The First Stage of Inflation Has Already Hit,Next Up Is the Currency Collapse

Tuesday, December 21, 2010
By Paul Martin

By Graham Summers
SeekingAlpha.com

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:

Asset
Price on 1/1/10
Price today
% Change

US Dollar Index
77.5
79.29
+2%

Oil
82.75
88.86
+7%

Gold
1,137
1,392
+22%

Silver
16.81
29.44
+75%

Wheat*
201
274
+36%

Corn*
167
236
+41%

Poultry**
83
85
+2%

Sugar **
21
28
+33%

* 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).

The Rest…HERE

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