Archive for March, 2008

Love has rights

Sunday, March 30th, 2008

Man’s definition of love suggested passive responses to conflict.  A person’s rights were secondary if he was to walk in love.  He was to turn the other cheek in a confrontation.  He was to look the other way if lawlessness challenged him.  However, love has many characteristics including mercy and justice.  The first mention of mercy is contained in the story of Sodom and Gomorrah in Genesis 19.  The Lord was merciful toward Lot and his family.  His kindness and goodness prevailed in saving Lot from destruction.  Lot had moved to the area and was drawn by his lust.  From a standpoint of justice, Lot should have perished with the rest of the population.  However, The Lord’s mercy superceded justice since Abraham had interceded on Lot’s behalf.  Once Lot had been removed from the city, justice intervened and all perished.  The lawlessness and lasciviousness were wiped out.  God is Love in the Old Testament as well as the New Testament.  Love demands justice.  Love prefers that mercy prevail if possible.  Many who have read the Old Testament could not reconcile how Our Heavenly Father could have killed so many people.  When you view their physical death as a chapter in their individual eternity, you can understand the necessity of removing them from further judgment.  If we all are ultimately reconciled unto The Father, we must be cleansed and purged of sin so that we may go before The Throne of God.  All of us will be cleansed of sin whether it is accomplished before our physical death or afterwards.  It was by mercy that Our Father removed the people of Sodom and Gomorrah from their path of destruction.

You have the right to choose your own path.  Even though you are called to "turn the other cheek", you are not required to remain in the presence of those who would abuse you and practice lawlessness in your presence.  At the conclusion of the Sermon on the Mount, Jesus told the workers of iniquity (lawlessness) to depart from His presence.  He warns us not to judge a person’s heart, but to judge the fruit (or lack of).  He further tells us in Matthew 7 to not only hear His words but to "do" them.  It is your right and responsibility to judge the fruit.  It is your right to cease promoting unfruitfulness in yourself and others.

In 2 Kings Chapter 7, there were four leprous men at the gates of the city during a famine.  These men had no future.  They were destined for death but then made a choice:

3 Now there were four leprous men at the entrance of the gate; and they said to one another, "Why are we sitting here until we die?  4 If we say, ‘We will enter the city,’ the famine is in the city, and we shall die there. And if we sit here, we die also.

Although contained within another story, these men made a choice to take action and step out of their assumed path of hunger and death.  Once they took action to leave their path of destruction, they found sustenance and life.  John the Baptist (the greatest prophet) told us to Repent!  Repent means to change your mind or current path which is one of destruction.  Was the command to be only considered once in a person’s life and only relevant to salvation?  Paul tells us in Galatians chapter 3 that the Law was our schoolmaster until faith has come.  We are to walk in faith and towards life.  We are to turn away from death and destruction.  That is our right.  Those who are given to destruction must not lead us to the same end.

Through the choices you make, you support either life or death.  If you smoke or take drugs, you are choosing death.  It may not be immediate but its conclusion will not be without pain.  As a child of God you are not a child of circumstance.  Our Father has given us the choice which frees us from being confined to circumstance.  If we were imprisoned by circumstance, we would not need the Holy Scriptures to reveal to us how we ought to live.  We would simply walk out our existence knowing there was nothing we could do about our circumstances.

By giving us a will, The Heavenly Father did not sanction destructive works.  He put laws into place to assure order and overall equilibrium.  You may use your will to attempt to defy the law of gravity and jump off a building.  The law will prevail unless The Father has specifically shown you how to supercede this structural law.  He will not provide the revelation unless it is to promote the Kingdom of God.  Your will is to promote your life and living, not to sanction death and destruction.  We are told to chose life (Deut 30:19 See, I have set before thee this day life and good, and death and evil;).  The Lord God Almighty "commands" us not "controls" us.  He has given us gifts and callings that will sustain our life and allow us to bring forth good fruit.  Our rights are connected with our calling and our gifts.  As our will aligns with The Father’s will, our fruitfulness will increase.  As we develop in our gifts and calling, doors will be opened that are otherwise shut.  Listen, obey, and walk accordingly!  As you walk in love, you will be able to exercise your rights granted by The Father to complete your calling.

Domino Theory goes mainstream…. Code Red (or) The Secret is out

Monday, March 17th, 2008

In our previously posted "Brace Yourself"  http://www.servias.org/?p=48  posted on January 21, 2008, we specifically warned of the Domino Theory scenario.

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Now the theory is now circulating among the mainstream media:

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March 15, 2008

News Analysis

A Wall Street Domino Theory

By JENNY ANDERSON and VIKAS BAJAJ

The Federal Reserve’s unusual decision to provide emergency assistance to Bear Stearns underscores a long-building concern that one failure could spread across the financial system.

Wall Street firms like Bear Stearns conduct business with many individuals, corporations, financial companies, pension funds and hedge funds. They also do billions of dollars of business with each other every day, borrowing and lending securities at a dizzying pace and fueling the wheels of capitalism.

The sudden collapse of a major player could not only shake client confidence in the entire system, but also make it difficult for sound institutions to conduct business as usual. Hedge funds that rely on Bear to finance their trading and hold their securities would be stranded; investors who wrote financial contracts with Bear would be at risk; markets that depended on Bear to buy and sell securities would screech to a halt, if they were not already halted.

See: http://www.nytimes.com/2008/03/15/business/15risk.html?ei=5087&em=&en=385f57e170b3e482&ex=1205812800&pagewanted=print

Once the risk is published by the mainstream media in the U.S., it moves from "possible" to "probable" reality.  The mainstream media intimately understands that perception moves society.

In Code Red: International Banking Liquidity has serious problems  exactly three months ago (12/17/2007), we alerted you that perilous times in the financial system were ahead.  Do not delay in getting your house in order!  Investors in Bear Stearns had stock worth $30 on Friday only to wake up today with a $2 stock value.  The Federal Reserve will not protect the average person and will sacrifice anybody and anything to keep the current banking system alive.  That is their mandate.  The credibility of the U.S. Dollar abroad is tanking.  2008 will be a turning point in world history.  It appears that the party is over for the greedy who have been extracting wealth from the masses.  Their "secret" is out. 

Credit crisis reveals America’s secret financial market

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Sun Mar 16, 12:18 AM

WASHINGTON (AFP) – The financial hurricane tearing through Wall Street has sparked vast losses at major banks, but it has also exposed a formerly secretive corner of America’s financial markets.

Millions of Americans track the Dow Jones Industrial Average and their stock portfolios on a daily basis, but the trillion-dollar trade in mortgage-backed securities, corporate and municipal bonds and other complex securities is mostly hidden and closed to amateur investors.

See: http://ca.news.yahoo.com/s/afp/080316/business/us_banking_stocks_finance

The first "run" on a major bank… quietly (March 14th, 2008)

Sunday, March 16th, 2008

In a conference call on Friday Alan Schwartz, CEO of Bear Stearns, spoke about the substantial withdrawal requests by investors.  Customers wanted their cash.  Banks typically do not keep much cash on hand.  When they speak of cash on hand, they use the term liquidity.  If you are extremely liquid, you have most of your assets in cash or equivalents.  If you are illiquid, you may have sizable assets but little cash.  The assets cannot easily be converted to cash.  If you own a $100,000 house with no debt, you have an asset, but until you sell that house you are illiquid.  Cash is needed for immediate financial demands.  Schwartz admitted that Bear Stearns was in a liquidity crisis.

Bear Stearns is an investment bank and a PRIMARY DEALER IN U.S. GOVERNMENT BONDS. There are only a handful of Banks allowed to participate as a dealer. Although Bear Stearns is sizable, the bank is the smallest of the top U.S. government bond dealers.  Like all major bond dealers, they traded in mortgage bonds and derivatives.  This is where the problems arose.  You may have heard that Bear Stearns was in trouble last summer.  Their troubles have not ended.  See: http://www.iht.com/articles/2008/03/16/business/bear.php

The Federal Reserve cannot afford to let Bear fail.  If Bear Stearns were to fail, the whole global credit system would be at risk of a meltdown.  They will be merged with another investment bank.  What is an investment bank?  Investment banks help companies and governments raise money by issuing and selling securities in the capital markets (both equity and debt), as well as providing advice on transactions such as mergers and acquisitions. Until the late 1980’s, the United States and Canada maintained a separation between investment banking and commercial banks. (Wikipedia)

The fact that you and I know about this "run" is an indication that there will be more banks to experience this same reaction to the fragility of the system.  Implement your personal defense plan.  Live in moderation.  Prepare to help your loved ones who have failed to prepare… Love gives!

"The risks of further escalation of this crisis are rising"

Friday, March 14th, 2008

Within the last 48 hours, the International Monetary Fund (IMF) has issued a second warning to not only the United States but other countries as well.

IMF tells states to plan for the worst

By Krishna Guha in Washington

Published: March 12 2008 23:55 | Last updated: March 12 2008 23:55

Governments might have to intervene with taxpayers’ money to shore up the financial system and prevent a “downward credit spiral” from taking hold, the International Monetary Fund said on Wednesday.

John Lipsky, the IMF’s first deputy managing director, said: “We must keep all options on the table, including the potential use of public funds to safeguard the financial system.”  See http://www.ft.com/cms/s/0/ee21ddbc-f08b-11dc-ba7c-0000779fd2ac.html?nclick_check=1

Why didn’t this make the news in the U.S.?  The American Press is controlled by private, wealthy investors who have their own agenda.  The rich and powerful have an agenda that differs from the average person on the street.  The overall economic system has consistently deteriorated to the point of collapse.  If the average citizen understood the brevity of the current economic crisis, all of the current congressmen would be removed from office along with most of the staff of the other two branches of government.  Congressman Ron Paul is the only member of Congress that I am aware of that has been challenging the status quo.  Now that he has been eliminated from the Republican ticket, I can freely speak about his record.  Paul understands the problem.  He has been an irritant to the powers that be.  His questions to Ben Bernanke of the Federal Reserve (FED) have forced Bernanke to admit that monetary policy without a gold-backed currency would promote inflation and instability.

Why do you think gold traded at a price of $1,000 for the first time in U.S. history?  The U.S. dollar is declining in value worldwide.  The following chart shows the U.S. Dollar Index relative to other currencies:

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As you can see, the Dollar is in a downtrend.  My expectation is that the Dollar will continue to downward trend to the .51 level. another 30% decline.  If all else is equal, gold would then trade at $1,425 to $1,650.  You can’t stop there.  Gold is the barometer that measures economic stability.  As the current system moves toward greater instability there will be a larger premium within the price of gold.  Gold retains value while paper currency loses value from inflation.  Silver has a similar nature.  Those in power have tried to convince the public that gold and silver were no longer money.  The prices of gold and silver have been rising against all currencies.  $3,000 per ounce is no longer unrealistic.

When a central bank has no restrictions tied to increasing the money supply such as a gold standard, they can issue as much money as they deem necessary.  By adding large amounts of cash to the system, they reduce the overall value of the currency relative to other countries.  This causes the decline in the value of the currency.  The Fed is injecting more and more cash into the system in an effort to save the banking system and will sacrifice the buying power of the U.S. Dollar to do it.  Holders of the dollar are losing value daily.  The only alternative to these holders is to trade their dollars for another asset.  This helps push the dollar to a lower value as well.  The U.S. authorities know that the dollar must decline but want an orderly decline, not a volatile free fall.  At some point, I expect a possible tipping point where large holders will run toward the exits.  If this happens gold will shoot up in a parabolic rise and at the same time the value of the U.S. Dollar will tank.  As I said earlier, the barometer is the price of gold.

Gold has consistently been a store of value throughout history.  I am not suggesting to hoard gold or silver.  All indications point to a gold-backed currency in the near future.  It will once again represent the primary medium of exchange.  Gold is a tool not to be worshipped.  It will be a medium of exchange allowing for the free flow of goods and services that we may flourish in an environment of "equal weights and measures".  Governments will not be able to manipulate "value" for their own agendas.  As former President Ronald Reagan once said, "Government takes from the needy and gives to the greedy."  Power without love as the motivating force is corrupting.  It will ultimately implode.

Volatile Times are ahead in the Market

Sunday, March 9th, 2008

How would you like to be one of those who purchased the following stock in January of 2007 at $25.00 only to see it now worth $1.79?

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Thornburg Mortgage is unable to meet margin call requirements by its lenders on $610 million.  Once the smoke clears this mortgage company will probably be out of business.  Another stock, Ambac Financial Group (ABK), is also in serious trouble.  Ambac is down 90% from its recent high.  However, Ambac’s problems have a greater repercussion than Thornburg.  Ambac is a primary insurer of financial instruments.  With this insurance "wrap", many securities were rated as "investment" grade securities.  This means that pension funds and other conservative investors could own these securities.  "Investment grade" is deemed to be highly secure.  However, if the guarantee by the insurer (Ambac) becomes worthless, then the "rating" of the security may fall below investment grade.  If that happens, then investors may have to liquidate their position and thus create a reduced demand for these securities.  The end result is the securities’ price is drastically cut.  Other holders of the security must then show unrealized losses on their balance sheets.  With additional losses, the holder must begin liquidating some of the assets to maintain financial stability.  This is a downward spiral.  Ambac is currenty insuring about $524 Billion of outstanding debt. See: http://www.washingtonpost.com/wp-dyn/content/article/2008/03/07/AR2008030700657.html

 

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The financial institutions and the Federal Reserve are intimately aware of this issue.  They will find a solution to further prop up Ambac or the securities Ambac insures.  With a much lower stock price and performance, AMBAC will have difficulty raising enough capital to stay in business.  It did raise $1.5 Billion but I suspect that amount will have a high "burn" rate in the coming months as more debt securities heads south and Ambac is forced to pay out claims.

Banks face "systemic margin call," $325 billion hit: JPM

NEW YORK (Reuters) – Wall Street banks are facing a "systemic margin call" that may deplete banks of $325 billion of capital due to deteriorating subprime U.S. mortgages, JPMorgan Chase & Co, said in a report late on Friday.  See: http://www.reuters.com/article/ousiv/idUSN0832645120080308

Remember, when a bank loses money on a loan, the loss goes directly to the bottom line and forces the bank to contract its loans and investments.  If banks are leveraged 10 to 1 against their capital, this puts $3.25 Trillion into play.  Hopefully this isn’t the domino that causes all of the other financial dominos to fall.

Could it be that Our Heavenly Father is beginning the cleansing cycle?

The Sharks are moving in

Friday, March 7th, 2008

I posted a writing on December 23rd, 2007 on "Fraud and Deception…" http://www.servias.org/?p=28.  We are starting to see the sharks circling their prey in the derivative insurance arena of collateralized debt obligations (CDO’s) contracts :

 

Johnson & Perkinson Announces Commencement of Class Action Litigation Naming Ambac Financial Group, Inc.
Monday March 3, 4:32 pm ET

SOUTH BURLINGTON, Vt., March 3, 2008 (PRIME NEWSWIRE) — Johnson & Perkinson hereby announces the commencement of a class action lawsuit naming Ambac Financial Group, Inc. (“Ambac” or “the Company”). Individuals, families, trusts or other entities that purchased Ambac securities between October 19, 2005 and November 26, 2007, inclusive, have the opportunity to participate as Lead Plaintiffs in the currently pending litigation. To do so, you must apply to serve in that capacity by March 17, 2008.

Johnson & Perkinson, a litigation boutique law firm based in South Burlington, Vermont, has extensive experience prosecuting investor class actions and actions involving financial fraud. Attorneys Johnson and Perkinson are both former employees of the Securities and Exchange Commission. Dedicated to maximizing shareholder return, members of Johnson & Perkinson have prosecuted complex class actions alleging securities or consumer fraud/deception on behalf of investors/consumers against numerous public companies since 1985, resulting in the recovery of many hundreds of millions of dollars, and have been singled out for excellence by various courts. The firm is litigating, or has recently resolved litigation, as Lead or Co-Lead Counsel in securities class actions against Xerox, Priceline, Wireless Facilities, i2 and Xchange, and serves on the Executive Committee in the Global Crossing case.  http://biz.yahoo.com/pz/080303/137505.html

This is just the beginning.  On the mortgage-backed securities front,  litigation is moving forth:

 

Swap Skirmish: Risks Hidden, Says Hedge Fund

By Susan Pulliam, Serena Ng and Tom McGinty

Word Count: 1,212  |  Companies Featured in This Article: Citigroup, Wachovia, MBIA, Ambac Financial Group, Bear Stearns, Morgan Stanley, Goldman Sachs Group, Lehman Brothers Holdings

As financial markets boomed in recent years, some Wall Street players began selling insurance against things going wrong, in what looked like prudence.

It wasn’t.

In separate lawsuits filed in a New York federal court, a $58-million-asset hedge fund alleges that Citigroup Inc. and Wachovia Corp., respectively, improperly required the fund to pay out more money from insurance derivatives contracts known as "credit default swaps" amid a steep decline in the value of mortgage-backed bonds. More… http://online.wsj.com/article/SB120459196434709061.html

 

Most of us don’t understand the complexities of these financial instruments.  The one thing we do understand- losing money.  We can be assured that this is just the tip of the iceberg.  The legal system will be extremely busy with the fallout of the greed-induced investing in these complex financial instruments.  Do you remember in March of 2003 when Warren Buffett called the derivatives "financial weapons of mass destruction"?  See http://news.bbc.co.uk/2/hi/business/2817995.stm

I hope you have implemented your "personal defense plan".

Love requires "The Cross"

Friday, March 7th, 2008

When a major revelation is at hand, the counterfeits surface to test those who are in pursuit of the revelation.  Jesus spoke of this occurrence in Matthew 24:

11 Then many false prophets will rise up and deceive many. 12 And because lawlessness will abound, the love of many will grow cold. 13 But he who endures to the end shall be saved.

False prophets are those who teach lawlessness and rebellion against God’s Word and Commandments (See Deut 13).  During these end times false prophets are now focusing on greatest revelation in Scripture: Love.  Many have written about their view of love.  Viewing love from the "created’s" point of view is only describing a partial view of love.  Since love is above structure, it defies complete definition by an individual.  Wisdom tells us to go to the Creator of Heaven and Earth to get understanding of love.  Only those with a pure heart shall see God (Mat 5:8).  Access to God comes through The Cross.  Jesus shed his blood so that we could enter in to the Holy of Holies.  Where is the Holy of Holies?

1 Cor 3:16 Do you not know that you are the temple of God and that the Spirit of God dwells in you? 17 If anyone defiles the temple of God, God will destroy him. For the temple of God is holy, which temple you are.

Why aren’t we entering into the Holy of Holies daily?  The Father’s Holy Presence is closely guarded.  Sin cannot enter the Temple.  Love can!  We must seek the entrance to the Holy of Holies in us.  If we defile the temple, destruction lies ahead.  Structure would redirect our attention to its imprisonment.  Structure demands attention.  Structure is looking for slaves.  What has you tied down?  What is preventing you from entering in to the Holy of Holies?  What is causing your love to grow cold?  We must be vigilant to protect our temple.  We must not forget that the Blood of Christ provided the way into the Holy of Holies.  The blood was shed at the Cross.  There is no other lawful entrance.  Anybody who claims otherwise is a false prophet.  In Corinthians 3, Paul further warns us:

18 Let no one deceive himself. If anyone among you seems to be wise in this age, let him become a fool that he may become wise. 19 For the wisdom of this world is foolishness with God. For it is written, "He catches the wise in their own craftiness"; 20 and again, "The Lord knows the thoughts of the wise, that they are futile."

He clearly states that there will be those among us will be crafty in worldly wisdom attempting to convince us of other means to gain entry into the presence of God.  Their attempts will be futile.  We are consistently warned against false prophets throughout Scripture.  Our Heavenly Father gave us the Law that we might judge the fruit(the words) of prophets.  If they promote lawlessness and rebellion to God’s Word, their life will follow the path toward destruction.  Those that listen and walk in "wisdom of this world" will follow the same path.  In the Book of Revelations, we are provided with the issues confronting us and possibly preventing us from "entering in":

 14 "And to the angel of the church of the Laodiceans write,

‘These things says the Amen, the Faithful and True Witness, the Beginning of the creation of God: 15 "I know your works, that you are neither cold nor hot. I could wish you were cold or hot. 16 So then, because you are lukewarm, and neither [fn7] cold nor hot, I will vomit you out of My mouth. 17 Because you say, ‘I am rich, have become wealthy, and have need of nothing’–and do not know that you are wretched, miserable, poor, blind, and naked– 18 I counsel you to buy from Me gold refined in the fire, that you may be rich; and white garments, that you may be clothed, that the shame of your nakedness may not be revealed; and anoint your eyes with eye salve, that you may see. 19 As many as I love, I rebuke and chasten. Therefore be zealous and repent. 20 Behold, I stand at the door and knock. If anyone hears My voice and opens the door, I will come in to him and dine with him, and he with Me. 21 To him who overcomes I will grant to sit with Me on My throne, as I also overcame and sat down with My Father on His throne.

22 "He who has an ear, let him hear what the Spirit says to the churches."’"

 

Worldly riches can easily cause blindness.  Many people conclude by their own understanding that wealthy people must have some sort of anointing which causes them to be wealthy.  Have you observed how people change when they are around wealthy people?  Are they hoping that the wealth factor will rub off on them?  Are they hoping that the wealthy person will simply take notice of them and write them a check?  Wealth seems to be often linked to blindness, wretchedness, and misery.  Wealthy Christians tend to become complacent.  Their eyes often become blind to The Father’s will for their resources.  They forget the Cross.  Jesus had the opportunity to become the wealthiest man on earth with His talents and abilities.  Actually, He was already the wealthiest man on earth.  His wealth superceded all the created wealth contained on earth.  Eternal life is worth far more than a couple of ounces of gold and silver.  This wealthy man walked in moderation.  He was provided with all the wealth necessary to complete his calling on earth: The Cross.  The Cross provides us with the restoration of fellowship with Our Heavenly Father.  The Blood of the Innocent Lamb provided the lawful means by which we could approach The Throne of Our Lord God Almighty.  Any other attempt is lawless.  Anyone who promotes another means is a false prophet.  Agape Love does not have an issue with the Law.  Love seeks to serve mankind, not control others by usurping requirement of the Cross.

Next? The Ultimate Bubble: Commodities

Saturday, March 1st, 2008

A recent article in Harper’s Magazine suggested that the next bubble would be "alternative energy" also known as "going green".  I would suggest that there has been a mother of all bubbles forming.  This bubble has a different set of rules.  This is the commodity bubble.  Commodities differ from other bubbles in that we all need commodities.  We must eat, travel, and replace failing infrastructure.  Commodities are generally consumed.  The beloved farmers are having their day in the spotlight.  This segment of the workforce must love the job.  Dealing with drought, insects, floods, etc. the farmer has many variables to deal with.  Their product has been in a "bear" (down/sideways) market for years.  Their time has come.  With the burgeoning economies of China and India, the worldwide demand for commodities is strong.  Five years ago I warned that China was an 800 lb. gorilla that would have a tremendous global impact.  Once China began to develop its resources (people) we would see a brave new world.  When I was a child, the cheaper toys were made in Japan.  At that time there was a stigma attached to foreign made goods.  That time is past.  Most products on the shelves are made in China, Vietnam, India, Mexico, etc.  We are importing about $500 Billion per year of energy products.  This transfer of wealth will surely cause a decline in the U.S.

The Federal Reserve is in a "no win" situation. Inflation is on the rise.  It is becoming serious.  Restaurant prices are up substantially, some by 10-15% in the last twelve months.  Expect to see price increases across the board- food, energy, utilities, vehicles, the list goes on.  Back in the late 70’s, early 80’s when inflation was moving to a hyper-inflationary status, Paul Volcker (Fed Chairman 1979-1987) increased core interest rates to 13.5% in 1981.  For people who had money to invest, those were the good ol’ days.  Banks were paying 14-16% on C.D.’S.  Companies were borrowing at similar rates.  Volcker knew that he had to contract the economy and purge the financial wastes that had accumulated.  This was a painful time for the U.S. economy.  Unemployment was at its highest level since the Great Depression.  Volcker was under political attack.  He held his position and rates subsided to 3% range in 1983.  The purging was completed.  This set the stage for the longest sustained economic expansion in the country’s history.  Ben Bernanke has a different set of circumstances to work with.  The debt to equity ratio of the private sector is much higher today.  The cost of housing in recent years has placed the consumer at risk.  Credit card debt in the 1970’s was insignificant compared to today’s levels.  The price of commodities was not being affected by China and India.  Now, the consumer is tapped out.  The real estate bubble has burst and housing prices are declining.  Consumers’ balance sheets are getting weaker.  Contraction of spending is ahead for most consumers.  At the same time, the financial crisis is in its early stages.  The Fed needs to cut rates to keep the banking system liquid.  Lower rates improve the profits of banks.  Higher rates reduce their profit margins.  The banks need profits to offset their investment and lending losses.  Can the banks recover before their losses must be booked?  That is the $64 Trillion question.  On the other hand, the primary inflation fighting tool of the Fed is "interest rate increases".  You have two opposing forces requiring opposite rate action.  What will Ben Bernanke do?  He wrote his Doctoral Thesis on the Great Depression and concluded that the depression could been avoided had the Fed pumped more money into the system.  This will reduce interest rates and at the same time increase inflation.  Remember, true inflation is defined by the increase in money supply.  Price inflation is the result of this increase in money.   There is more money chasing goods and services.  The Fed is also under pressure to keep the economy stable during the election cycle.  Rest assured that they will do everything possible to keep the stock market at its current levels through November.

Hyperinflation is ahead!  The Fed does not have the "guts" to raise rates and fight inflation.  Their mandate is to protect the financial institutions, not you or me.  At the same time the economy is in recession.  As inflation increases the consumer will continue to respond with reduced spending.  This will be observed as a downward spiral.  Consumer confidence (or perception) will determine the velocity of this downward spiral.  Global demand for commodities will provide a strong price base for commodities.  As the Fed injects more dollars into the system, the value of the dollar will decline relative to other currencies.  Any dollar denominated investments will decline in "global" value.  Since energy has been bought and sold in U.S. Dollars, international owners of this resource are losing money.  There will be continued pressure to move away from the dollar in pricing oil.  With less demand for dollars, inflation in terms of dollars will increase.  Ugly!!!

To summarize:

1. You have a housing bubble that has burst.

2. The Banking System has severe structural problems yet to be fully revealed.

3. The commodities are in a historic bull market which will affect the price of everything we buy.

4. The Fed cannot control inflation.

5. We are probably at "Peak" oil, thus a declining supply in a world of increasing demand.

6. The consumer has reduced ability to spend.

The true global currencies are gold, silver, oil, gas, water, grains, and other base commodities.  Your assets should include some of these or you will see your wealth evaporate.  Those who prepare for this perfect storm will be a blessing to those who failed to see the storm clouds forming.  Cleansing/purging cycles as mentioned in Scripture are necessary.  This may be the ultimate purge!