Inflation, the scourge of fixed income savers, is dormant. In a competitive global economy, with business under relentless pressure to operate more efficiently, it's possible that the price level will stay flat or even decline over the next 10 years or so.

There is even a whiff of mild deflation in the economy. Thanks to global overcapacity in many industries, ranging from autos to semiconductors to major appliances, consumers are paying less for many goods. For instance, prices for all retail goods outside of autos and gasoline are falling at a 2% year-over-year rate. Little wonder the Federal Reserve is in no hurry to change monetary policy.

That said, many investors should include Treasury Inflation Indexed Securities-better known as TIPS--in the fixed income portion of their portfolio. Many individual investors will find it cheaper and easier to purchase the Treasury's inflation-protected savings bond, the so-called I-bond. Both TIPS and I-bonds are a hedge against an untimely spike in overall prices, say around the time you're retiring.

Economists have long advocated for fixed income securities that hold their value despite the ravages of inflation. Britain pioneered the market in 1981 with good reason. Britain's average annual inflation rate from 1976 to 1980 was 13.6%, a rate that devastated its pension funds. The U.S. government started issuing its bonds linked to changes in the consumer price index in 1997.

U.S. investors have never really embraced inflation-indexed securities. The government started selling them at a time of double-digit equity markets returns and low inflation. Who wanted to own a bond, say with a guaranteed real return of 4.4% in January of 2000, when the Nasdaq had soared 65% over the preceding year? And when the equity markets tanked, investors remained somewhat cool to TIPS and I-bonds since inflation stayed so low.

Still, these securities are a valuable hedge against the risk that future governments will debase the currency. Unlike gold, the traditional safe haven against a debauched currency, owners earn interest from their bond investments instead of paying storage and other costs for a sterile asset.

The bottom line: Whether you are an inflation optimist as I am or an inflation pessimist TIPS and I-bonds are a savvy way to preserve wealth.