Reading the Signs

Earlier this week, I discussed some current economic data regarding gold, silver, oil, and the US dollar. All of these continued their trends. At today's close, gold is $806.40, silver is $14.55, oil is $95.93 per barrel, and the US dollar index sank to 76.74 on Thursday's close. The Federal Reserve lowered interest rates another quarter point to 4.5% on Wednesday to bolster the money supply and keep the economy moving. This morning, even the 166,000 jobs increase on the US non farm payroll report, over double the forecast, did not stem the dollar slide. The foreign exchange rates for the Great British Pound, the Euro, the Swiss Franc were all at multi-decade highs against the US dollar.

What does all this mean? The US dollar is getting weaker and weaker, eroding purchasing power of all consumers, increasing the US trade deficit and sending more money out of the country and even less entering. All of this leads to increased pressure for inflation. Now, with the Fed lowering interest rates again this week, they are trying to increase the money supply which further increases inflationary pressures. They are willing to trade the risk of inflation for trying to salvage the weakening dollar. If their strategy does not work and the dollar continues to fall, we could begin a period of hyper-inflation, where prices increase dramatically in a short period of time. Gas prices will just be one of many things that will cost a lot more.


Set up road signs; put up guideposts. Take note of the highway, the road that you take. Jeremiah 31:21

The road up ahead curves ... stay tuned.