(Opinion)
If you’ve been watching the news lately, there have been constant reports of inflation affecting the price of just about everything under the sun, except for interest rates here in the United States. But if you have been reading the news about inflationary pressures on oil, gas, cotton, wheat, corn and just about every other dollar denominated assets, you have probably also heard that the Federal Reserve has been busy injecting “stimulus” dollars into the economy through what is known as Quantitative Easing. In fact, they are on round two right now to the tune of over $2 trillion dollars.
That figure, by the way, isn’t even counting the government funds issued to bail out the banks, backstop Wall Street firms and banks during the financial crisis which is an additional amount likely to end up in the trillions as well. To be sure, the budget deficit has gone parabolic and the printing presses have been running 24/7 for over two years now. It’s no wonder prices are skyrocketing, the dollar has been diluted more than ever before in history in such a short period of time. However, the government is pleading the case that there is little inflation present because interest rates are so low. Do they really think we are that stupid?
The fact of the matter is, like all economies backed by fiat currencies of the past whom put their printing presses to work to increase the supply of money in an effort to “loosen” the flow of funds, inflation was expected to soon follow. And boy has it ever. Cotton is up 94 percent in the past year, gold is up 14 percent, silver is up an amazing 64 percent, the CRB Commodity Price Index has exploded nearly 30 percent higher and oil is up 32 percent with gas prices reaching over $4.00 a gallon in some cities of Southern California!
What I can’t get my mind around is how the Federal Reserve has been reporting very nominal inflation and government officials are still claiming that low rates proves that inflation isn’t a threat at this time, yet the American public has barely noticed or commented on the fact that it is the Fed that is buying up Treasuries and mortgage backed securities so that interest rates can be pushed lower and bond prices are bid up.
If the Fed doesn’t think there’s any inflation, why don’t they stop artificially suppressing interest rates lower? After all Mr. Bernanke, wouldn’t they drop all on their own?
Rates are going to skyrocket when the Fed runs out of ammunition, go to www.fedhedge.com to get your free report on how to protect against this threat to your wealth.
Thomas E. Jandt is the author of Your Money is Everything. He is currently the CEO of Hilton Thomas & Associates, Inc., a Real Estate Investment Company and the CEO of I3 Financial & Insurance Services, Inc. He also writes articles and opinion editorials to various trade journals and industry magazines.
