Mortgage payments would remain unchanged.