Treasury Inflation Protected Securities (TIPS) are bonds issues by the US Treasury that protects the investors against inflation. They have a much lower coupon rate, but the face value is indexed to inflation every coupon period. Hence, if you start with a face value of $1,000, and general level of prices tripled in 30 years, and your coupon rate is 1% APR, as your last payment, you will get $3,000 times 0.5% (semi-annual) which is $15 as coupon payment plus $3,000 as payment of the face value indexed for inflation. A regular bond pays only $1,000 as face value payment plus whatever the coupon maybe. Currently, yields on regular Treasury Bonds for 10 and 30-year maturity are 2.90% and 3.05% respectively. The yields on TIPS with 10 and 30-year maturity are 0.80% and 0.94% respectively. Taking the difference gives for 10 and 30-year maturities gives 2.10% and 2.11%. Controversial Claim Since the market essentially assuming that average rate of inflation will be about 2.10% for the next 30 years or so, we should BUY TIPS and SELL Regular Bonds. Claim Objective Students are expected to argue in favor of positions they may not necessarily agree with, and in the process, learn to understand where opposing views come from Such skills are necessary to stay away from "incestuous amplification" that arises from groups of people who think alike. You are required to defend the statement made as if it was made in a court of law in front of a judge