Since 2007, Ben Bernanke has been consistently transparent. The FED hates deflation. Deflation you see is a very normal consequence of free markets. Deflation penalizes debt holders. It makes people with little debt and savings far richer. It rewards prudence. The Bernank is well aware of this.
Who would have gotten screwed by deflation? Banks and debt holders. So for three years, anyone who has passed an Econ 101 class has had to watch the Bernank try to print his crony bankers out of bankruptcy. They have pulled out every stop. Secret loans, taxpayer bailed out banks who don't have to absorb losses, mythical accounting standards, manipulated BLS numbers, and lies. Lots of lies and distractions. But Ben has a gawd awful problem now. He can't stop the inflation train. To raise rates now means the debt we owe and must refinance goes parabolic. Banks can't unload all those toxic loans and foreclosed houses. In short, the Bernank is screwed. He has painted himself in the corner. And he seems willing to take everyone with him. He is out of options. Runaway inflation is how this all ends- time and time again history has proven this. Weimar, Zimbabwe.
Can you imagine how insane this would get if suddenly 10 million or so people found jobs and added to demand and pricing pressure? Shit.
What is the answer? The most painful one. Jack interest rates up and fast. Kill the economy now. Live to fight another day. Savagely attack all government spending. Pay down debt. Will he do this? Not a chance in hell. That would be a reversion to the mean. It would cost him his job and it will cost the President his. The same outcome that they have been trying to avoid since 2007.
Last night, I saw ground sirloin at FIVE bucks a pound. Everything I consume, coffee, butter, vegetables all up at least 20%. Container quantities down. By this spring, the SHTF. Producer prices, consumer prices, taxes, gasoline and fuel, all are poised to go parabolic and kill the economy. This is what happens when you try to fool Mother Nature.
Here's a chart I snitched from ZeroHedge. Pick out the stuff you use and watch the howls and denials that will occur in the BLS and CPI figs due out mid Feb. If you are considering gold and silver as hedges, I'd be a buyer. Soon.