Alas poor Sawbuck, I knew him well

Inflation up, housing down, employment weak, dollar diving, gold zooming. So what. It doesn't amount to a hill of beans when it comes to weather the Fed will raise interest rates again. They will because they have to.

All the usual suspects are being paraded out for the media like always, except this time these are not really the things that the fed will be evaluating. I'm sure Helicopter Ben Bernanke would like the luxury, but the world's currencies are in big trouble and the only way the US treasury can finance its ballooning debt is to make the US securities it sells to foreign investors in Asia and Europe more attractive than other countries debt. US treasuries already pay a few percent more than other government's bonds but other countries are raising their rates, and so the Fed has to keep raising to stay ahead.

The old one - two punch
This is a dangerous game. Not only is the USD diving related to other world currencies, but those other currencies are weak themselves, multiplying the damage. Add to this the disgorging of US dollar reserves by China, the European Central Bank, Russia and the rest of the central banks. That money is being used to buy gold, other hard assets and commodities driving their prices up. The damage caused to the confidence of foreign debt holders when the Dubai Port deal was served up as the issue it never was but the political opportunity it became was perhaps the tipping point. Dollars loaned outside the country ultimately have to come back home. If they are rejected by their home country, they become worthless. The world's investors have not missed this point as the Americans have. The Fed will have to raise interest rates at an accelerating rate if they hope to keep the dollar from complete destruction. Its probably a hopeless case, but that's unlikely to keep them from trying.

The foreign central banks are finally loosing their faith in the US dollar as the world's reserve currency. Its no surprise, lots of smart people have been writing about this for years. Iran has stated their intention to sell oil in Euros and now Vlad Putin has announced that the Russians will switch to selling their oil and gas from the dollar to the Rouble. Russia is one of the largest producers of oil and gas in the world. This means buyers, including the US will have to buy Roubles first in order to buy Russian hydrocarbons. Putin said in his annual state of the nation address: "The Rouble must become a more widespread means of international transactions. To this end, we need to open a stock exchange in Russia to trade in oil, gas, and other goods to be paid for in Roubles,".

Take your shit and get out
Add to this mess, all the countries nationalizing their natural resources. Russia, Indonesia, Venezuela, Bolivia, Nigeria, countries all over the world are kicking out international mining, oil and other resource companies and taking over the production for themselves. What the hell took them so long? What nation in their right mind lets outsiders take their resources and receive a pittance for them while their citizens live in poverty? Puppet governments propped up by the former empires of Europe and the US, that's who. As the empires loose their grip of rule and their currency fails, there is little left in the way of corrupt influence, and we're watching it happen right now.

What's a body to do?
If you have any adjustable rate debt, be it a mortgage or credit cards, do whatever you can now to either pay it off or refinance it to a fixed rate or you will be road kill. Rates are going up. They have to.

If you have any assets denominated in US dollars, or even other world fiat currencies, sell them into any market rally and buy gold and silver, they are the only way to preserve the wealth you have managed to accumulate so far.

If you think this piece is rough, and you've got the balls, read what Chris Laird over at PrudentSquirrel has to say.