Description: At our Houston meeting PD l, Donald D. Hester, Professor of Economics at University of Wisconsin, outlined a novel investment system aimed at protecting purchasing power of the lender’s funds from inflation’s ravages. This article is summary of that presentation.

Description: The author notes that “many considerations enter into the determination of investment strategy. Important among these considerations is the maximization of investment income on an after-tax basis rather than on a before-tax basis.” The article then discusses how starting in the early 1960’s insurers, using a marginal tax rate approach, invested heavily in tax exempt bonds. The author, expressing his belief that a major depression is likely to occur in the next 10 years, recommends insurance companies divest of their holding in tax exempt instruments, based on the macroeconomic analysis he presents.