Would you really gamble your hard-earned savings on the hope that inflation will remain virtually nonexistent for the next 10 years? How about 30?

If you think that's ridiculous, don't laugh. Millions of Americans are taking precisely that high-risk bet. And many of them don't even know it.

You may be among them.

Why?

Because this is the quiet and dangerous wager now being made by anyone who invests in regular, long-term U.S. government bonds. That includes those who invest in mutual funds that specialize in such bonds, like the ( VUSTX) Vanguard Long-Term Treasury Fund (VUSTX).

This follows a slump in the yield, or interest rate, on these bonds recently.

By Friday, even after a small bounce, the yield on the benchmark 10-year Treasury closed at a paltry 4.64%. That's the compound annual interest rate you'll get if you lend money to Uncle Sam for 10 years.

If you want to see how crazy that is, have a look at the yield on another asset class: The special group of inflation-protected government bonds known as TIPS, or Treasury Inflation-Protected Securities.

And 10-Year TIPS, as of Friday, were yielding 2.32% in real, post-inflation terms. That's what you get back on top of any increase in the consumer price index each year.

The net result? The only reason you'd buy the mainstream Treasuries instead would be if you thought consumer inflation over the next 10 years will work out as less than the difference between the two yields.

In other words, 2.3% a year or less.

Yet that's what legions of investors are doing.

If you look at "long" Treasuries, which mature in 30 years, the picture is even more alarming.

As of Friday, 30-year Treasuries were yielding about 4.88%.

TIPS with a similar maturity: 2.27%. So the normal 30-year bonds are worth it only if you think inflation is going to average the difference, 2.64% a year, or less between now and 2037.

Investors, like lemmings, line up to take the bet anyway.

Good luck, guys.

Erik Weisman, portfolio manager at the ( MIAAX) MFS Inflation Adjusted Bond Fund (MIAAX), says this critical gap between TIPS and regular bonds is around its lowest level in several years. Anyone buying the regular 30-year bond, he says, has to believe "that inflation is going to stay very buttoned down over the next three decades."

Look at it this way. The picture on inflation during the past 15 years has been as good as it is ever likely to be. Prices for all sorts of things, from computers to clothes, have fallen thanks to technology and massive offshoring to China and the rest of Asia. The prices of commodities, from copper and oil to food, also collapsed.

Factor in the crises of 1998 and 9/11, and you had nearly perfect conditions for low inflation, or even falling consumer prices.

And what happened?

Only four times -- in 1998 and 1999, 2001, and 2003 -- did inflation come in under 2.3%. And over this entire halcyon period for consumer prices, inflation averaged 2.6% a year.

Now look ahead.

Look at skyrocketing prices for energy, metals and food.

Remind yourself that pretty much all the cheap manufacturing that could move to China has done so. And then decide to bet that U.S. consumer inflation is going to be even lower over the next 10 or thirty years than it has over the past 15.

The finance industry likes to call Treasurys "risk-free" assets. Their argument: The Federal government has never defaulted on its debts. (At least, not yet.)

The reality is quite different. These bonds are deeply risky.

The risk? Inflation.

Those fixed interest payments get a lot less valuable when inflation destroys the real value of the coupons, and while competing interest rates at the bank go through the roof.

That's why government bonds collapsed in the 1970s. A whole generation of investors lost their shirts.

TIPS aren't particularly cheap right now. The real yield of around 2.3% isn't a bargain. But they are a lot less risky than regular government bonds.
In keeping with TSC's editorial policy, Brett Arends doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Arends takes a critical look inside mutual funds and the personal finance industry in a twice-weekly column that ranges from investment advice for the general reader to the industry's latest scoop. Prior to joining TheStreet.com in 2006, he worked for more than two years at the Boston Herald, where he revived the paper's well-known 'On State Street' finance column and was part of a team that won two SABEW awards in 2005. He had previously written for the Daily Telegraph and Daily Mail newspapers in London, the magazine Private Eye, and for Global Agenda, the official magazine of the World Economic Summit in Davos, Switzerland. Arends has also written a book on sports 'futures' betting.