For years now the US has been a debtor nation. Our current public debt is approaching $11 trillion. Add to that the estimated $4 trillion that may ultimately be spent on recovery efforts in the US alone–most of which will be borrowed–and there’s a lot of essentially non-existent money floating in the US economy. What’s more, that amount doesn’t even consider similar efforts on the part of other global markets.

That sets up a situation where once the economic picture begins to improve, concerns about inflation will once again be front-and-center. Buying Treasury Inflation Protected Securities (TIPS) now is a great way to hedge your portfolio.

TIPS work because on a monthly basis the US Treasury Dept adjusts the principal value based on the direction of the Consumer Price Index (CPI). When the CPI rises, your principal adjusts upward. If it falls, your principal adjusts downward. You also receive semiannual interest payments based on the adjusted principal amount of your holdings.

You’re also hedged against deflation if the bonds are held to maturity because when the time comes, you’ll be paid either the full value of the bond or the principal-adjusted amount, whichever is greater. If you hold to maturity, you won’t lose out on the face value of the bond. Although investors can purchase individual TIPS directly through the US Treasury, the easiest way to own them is through funds.

For mutual fund investors, Vanguard Inflation-Protected Securities (VIPSX) is one of the best options available. The fund, like many others, keeps the majority of its portfolio in TIPS, with run-of-the-mill Treasuries mixed in to beef returns under normal economic conditions.

But the management team of John Hollyer and Kenneth Volpert doesn’t stray too far from their primary mandate, currently devoting 99.7 percent of assets in TIPS. That tunnel vision generated a small 2.9 percent loss for the fund in 2008–the first loss for the fund since its inception in 2000. But that wasn’t due to any managerial misstep; rather, the loss was generated by the sudden mid-2008 shift away from TIPS to more traditional Treasury bonds.

That situation isn’t likely to hold, though. With TIPS trading at levels not seen in years, this is an excellent chance to gain exposure on the cheap. Currently yielding more than 5.3 percent with a bargain basement expense ratio of 0.2 percent, Vanguard Inflation-Protected Securities is an attractive open-end fund.

Another option for investors who prefer not to hold mutual funds is iShares Barclays TIPS (NYSE: TIP). It’s an exchange traded fund (ETF) available on the New York Stock Exchange, just like a regular stock. It’s simple for investors to buy and sell.

iShares Barclays TIPS currently yields almost 6.5 percent, though, like any ETF, it’s not necessarily priced at its net asset value (NAV). Currently it trades at a 1.5 premium to NAV, but that should fall back into line as the pricing of the underlying securities reverts back to more normal territory.