Last week, the Federal Reserve pledged $30 billion each to South Korea, Mexico, Brazil, and Singapore. The Fed also offered New Zealand a $15 billion line of credit... and invited the Australians to borrow $30 million, too.

We're entering a recession. It could turn into a depression. To prevent this, the U.S. government – in concert with the Brits, the Euros, and a few other governments around the world – is plowing money into the global financial system.

They'll design new bailout packages. They'll start nationalizing companies. They'll start new public spending projects. And they'll lend money to anyone who wants it. Expect new roads, bridges, and railways everywhere. Depending on how bad it gets, maybe they'll even start a war. Wars are the best way to get an economy out of recession. They get everyone working again and funnel billions from the government into the private sector.

Where does this money come from? Inflation. But right now, the market doesn't care about inflation because investors are more worried about deflation and depression. So no one's complaining. It's the perfect environment for governments to increase their power.

But inflation is coming... It's going to take incredible amounts of new paper money to pay the piper back for the party of the last five years. I call this landscape "Paulson's New World." And today, I'm going to tell you how income investors can survive and prosper in Treasury Secretary Henry Paulson's New World...

First, focus on hard-asset investments.

During inflation, you want to own hard assets... things like gold, power plants, toll roads, oil wells, machinery, and land. Say a loaf of bread costs $1. Then the Feds double the money circulating. Now that loaf must sell for $2.

Hard assets that pay dividends are the best of both worlds. Your principal rises as excess paper money inflates the value of your asset. Your dividends rise as excess paper money makes the value of output increase.

Second, focus on the safest possible companies.

Weak economic times are actually great for the strongest and smartest players in an industry. Weak players go bankrupt... So strong players can buy up their assets cheaply and increase their market share. Plus, investors seek safety in the strongest and most stable companies.

A major upheaval is coming... particularly in the way Americans deal with money. Expect new regulations, new emergencies, and major volatility. Banks will hit the wall. Money markets are not safe. That's why I like companies that sell cheap, everyday items... like soda, oil, cheap food, and cigarettes.

To profit from Paulson's New World, my favorite investments come from a select group of securities called "Bonded Trusts."

Bonded Trusts are 100% hard-asset investments made of steel, copper, energy, labor, and large amounts of capital. They're among the safest investments in America. They operate critical sections of America's national infrastructure network. The government supports them. Consumers cannot live without them. Bonded Trusts pay dividends that rise with inflation, so you'll never be left behind. In fact, eight of the largest Bonded Trusts raised their dividends in the last two weeks.

Most Bonded Trusts operate oil and gas infrastructure, like pipelines, processing plants, and storage tanks. America simply cannot function without these businesses. And the sector is having a banner year... Giant new gas discoveries in Wyoming, Texas, Oklahoma, and Appalachia have propelled demand for energy infrastructure. It's producing record cash flows, generating record dividend payments, and growing faster than ever before.

In the last two weeks, eight of the largest Bonded Trusts in the sector posted dividend increases for the third quarter of 2008. They are the perfect investments to profit from Paulson's New World. Consider allocating a portion of your portfolio to them.The technical name for a Bonded Trust is "master limited partnership" (MLP). MLPs are the American equivalent of Canadian income trusts. They pay no tax. They return all their profits to unitholders (another word for shareholders) in large monthly distributions. Close to 100 MLPs trade in the stock market. And they're the absolute best place to look for big, safe dividends.

Good investing,

Editor's note: Tom Dyson is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.