Actually this morning the dollar is up a tad, but that is a temporary situation. The wonderful government announced this morning that inflation as measured by the CPI was up .6% for March. If you do some quick math, you will find that pencils out to around 7.2% on an annual basis. If you read the whole report published here, you will notice that way down in the report they speak of the old weights for calculating the CPI versus the new weights. Under the old method the monthly number comes in at around .7% which works out to a 8.4% annual rate.
What does this mean? It means that as the Federal Reserve continues to increase the money supply, the purchasing power of the dollar is going to continue to drop. That means the price of just about everything we buy will continue to rise. If you add to this any of several tipping points that I talked about back in January, it could get much worse. Word on the street is that China is sending the U.S. a strong message not to mess with Iran as China is trying to get Iran a membership into the Asian Bloc.
If China takes the teat away from the U.S. consumer, things really get interesting. With no other countries stepping up to buy U.S. debt, the dollar tanks and almost everything we buy goes up big time.
Take a moment and figure inflation into your current situation. It looks like it will be around for the foreseeable future. With careful planning you can weather the inflation storm.
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