Arun Motianey's Advice For A Period Of "Voluntary Inflation" (TIP) (TBT) (GLD) (SLV) (JNK)

Tech Ticker's Aaron Task interviewed Arun Motianey, author of the book "Super Cycles" and a senior strategist at RGE Monitor.

Motianey said that the three most likely investing scenarios to come out of the current economic cycle are inflation without indexation, inflation with indexation and deflation.

Although he believes deflation is a serious concern, Motianey believes it more likely that we will enter into a period of "voluntary inflation" when central bankers embrace the benefits of a managed period of inflation.

Motianey said that we know from the Japan experience that zero rates didn't really help and that the US economy is not even in the same position as Japan was 2 or 3 years into their crisis, when they were not even aware of deflation.

He said that the central banks will probably monetize public sector deficits, which would bring inflation.

Motianey says that because equities tend to like a bit of inflation, demand for credit would go up.

Once we have entered a period of voluntary inflation, government bonds should be avoided, especially "risk free bonds", which would actually be the riskiest.

Investors should hold onto corporate bonds, which are a sort of "quasi-equity".

Natural resource and basic material equities would be attractive investments, as would dividend paying stocks, which would replace bonds as an income generating investment as their dividends rise.

According to Motianey, gold and other commodities would do "extremely well."

If such a scenario came to pass, investors would do well to look into investments such as iShares Trust Ishares Barclays (NYSE: TIP), ProShares UltraShort Lehman 20 (NYSE: TBT), SPDR Gold Trust (NYSE: GLD), iShares Silver Trust ETF (NYSE: SLV), S&P 500 INDEX,RTH (SNP: ^GSPC), SPDR Series Trust SPDR Barclays (NYSE: JNK) and Dow Jones Industrial Average (DJI: ^DJI).