For the last two years, the government and their parrots have been claiming that regardless of how much money has been printed, we won't have to worry about inflation, because the real bogeyman is "deflation". That's always been nonsense, which is why I bought some silver at $12.80 an ounce and have since watched the price rise to over $24 an ounce in a year.
That wasn't really a "guess" on my part or a coincidence, it was just common sense... If you print and disseminate trillions of new dollars into an economy that hasn't actually produced any more goods, the end result will be that prices go up. More dollars chasing the same amount of real resources will do that to you...
But, for the last couple years, the majority of news stories, and prominent "economists" like Paul Krugman, Christina Romer, Larry Summers and basically anyone else working for the White House have been claiming that no inflation would result from their policies. They've often even been on the offensive, demanding "Where is the inflation?" from those of us who see it on the horizon and yet they've ignored all the evidence for it we've already seen by cherrypicking industries, averaging in the fall in house prices (which were overvalued thanks to the bubble to begin with, and looking only at things like the Consumer Price Index, which omit commodities.
And they've spent considerable effort pretending that gold & silver are just "bubbles", not to be trusted, rather than legitimate rallies reflecting both the lack of confidence of investors in the US Dollar and the real devaluation of it as a currency.
But fortunately, over at Kitco, Howard Ruff lists a few other commodity price increases that should make you sit up and take note:
"For example, Agricultural Raw Materials are up 24%, The Mineral Index is up 25%, The Metals Price Index is up 26%, Coffee is up 45%,Barley is up 32%, Oranges are up 35%, Beef is up 23%, Pork is up 68%, Salmon is up 30%, Sugar is up 24%, Wool is up 30%, Cotton is up 40%, Palm oil is up 26%, Hides is up 25%, Rubber is up 62%, Iron Ore up 103%. Those are prices at the wholesale level."
Consider just the last two on this list... Rubber & Iron Ore.
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| Rubber & Steel anyone? |
Exactly how many of the goods & services you use EVERY single day contain or require rubber or steel? It's still a little early to see the full effects, but these raw-materials price increases keep going up and will soon be reflected in more and more of your final goods sale prices.
So if you're thinking about building a new house, you'll probably want to do it now instead of later since the coming price increases in the materials needed are going to go up, and that will be reflected in the house price eventually and this time they aren't just a bubble that will pop later, but the long term consequence of a devalued currency (although this will probably apply more to *new* houses rather than the price of existing ones for sale since those are probably still overvalued thanks to sellers who refuse to accept that the market won't pay what they think their houses are worth anymore and thanks to policies which reinforce that foolish belief).
Also, if you have money saved up anywhere... I would hope you have some, or a lot of it saved in a form that isn't quickly killing itself (i.e. something other than US Dollars). I hear the Singapore Dollar is doing nothing but going up right now....
It's often very hard for me to find a silver lining in a lot of what's going on out there right now, but to all my friends: Good luck.
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