"The Congressional Budget Office recently estimated the fiscal 2009 deficit at a whopping $1.2 trillion. And that doesn't even include the cost of the stimulus package or of a new bank bailout package now on the way.

"Nor does it factor in a deep economic depression, which could smash the government's tax revenues and drive welfare costs through the roof. The end result? Expect a deficit of as much as $2.5 trillion, forcing the Treasury to issue equivalent amounts of new Treasury securities.

"Second, the world's biggest investors in Treasury bonds -- China and Japan -- need the funds to help offset their own economic slide. U.S. investors are suffering declines in income from nearly all sources. And everywhere, the flow of new investment dollars is slowing. So demand for bonds could plunge.

"Your best strategy is to stick with 3-month Treasury bills or Treasury-only money funds. If rates rise by, say, 1 percentage point across the board, the most actively traded 30-year bond would plunge by roughly $20 per $100 in face value securities.

"With a 3-month Treasury bill, by contrast, you can wait the three months until maturity; you suffer no loss whatsoever in principal; and you can roll into the newer, higher yielding T-bill right away. Conservative investors can buy Treasuries directly from Uncle Sam at TreasuryDirect.gov.

"Or if you go the money fund route, consider American Century Capital Preservation Fund (CPFXX), 800-345-2021; Dreyfus 100% U.S. Treasury Money Market Fund (DUSXX), 800-645-6561; Fidelity U.S. Treasury Money Market Fund (FDLXX), 800-544-6666; or the Weiss Treasury Only Money Market Fund (WEOXX), 800-242-8092."

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.