Worried about Deflation? Go Long Bonds with EDV

Since the financial crisis hit over two years ago, governments all over the world have taken a variety of steps to restore economic growth and investor confidence.  The most popular tactic has been to throw enormous amounts of stimulus money into the economy.  Central banks enhanced this fiscal stimulus with drastic cuts to interest rates.  That’s certainly how the Bush and Obama administrations handled the situation. While the effectiveness of the strategy can be debated, the result is that short-term interest rates in the U.S. currently hover near zero.  The resulting new liquidity makes many investors think twice about investing in long-term Treasuries.  Financial markets suspect the Federal Reserve will not be shy about raising interest rates when economic growth resumes. In other words, investors look at interest rates and…