They Picked Inflation

The Fed is caught between a rock and a hard spot.  The fiscal irresponsibility of our elected officials puts the Fed between recession and inflation, as I said in my previous post.  I guessed right, as far as what they would choose.   I love getting lucky.

One big problem is that oil, gold, and other commodities are on the upswing.  Real Estate also has a huge upswing.  Groceries have edged up.   A lot of these prices will start trickling down to durable goods.  If you look at the overall prices, inflation has been very significant over the last three years.  When Wal-mart says the prices are dropping, it is because they are getting cheaper and cheaper crap from China.

Bruce McCain, head of the investment strategy team for Key Private Bank said, “A rather stingy Fed suggests that they see an economy that is in pretty good shape.”   I think he is crazy.  A really stingy Fed sees massive inflation on the horizon and is walking the tightrope for as long as they can.

The classic hedge against inflation, gold, has topped $800 for the first time since 1980.  This fact becomes even more significant given the price of gold just 5 years ago (a little over $300).

Only fiscal conservatism can stem this tide.  The government can’t keep printing money that is not backed by anything.  We have to try to stop this wreck and, given the fact that the chances of stopping it are slim, insulate ourselves from the effects.  The only fiscal conservative in office I know of is Ron Paul.  I like his message because he walks the walk.  He actually believes in a small government.  I just donated to his campaign because I think he could win.  If not, I want to shock the republicans into following his lead.  I just hope that someone in government becomes responsible.

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