[Scape]

Between 1986 and 1994, the amount of U.S. dollars in the world rose from $3.5 trillion to $4.4 -- an increase of just $900 billion.

Now compare that to what happened between 1995 and 2003, when the amount of money surged from $4.7 trillion to $8.9 trillion -- a difference of $4.2 trillion! Over the past eight years, the money supply has grown nearly five times faster than during the preceding eight years.

That's a lot of cash floating around. But few people have noticed, because it hasn't been flowing into shops and stores. Instead, it's been inflating bond prices... stocks... and home prices.

But all that is about to end.

You see, Fed Chairman Alan Greenspan finds himself in a no-win situation. On the one hand, he needs to raise interest rates to slow inflation. In fact, a lot of people are saying a rise in rates is long overdue.

"They never should have lowered [rates] to this emergency/deflation prevention level," says Bill Gross, who runs the world's largest bond fund.. "Inflationary pressures build as long as we have this emergency less-than-zero percent real interest rate.'' The Fed should lift its benchmark rate to 2.5 percent and "they should get there quick, and not with baby steps.''

But Greenspan can't raise rates like that. He can't even raise them just a little bit.If he did, the enormous housing bubble would burst... millions of consumers overloaded with low-interest auto and home equity loans would have to declare bankruptcy... and outright panic would erupt on Wall Street.

Remember, even the mere mention that Greenspan was considering lowering interest rates was enough to send the Dow plunging 123 points in a single day.

And there are signs that things are already out of Greenspan's hands. Long-term interest rates are rising... and massive home buying and refinancing is coming to an end.

In fact, according to the American Mortgage Bankers Association's, the average contract interest rate for 30-year fixed-rate mortgages was 6.01% at the end of April -- up from 5.5% a year earlier. Meanwhile, the number of mortgage applications at the end of March was down nearly 13% from the year before.

Things are about to get really ugly... real quick. We could see a gigantic market meltdown -- the likes of which we haven't seen since the Great Depression.

Even Warren Buffett, who owns more dollars than any other human being besides Bill Gates, has become increasingly concerned about the U.S. dollar's value. The chairman of Berkshire Hathaway believes the Federal Reserve was "a little slow in terms of moving up."

Maybe that's why he's plowing the company's massive cash reserves into five foreign currencies, representing his biggest investment in the past two years.

"Our capital is underutilized now," says Mr. Buffett. "It's a painful condition to be in -- but not as painful as doing something stupid."

You see, with commodities, inflation isn't a bad thing. It's a GOOD thing. That's because every ounce of pressure pushing the dollar down creates upward pressure under commodity prices.

The reason is simple. When inflation hits, the value of the dollar falls. That just means it takes more dollars to buy the exact same goods. So when the value of a dollar is falling, you need MORE dollars to buy oil, gold, tin, steel -- or any commodity. So prices go UP.

It's a historical truth. Just consider the inflation of the 1970s. In 1970, the U.S. dollar was relatively strong. But by 1980, inflation was out of control -- and the value of the dollar nearly fell in half.

What cost you $1 in 1970 cost you $1.98 just 10 years later. In other words, it took twice as many dollars to buy the exact same goods. Or, put another way, $100 spent at the store in 1970 would only buy you $49 worth of stuff in 1980.

But while the dollar was falling, gold was soaring. It shot from $35 an ounce all the way up to $850 in a decade. That's an average annual gain of 233% -- more than enough to offset the dollar's loss of value... with a tidy sum left over.

It's all set up to happen again -- gold is already up a whopping 52% since January 2001. And it's ready to blast well past its 1980 peak of $850 an ounce -- the equivalent of more than $2,000 an ounce in today's dollars -- and make you more than 800% richer, IF you play it right. One card to play is right here in Alberta.

The Athabasca Oil Sands -- covering a vast area of 25,000 square miles -- is estimated to contain over 300 billion barrels of oil.

Only until recently there hasn't been a cost-effective way to get the oil OUT of the sand deposits and onto the market.

You see, these rich bitumen oil deposits are buried deep below the Earth's surface and are soaked into vast fields of sand and clay. So instead of simply drilling for oil, you have to remove layer after layer of gravel, limestone and water before the oil sands themselves can be dug up and processed.

This time-consuming process used to cost about $30 per barrel -- and that was just to get the oil out of the ground. Today, a new extraction technique has made the entire process not only three to four times faster, but it's slashed production costs by two-thirds, to nearly $10 per barrel.

And costs keep falling as MORE oil is produced. In fact, more than 1 billion barrels of oil have already been pulled from these oil sands since 1980, and that number continues to grow daily. Mind you it will turn Alberta into a lunar lanscape, but it's Alberta so who cares?

[Robair]

So what happens to my whole 'move to the States, make money, then move back home and spend it' plan?

No offense Scape, but you just shit on my whole day....

[Scape]

Oops, my bad. Forgive me?

[Rev_Blair]

So what happens to those of us who are living lives not indexed to inflation? My boss really doesn't care if my cost of living goes up, but he doesn't like to give raises because then his cost of living goes up. That is the normal attitude as far as I can tell, and has been for some time now.

When the bottom falls out of this thing, and I have doubt that it will, will that be accompanied by a wage correction as well?

[Scape]

Anything that isn't nailed down is going to be adversely affected. That's a given. Considering the job market will be flooded with more people looking for work and motivated because the social safety net will be torn to shreds from the demand. Competition will be fierce. The effect of the collapse of the US housing market will bring the whole US economy down with it. That in turn will make our dependence of US trade like a shorn mast on a tall ship and threaten to overturn our economy unless we dump it. Invest in commodities now before it takes off.