The First Stage of Inflation Has Already Hit,Next Up Is the Currency Collapse
By Graham Summers
One of the biggest misconceptions about inflation is that the US Dollar needs to collapse in order for inflation to occur. While a currency collapse often accompanies periods of heightened inflation, this is not necessarily true.
Case in point, the US Dollar actually rallied this year despite commodity prices exploding higher:
Price on 1/1/10
US Dollar Index
* per metric ton
** cents per pound
As you can see, we’ve had an inflationary spike in commodity prices in 2010 despite the US Dollar rallying 2% during that time. Indeed, the inflation the US is experiencing today is rather unusual as it has been accompanied by deflation at the same time. As I write this, the US is experiencing deflation in housing prices and incomes combined with inflation in the cost of living (energy, food, commodity prices).