The annual inflation rate in the United States could hit 15% by late 2013 or early 2014, and the Federal Reserve may be powerless to stop it.
While much can change the risk of inflation, the single most important driver of a rise in the general price level is the relationship of the money supply to economic activity.
Since the economic meltdown began in 2008, the Fed has pumped an unprecedented amount of money into bank reserves. In 2011 alone, adjusted bank reserves increased at a compounded annual rate of 47.1%. As these bank reserves filter into the business and consumer economy, the risk of inflation rises.