Monday, January 17, 2011



Please read the following CNN story on the increase in CPI recently.

I put this story on the blog today with the intent of setting the table for a few follow up posts.  I'm still working on my "labor of love" the January Monthly Update.  As soon as I'm done I'll put it up.  After the monthly update I will put up an article on deflation and then the major piece that I've been threatening to write, the article on the economic war that is brewing.  Anyway, the inflation story is one which we MUST pay attention to and one that I've been warning about for a while. 

The Fed's attempt to indirectly boost asset prices (stock prices) through the buying of treasuries and flooding the banks with cash has created a situation where speculators have taken that liquidity and bought real assets (commodities).  Of course these commodities are the raw materials for finished goods, but these commodities are also the foods that we eat.  Amerikans are starting to see a bit of the pain of pricing increases, but frankly we are so wealthy we don't notice it much.  On the other hand citizens in emerging countries notice the rise in food prices immediately.  As I mentioned in the monthly update governments are very concerned about inflation in emerging countries because it results in overthrows of the government (Tunisia should come to mind as an example although the seeds of the revolt were about much more than food ). 

Ultimately, the Fed's actions are a war on the poor as I've stated many times.  Bernanke will continue to drive prices of "assets" higher in the name of getting the consumer back and making us feel wealthier.  It's too bad that the casualties will be littered all over the world.

I keep getting the sense that something is about to break..... how about you?


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