What is the down-side of using the TIPS?
We must never forget that the TIPS are fiat instruments, issued at-will just like the government-issued currency. Governments, by their very nature, are driven by political considerations, which sometimes outweigh economic considerations. As such, it is always possible that a government administration in the future might issue too many TIPS, which could lead to a default. Inasmuch as there are no assets securing the issuance of the TIPS; such a default would have a major impact on the private currency, if it was backed 100% by the TIPS. For this reason, we will ultimately use Real Mortgage-Backed Securities® (RMBS), in addition to the TIPS, to secure the private currency. Since the RMBS are also real financial instruments, they can be stripped just like the TIPS. However, the RMBS are secured by Real Mortgages® on real estate, which is an excellent hedge against inflation. Nonetheless, a portion of the assets backing the private currency will always be the TIPS, since the TIPS will gen
