Conservative investors can fight against inflation by considering Treasury-Inflation Protected Securities, or TIPS. These federal governmentbonds are guaranteed to keep pace with the government -calculated Consumer Price Index.
Cypriot Banks naively invested over the years in Greek GovernmentBonds, which before the global crisis, they were a guaranteed investment, so by that haircut, their investments were reduced catastrophically.
Because the capital markets believed, rightly as it turned out, that the bonds issued by Fannie and Freddie to raise money for their mortgage financing were effectively governmentguaranteed, the two organizations were able to raise huge sums at low interest rates to pump into these mortgages.