Prediction 2010.2: The Year When America Changed Gear?

I think 2010 is the year where we might see a dramatic change in how the world sees the US. And this year it all depends on the voters and the Fed. I actually can’t say whether America will go up, or go down. What I am predicting is that this is the year when America changes.

My thinking is that the Fed is indeed printing money like there is no tomorrow, Bernanke is still finger pointing, and the government is still spending like a drunken sailor. All of these problems are not new and the fault of this current administration. This has been a long time coming.

What changed my mind was Peter Schiff. Many of you readers will know that I think Peter Schiff is a quack, and that I think Jim Rogers is inhaling too much smoke. But recently of Fast Money Peter Schiff has stopped his ranting and decided to talk intelligently. He calmly built up and argument and it made me think and search.

Peter Schiff argued that America is entering into a hyper-inflation era, and the Fast Money crew laughed at him (again, and again.) Though instead of getting jumpy Peter stayed calm and explained. And that is where I did a double take.

The Fast Money crew said that hyper-inflation is when you have 50% inflation. But Peter said, no not exactly, it is a result, but not the start. So now you ask what is hyper-inflation?

The main cause of hyperinflation is a massive and rapid increase in the amount of money that is not supported by a corresponding growth in the output of goods and services.

Here is where I began to think. The US has a massive amount of money in the pipes, and the GDP is not budging as much as we would like it. As recently as today construction is down. I am going to give Peter Schiff his due and will admit that he has a point and it has me concerned.

Thus I cannot and will not predict on where America goes, but I will predict America has a decision to make and I await that decision.