The Treasury is getting ready to issue a boatload of inflation-protected bonds to please investors who are afraid that an economic recovery will be accompanied by rising prices.

Many of those investors are foreign — loans from China are covering almost a quarter of the US national debt — and Treasury officials are conceding that the department won't be able to keep floating trillions of dollars worth of securities every year unless it promises the buyers of those securities that the dollars behind them will retain their buying power.

Individual US investors eyeing their own retirements have the same concerns. Often, recoveries do lead to inflation.

Increased production could cause greater demand for energy, which feeds into just about every other piece of the economy. The prospects of rising costs for food, healthcare, housing, education and just about everything else make investors fear bonds: If you buy a $10,000 bond yielding two percent, and inflation goes up three percent a year, you effectively lose one percent every year that you hold the bond. It may seem better to buy gas and groceries, or commodities like gold, paper and coal that are said to protect investors from inflation. But investors have to put their money somewhere, and Treasuries are considered safe.

And so, the Treasury issues two types of bonds with the idea of protecting investors from those inflationary risks:

I Bonds are consumer-aimed savings bonds that change their interest rate every six months to reflect changes in the consumer price index; you can buy them in denominations as little as $25, and they never lose face value.

Treasury inflation-protected securities (TIPS) are a little bit more complex. You can buy them directly from the Treasury (http://www.treasurydirect.gov), in denominations starting at $100. Instead of changing their interest rate every six months, their rates are fixed. The principal amount of the bond is indexed to inflation, so that the fixed interest is applied to a growing (if there is inflation) principal. When the bond matures, you get those extra interest payments back. Right now, inflation-proof bonds seem cheap to many analysts. They are priced as though inflation will remain under two percent annually for 10 years. Compared to regular Treasury bonds, they do seem like a good deal. But they can still beat you up pretty badly if you don't know the risks. Over the next year or so, inflation-proof bonds will become more plentiful, their yields (currently zero!) may rise to attract investors, and inflation could make them seem even more worthy. But before you load up on them, here are some warnings to consider.

• Interest rates and inflation are not the same thing. There's not a one-to-one correspondence in interest rates and consumer prices. It's entirely possible that consumer inflation will remain moderate over the next few years, as tapped-out consumers keep a lid on what they'll spend for goods and services. But the cost of money itself can leap far beyond the cost of other things.

Should the Federal Reserve see recovery and stop holding interest rates artificially low while the global need for cash explodes, interest rates can rise far faster than consumer prices. And that would really hurt investors in inflation-proof bonds. Here's why: The increase in rates on new securities would devalue existing bonds until their effective yield was as high as the yields on new bonds. So a $10,000 bond paying two percent could become worth only about $7,000 on the open market if rates on new bonds were at three percent. That could hurt a lot more than any small inflation adjustment could help.

• Taxes can pile up, too. TIPS also have a weird tax effect. Investors are expected to pay taxes annually on the extra interest they won't actually see until the bond matures. So experts suggest that investors hold TIPS in mutual funds within their tax-deferred retirement accounts. For folks with $50,000 or more to put towards these bonds, Morningstar recommends Harbor Real Return institutional fund (HARRX). For the rest of the world, Morningstar likes the Vanguard Inflation-Protected Securities fund (VIPSX.)

• Inflation-proof bonds may pace broad consumer inflation, but they aren't going to beat it, nor are their owners going to cash in big if inflation hits. Buying them when they are cheap and tucking a few away to balance a stock-heavy retirement portfolio might make sense, but there are other ways to fight inflation, too: Over the long term, stocks will best inflation most of the time. And stocks of companies that do well when prices go up, such as energy and lumber companies, can offer better inflation-fighting rewards.

Finally, it may make more sense to keep some money liquid so you can put it into a money market mutual fund if interest rates take off. Should a real economic and credit recovery be here, those money market funds may make you more money than their inflation-protected longer-term competitors.