I have long maintained that the economic crisis in the US is an inflationary one, or put another way, that dollar devaluation and rising prices will be more detrimental than unemployment and a crashing stock market. Of course, we are going to get both.

From this perspective, the crisis truly began yesterday, when the Fed announced that it would purchase $300 billion of long-term Treasuries over the next six months.

What this means in regular speak:

1. The Fed is going to print money. $300 billion to buy Treasuries, $750 billion to buy mortgage-backed securities.
2. The immediate impact was a drop in the dollar. The price of gold and silver shot up, as did virtually every currency against the US dollar.
3. Hyperinflation is the nightmare scenario in which the dollar loses all its value, imports skyrocket in price, and your money is turned worthless. We are on the path to hyperinflation, accelerating, and not showing any signs of turning around. This is not good.
4. Of course I have been recommending buying gold, and that recommendation will only continue. Get in while you still can.
5. Do not be fooled by rallies in the Treasury market or the US stock market. The Fed is intervening and is distorting analysis. If you are a short-term trader who can read charts and understand the momentum in the market, than no problem -- but if you are a long-term investor just looking for something safe, these markets are not for you. Unfortunate as it may be, gold and silver are really the only long-term viable stores of wealth.

Also coinciding with the Fed's announcement to print money and go on a shopping spree was that consumer prices have risen for the second month in a row. This is how it starts: rising consumer prices will lead to a demand for rising wages, which causes businesses to raise prices, which causes further demand in a rise of wages.....all the while, the Fed is printing money, thus making imports continue to rise in price no matter how much demand falls.

Welcome to the economic crisis.