A boom is coming, says Ted Peroulakis. Unfortunately, it’s a boom in inflation. It looks increasingly like the Fed will have to print its way out of this economic crisis. And the huge national debt burden will need to be inflated away. Ted says investors can protect themselves against this trend by holding the ultimate currency: gold.

This from Investor’s Daily Edge:

Well folks, it looks like the inflation genie is out of the bottle. All these economic stimulus packages and bailouts will have to be paid back eventually. It looks like we are going to have to print our way out of this mess.

Not to mention, the U.S. national debt is over $10.6 Trillion and the Federal budget deficit was over $400 billion last year and could exceed $1 Trillion this year.

Federal spending could reach 25% of GDP this year, which would be the highest level in American history outside the World War II period. The U.S. government is going to have to borrow more money than at any other time in history.

Where is all this money going to come from? Currently, investors around the world are still standing in line to buy our short-term government securities. The global economy is in bad shape and America still has the most trusted and stable market in the world.

But China’s exports have plummeted so they don’t have the money to lend us anymore. Oil prices have dropped sharply, so OPEC doesn’t have as much to lend us. On top of that, if America opens up the printing presses it could scare investors out of the dollar and into the Euro or Japanese Yen.

So what happens if the world stops supporting our lavish spending habits? We will have to print money to meet our crushing debt obligations and that will result in a huge jump in inflation.

Inflation seems unavoidable considering the huge amount of money that’s being created and put toward our country’s economic problems.

The government recently reported that there has been a large spike in the amount of money that is floating around. The Fed is pumping huge amounts of capital into the financial markets to rescue the banks and restart lending. The monetary base is accelerating and currency in circulation is exploding. This is very inflationary.

The Federal Reserve has been cutting interest rates to head off a deeper recession. One potential risk to that strategy is inflation.

President Obama has hinted that America will spend its way to prosperity. He knows that dumping billions of dollars into upgrading our infrastructure will create jobs and stimulate the economy. His plans to reinvigorate our economy will have a big price tag and this is another case for inflation.

America has the biggest and most resilient economy in the world and we will eventually recover from our financial woes. But, when our economy recovers I expect the prices of goods and services to rise substantially. We have all witnessed prices for many everyday items going up already.

The U.S. is not going to make it out of this financial crisis without significantly devaluing the dollar to inflate away part or the entire debt problem. Batten down the hatches, inflation is coming.

Now, I’m not saying we will have hyperinflation. It will not get that bad. We will not end up like Zimbabwe with 231 million percent inflation.

But, it is important to protect ourselves from inflation to preserve our wealth and purchasing power.

So How Can You Profit From Inflation?

You can own an asset whose purchasing power has outlasted governments and civilizations for more than 5,000 years. Gold has always protected one’s assets in inflationary times.

Gold is the best performing asset class this decade. Since 2000, gold is up over 200% and it looks like it will keep going.

Inflation decreases the value of the U.S. dollar. As the dollar goes down, the value of gold tends to go up, because gold is priced in dollars. That’s why you should be a gold bug.

One of the best ways to protect yourself against inflation is to own gold.

A great way to own gold in your portfolio is to buy the SPDR Gold Shares (GLD). This Exchange Traded Fund is the largest gold-backed ETF on Earth.

Bottom line: Hold gold, the ultimate currency!