On A Clear Day You Can See Inflation

Food Sellers Grit Teeth, Raise Prices

That's the headline from a Wall Street Journal article posted online tonight that you can read HERE Funny how the deflationistas conveniently overlook the issue of rapidly rising food prices when they spew out their reckless views.  They also ignore the following (click on the charts to enlarge):

Sugar up 114% since June

Corn up 79% since June

Wheat up 54% since June

A perusal of several other neccesitous consumption items like oil and healthcare insurance will reveal similar stories.  And with the significantly weaker dollar, get used to paying more for your basket of general imported goods at Walmart going forward.

Aside from the price behavior of gold and silver, there are plenty of other overt indicators which reflect a growing market perception of higher inflation ahead.  Today, for instance, the long bond experienced a 3-point price reversal to the downside from this morning after the QE announcement.  The yield on the long bond shot up to 4.07%. It was around 3.90% just a couple of days ago and was approaching 3.5% a few months ago.  The long end of the yield curve typically reflects market expectations of both sovereign U.S. credit risk and inflation risk.  Since it is now apparent to all that the Fed is willing to print enough money to prevent a U.S. Govt bond default, we have to assume that the higher yields on the long end of the Treasury curve are starting to reflect inflation expectations.

The other rediculous deflationista argument is based on the absurd idea that there is some sort of debt contraction going on in the U.S. financial system.  That is just plain wrong.  For sure the level of private debt has declined somewhat.  However this debt has been "shifted" from the private sector balance sheets to the Fed and the Taxpayer. In fact, the overall gross level of debt in our system is rapidly expanding.  As of the end of this month, the Fed will supplant China as the largest holder of U.S. Treasury debt.  In addition, the outstanding Treasury debt is increasing at nearly a geometric rate.  In fact, by the last estimate I saw, the U.S. Treasury debt will exceed $14 trillion by March.  By then the amount of outstanding Federal Debt explicitly reported (there is at least another $7-10 trillion "off balance sheet") will have increased 55% in the first 26 months of Obama's Presidency:

(click on chart to enlarge)

It's going to start to get ugly.  Please read this quick interview of Jim Sinclair posted today by King World News, which explains why gold/silver is the only way you can protect yourself from what is unfolding in this country: 

We are in unchartered waters with business folding over.  We don’t know what the name will be for this.  One thing we do know is it’s not dollar positive and that the only insurance out there that would react positively to things we can’t control such as Fed decisions is gold

Here's the link: Got Gold? The next time you run across some cybergarbage analysis of why we are entering into a deflationary death spiral, you only have yourself to blame if you decide to waste brain cells reading it...