Inflation. It's the great scary monster under the bed, the one that's going to show itself any minute and eat up what value remains in our sad little dollars.

Or maybe it's just a wildly overblown concern based on a misreading of history and economic indicators, and deflation is the real threat we should be preparing to confront.

I've heard both lines of argument in recent days, with plenty of hyperbole on both sides. But what's the truth?

Depends on who you ask
One thing's for sure: There's been an awful lot of chattering (and worrying) about inflation ever since the Federal Reserve pushed big buckets of new money into the economy during the darkest days of the financial crisis. At the most basic level of economics, these worries make tremendous sense: The more money there is in circulation, the less each individual dollar is worth. And plenty of worriers have been taking action, driving gold and silver prices to dramatic, unstable highs.

But is there real cause for concern? Perhaps: The dollar's value in foreign exchange has been falling for three years now. So far this year, it has already dropped almost 6% against the world's other major currencies using the Fed's trade-weighted index. And as anyone who has paid $60 to fill their gas tank recently knows, oil prices have been on the rise in a big way.

But as my Foolish colleague Amanda Kish pointed out in an article for the Fool's Rule Your Retirement service, widespread inflation is largely being kept in check at the moment because of the lingering effects of the recession. With so many people still out of work, and so much production capacity still underutilized, there's still a lot of slack in the economy that will have to be taken up before prices come under serious pressure.

And even when that happens, the Federal Reserve will be able to raise interest rates, which will (in theory) act as a (hopefully) gentle brake on the economy. The danger, as Amanda says, is that the Fed will wait too long to act, for understandable reasons: Would you rush to put a brake on the economy just as it's finally coming out of a big recession?

Long story short, yes, inflation's a real risk. Fortunately, there are things we can do now to prepare -- and even profit.

How to put the monster to work for you
Many folks think first of gold and silver when they think of investments for inflationary times. That's not necessarily a bad thought. But right now, as I mentioned above, lots of other folks have had the same thought, and prices of both metals have gotten way out of hand.

Precious metals are popular because they're seen as storehouses of value. But stocks of good, large companies are also stores of value, and all the better if those companies are U.S.-based, have global businesses (so those strong currencies get converted back to dollars at favorable rates), and pay a dividend.

What companies might make the grade? Think of Philip Morris International (NYSE: PM), which sells tobacco products outside of the U.S. and pays a dividend close to 4%. Or a solid pharmaceutical firm like Bristol-Myers Squibb (NYSE: BMY), which has a great debt-to-equity ratio and an even fatter dividend. Global drink giant Coca-Cola (NYSE: KO) has raised its dividend every year for 49 years in a row, a fine inflation-fighting sign. Or taking a somewhat different tack, put rising oil prices to work for you by adding Chevron (NYSE: CVX), which saw earnings jump 36% in the most recent quarter.

Want more ideas? The new issue of Rule Your Retirement is chock-full of 'em. Foolish retirement guru Robert Brokamp leads it off with a great guide to fighting the inflationary monster on several different fronts. Sure, stocks and commodities and gold are discussed in detail, but Robert looks at other approaches as well -- including a few that may surprise you.

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