“The wages of sin is death” – Romans 6:23

The wages of sin may be death, but we'll have to wait for death to find out for sure.

Right now, we have crystal clear proof on the topic of the wages of reserve currency devaluation. We know, because we're seeing those wages everyday.

Reserve currency devaluation results in higher commodity prices.

I don't even think that Ben Bernanke himself would dispute the above statement privately.

Over the course of Bernanke's tenure, we've heard some fancy banker speak. We've heard about increasing liquidity and backstopping the financial system and easing quantitatively.

But today, everything that you would expect to happen when a currency is devalued is happening – and more.

Before I get to the “and more” portion, we don't have to look very far or hard at all to find the wages of currency devaluation.

Those wages are written in 21 pt headlines in all the major newspapers.

Most recently, The Wall Street Journal published a story titled “Consumers Start to Feel Pinch From Higher Grain Prices”

Some notable quotables from that story: “Prices of corn, wheat and soybeans—crops that are ubiquitous in U.S. food products—are up 88%, 76% and 37%, respectively, from 12 months ago. The soaring cost of fattening livestock with grain is also helping to lift prices of hogs and cattle to record-high levels. On top of all that, rising oil prices are lifting costs of packaging and transportation.”

Some commodities, like cotton, are breaking ALL TIME price records.

And while it's nice to be “right” about these things, it's still a bad thing in general to pay more for cotton, corn, oil, wheat and all the rest.

It's bad because it's entirely based on policies that will ultimately be net-destructive for the vast majority of people.

If you haven't started to invest in commodities, the good news is that it's not too late. I hesitate to call it good news, for the aforementioned reasons, but it's not too late because precious few of the people in power have any inkling as to what the right course of action might be.

People like President Obama and Timothy Geithner really don't have a clue, let alone the political will, ability or inclination to actually pursue policies that will make things better.

For those reasons, and more, it's not too late to build or add to positions in commodity related investments.

The real problem with higher priced commodities that can side-swipe even the savviest investors is the “and more” part.

For instance, someone in Libya with the foresight to protect their net worth with physical gold and silver might also have the misfortune of being turned into hamburger by the death throes of Muammar Gaddafi's terrible regime.

These additional, secondary effects of reserve currency devaluation will likely find their way to the shores of these United States.

People will revolt if they can barely afford to feed themselves. And that's the path we're already far, far down.

It's been said before, but 40 million Americans are on food stamps. That's over 10% of the population that can't afford to feed themselves without aid from the Government.

It doesn't take too much imagination or foresight to see what's coming if Bernanke et al continue to have their way with the dollar.

Invest, and prepare accordingly.

I suggest taking a look a presentation I put together on my three favorite commodity ETFs. You can watch this presentation by clicking here now.

Kevin McElroy

Editor

Resource Prospector