Inflation...

We were warned. Printing money is a short term solution. Bernanke and Geithner were the men of the hour if not the year in 2009 but like all heroes, time to let real fixers come in and do the dirty work.

We've said it many times, the US economy is broken. A political class that is easily if not cheaply bought to the detriment of the average Joe cannot expect to fix itself. 2 senators are leaving the scenes but many other guns for hire are up to squandering fiat currency.

It is a shame that Wall Street continues to be bailed out when the problem will just continue to grow in proportion to the accumulated debts of the USA.

The Fed is buying $1.25 trillion of mortgage-backed securities issued by housing-finance companies Fannie Mae, Freddie Mac and federal agency Ginnie Mae. The central bank began the program in January 2009.

The central bank separately purchased $300 billion of Treasury securities from March through September 2009 and is buying, through March, $175 billion of corporate debt issued by government-backed Fannie and Freddie and the government- chartered Federal Home Loan Banks.

Now with a $14 TB debt load, aging baby boomers sucking out the life of public healthcare and 15MM people out of jobs, the printing presses are furiously running out of ink.
 2-10 yr spread on Treasuries is at its widest point in 20 years showing that the Fed has drawn a line in the sand and who ever crosses it is betting against the Fed. Usually not a good move but this time, is it Different?

In the last month,  we can sense that the Treasury department 's alarms bells are going off.

Around the World China, Vietnam, Australia have started to raise rates to keep their customers happy, why are the Americans late to the game?

This does not bode well for the US dollar as the powers that be are not inclined to protect the dollar.

Continue to hold gold, buy some more gold  if not hoard the sucker!

Until Long term rates cover inflation, there is no better asset to hold.

Good trading to you!

DCW