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USA TIPS are inflation-adjusted according to a published standard (CPI-U). One can argue that the standard itself underestimates inflation (I would probably agree), but the securities really do adjust with measured inflation. If the inflation is understated, it's at least done in a defined way. So yes, I suppose the holder of the securities would still lose purchasing power, but not in a catastrophic way. TIPS are still a decent hedge against inflation.

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