For me the great curiosity was in the fact that gold and oil didn’t rally on the inflation news. I say this because when I look at the Alt-A and Options Arms wave of foreclosures that will be hitting over the next two years and the commercial real estate default debacle unfolding before our eyes and couple that with the huge wave of shadow housing inventory that hasn’t been allowed to hit the MLS pages, I don’t see how the Fed can raise interest rates or stop playing their new found role as the buyer of last resort in addition to their former and current role as the lender of last resort.

I follow Williams at Shadowstats and while I disagree in regard to a second depression, I do believe that there is plenty of on the ground evidence that a major wave of inflation and possibly hyperinflation is straight ahead and the Fed will have its hands tied for some time, unless of course it wants to make William’s predilections come true on the depression front.

I can not see how the US, Japan or the UK can ever pay off their sovereign debt at today’s currency valuations and to me that spells “inflation.” Where am I off here?