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Beware - The Bernanke Fed could ignite hyper-inflation!

Money supply surging, dollar plunging. “You unlock this door with the key of imagination. Beyond it is another dimension, a dimension of sound, a dimension of sight, a dimension of mind. You’re moving into a land of both shadow and substance, of things and ideas. It’s a journey into a wondrous land, whose boundaries are that of imagination. That’s a signpost up ahead, your next stop, the ‘Twilight Zone!’ ” 

Rod Serling was a multi-talented man and a prolific writer. His television series “The Twilight Zone” ran for five seasons in the early 1960’s and was extraordinary, winning three Emmy Awards. As the host and narrator, and writer of more than half of 151 episodes, he became an American household name and his voice always sounded a creepy reminder of a world beyond our control.

Nowadays, there are numerous signposts indicating that inflation in the US is getting out of control. The US M3 money supply is 14% higher than a year ago, its fastest growth rate in 35-years, the US Dollar Index is plunging to 15-year lows, gold is surging toward $725 /oz, a 28-year high, crude oil is cruising above $80 /barrel, wheat prices have doubled to $8.75 /bushel, an all-time high, and the Baltic Dry Freight Index has zoomed 300% higher to stratospheric levels.

It’s like entering “a fifth dimension beyond that which is known to man, that lies between the pit of man’s fears and the summit of his knowledge. It is an area called “the Twilight Zone,” Mr Serling explained. Could it be - the fifth dimension that lies ahead is hyper Inflation, and the re-ignition of the “Commodity Super Cycle?” Money is still pouring into commodity indexes to diversify portfolios, amid recent financial market turmoil, reaching $120 billion at the end of the Q2, up 50% from a year earlier.

Food and energy prices are sharply higher from a year ago, and this time, the surge in these “volatile components” of inflation is not a flash in the pan. But remember, you’re in the “Twilight Zone,” where perception is more important than reality, and emotions often trump logic. Putting it another way, “there is nothing so disastrous as a rational investment policy, in an irrational world,” explained JM Keynes. (the full article)