The Perfect Storm is Brewing in America

The Perfect Storm is Brewing right now in America right now. The Government is printing money at a record pace, the country's deficit is rising to nearly 14 Trillion dollars and unemployment is over 10% now. I realize this is doom and gloom information but let's get real here. The Fed has nearly finished purchasing it's 1.25 Trillion in Mortgage Backed Securities. This move by the Fed has artificially pushed interest rates lower in 2009 which has been great for business of course but supply still has to come to the market as well. With the weight of more supply hitting the market and a Fed buying less and less rates will move higher. Jobless Claims have gone down in the past few weeks but is this really the case when we have 10.2% unemployment? Two things could be happening here. First the media could be right and people are finding jobs and no longer need unemployment benefits, or they have been unemployed for so long their benefits are running out before they are able to find a job. I believe it is the latter because the high unemployment rate tells me the real picture. The arch enemy of low interest rates is Inflation, which is sure to kick into high gear in the next year or two. The US Dollars value is dwindling, the price of Gold is rising, Government spending is out of control and they are printing money in Washington faster than Paul Bunyan could cut trees to make the paper. The Fed is scrambling to try and keep the dollars value up but has spent itself into a hole I am not sure it can dig out of. Yesterday Fed Chairman Ben Bernanke said this, "We are attentive to the implications of changes in the value of the dollar." He also went on to say that "the Dollar is one of the main four factors affecting US inflation", and linked it to a second factor - "the prices of oil and other commodities". With Gold rising and interest rates sure to rise soon, then Oil and other commodities are sure to follow. I am not sure what the Fed is doing maybe they don't even know. Either way hold onto your seats as we are in for a wild ride with this storm!