The One Question That Will Have the Greatest Impact on Your Financial Future

June 26, 2008

The other day, on MarketWatch, a headline read, “Markets hope strong inflation warning from Fed in Wednesday statement will keep dollar firm as growth slows, delaying or eliminating need for rate rise later in the year.” I’ve read similar headlines too numerous to count in the past couple of months spinning the same false hope. If the best weapon the U.S. Federal Reserve has right now in their arsenal to keep the U.S. dollar afloat and to check rising commodity prices is mere words versus sound structural actions, then indeed we are in deep trouble.

Several years back, U.S. Federal Reserve Chairman Alan Greenspan stated that the economic behavior of rising prices was the same as the debasement of currency. Not similar, not spurred by, but the same. Today we have all kinds of voodoo economic analyses that try to attribute rising prices to everything but its primary cause – i.e., ethanol production causes higher corn prices, bad weather and lower crop yields cause higher food prices, oil speculation causes higher oil prices. Basically whatever reason the think tanks can conjure up today to distract the masses from the real cause of rising prices seems to show up in newspapers and TV tomorrow. Sure, the above reasons undoubtedly contribute to rising prices, but they are not the primary reason nor do they constitute the greatest component of rising prices worldwide. Read more …

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