“If our assessment is correct, somewhere down the road, the Federal Reserve will lose its battle and T-bond yields will soar.”

I agree. There might have even been a failed treasury auction this year if it were not for the way the system is designed. In a nutshell, the big banks are forced to bid at each auction. Because of this, a true failure is unlikely without a full scale banking system failure. Rates will still rise without an auction failure, it just might take longer than people expect.

“In the past, when inflationary episodes spiraled out of control, hard assets were the prime beneficiaries and this trend is likely to remain intact in this inflationary episode. If our assessment is correct, over the coming years, stocks, precious metals, commodities and real estate will appreciate in value versus paper currencies.”

Read “When Money Dies: The Nightmare of the Weimar Collapse” which you can read for free here: http://mises.org/resources/4016 It has detailed information on which investments held up and which ones did not during the hyperinflation of Weimar Germany. At the beginning, those who held Germany currency lost out, while foreign currencies, stocks, precious metals, commodities and real estate held value. After several years, however, stocks got crushed as the German economy collapsed. As famine set in, owning a farm or having access to food sources was key. Housing did OK but not as good as general commodities by the end. The book has fascinating tales, such as one case where a formerly well to do woman sold a grand piano for a bag of potatoes. Perhaps this is why Jim Rogers has been saying for years that he recommends people become farmers. I would like to find out how Weimar matches up with other episodes of hyperinflation in history.

“Finally, we suggest that you consider allocating a portion of your capital to the fast-growing economies in Asia, like China, India and Vietnam. Such investments should prosper during the low-growth, high-inflation environment to come.”

India and Vietnam, maybe. China? I have to disagree here. China has been busy building entire cities where there is no demand and stoking bank lending to unparalleled degrees: http://www.youtube.com/watch?v=0h7V3Twb-Qk China might be a greater risk than anywhere else in the world of collapse. I don’t like the risk/reward there at all.