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U.S. dollarWe promised today to return to the “Dirty Little History of Banking” series but recent news about a few currencies, taken from The Sovereign Investor, was too interesting to ignore. It's no big secret that the U.S. Dollar continues to be driven down in value by dunder-headed economic policies from alleged leaders with names like Obama and Bernanke. Let's be clear here – massive government bailouts of dysfunctional American industries, funded with fiat money printed for that express purpose, will lead us directly to runaway inflation.

This concept is not something you can agree with intellectually but file away for future use when the effects begin to be felt in your pocketbook. The future is here and runaway inflation has already started. The fact that the U.S. Dollar has been devaluing at a 5% to 10% annual rate (much higher than “official” government numbers) for the past 40 years should have been your first clue, even though most of us grow immune to the effect and factor it in as the cost of being an American.

The scary truth is that right now, today, we can look at statistics like the Commodity Research Bureau Index (CRBI) and see the first spikes of the worst coming to pass. The first place you're likely to notice skyrocketing prices are at the gas pump and grocery store. The CRBI has climbed 23% in the past five months, which means that a group of 19 different commodities have increased by that much in price.

Some random samplings: cotton has risen 84%, wheat 50%, coffee 37%, and the Thanksgiving turkey – in case you didn't notice – cost you 28% more this year than last.

What does this mean to the average currency investor? First off, drop the U.S. dollar from your portfolio like it was a flaming potato. Where in the world of geography should you look for your currency bargains then, pray tell? Right now, Australia and New Zealand are looking absolutely mighty compared to America's anemic currency. As major commodity exporters', both the Aussie and New Zealand dollar have made impressive gains against the United States version over the last several years. This is a long range trend that we don't see coming to an end any time soon. Seems like a great time to consider buying Aussie and Kiwi dollars to inflation-proof your portfolio against what is sure to be a rocky road for America's currency.

The American Monetary Association Team

American Monetary Association

Flickr / Linh_rOm

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