In 2008 few Americans were privy to the discussions that determined whether the world financial system would completely implode or be saved. Wall Street was crashing while policymakers argued about what was to be done in the little time before the unthinkable could happen.

However, we all know now that the system is potentially being "saved" by the ongoing economic bailout: including Ben Bernanke's QE1 and now QE2. We are now faced with a new economic reality raising the following five questions regarding the potential growth of one's money and one's financial survival in an economy with potentially high rates of inflation in 2011 and beyond:

Wednesday, October 6, 2010's Wall Street Journal's front page headline read: "Central Banks Open Spigot.... Japan launches Bond Buying, Fed Officials Urge More Easing."

If the Federal Reserve led by Ben Bernanke adopts this much anticipated policy of a second round of quantitative easing , then U.S. economic deflation for the foreseeable future may be off the table. A cautiously rising stock market may be reflecting the belief that "the huge bond-buying effort they (the Fed) ended in March (2010) is likely to be resumed." We know that the U.S. Dow Jones Industrial Average peaked shortly after that bond buying ended and fell rather dramatically.

The immediate force starting in May 2010 with which our investments may have to reckon may be deflation (lower or stagnant prices) throughout our economy and in asset classes such as the stock market, oil, silver and potentially gold.

The Dow Jones Industrial Average closed at 10136.6 on Friday, May 28, 2010. Gold closed at $1,212.20 per troy ounce and silver closed at $18.43 per ounce on this date. (Editor's note: oil traded at $74.09 when this post was written).

Both Warren Buffett in his August 18, 2009 editorial in the New York Times and Curtis Mewbourne in an August 2009 report on investment manager PIMCO's website appear to concur on the fate of the U.S. dollar: that it may continue to fall. The dollar index (September 2009 contract) closed August 18 at 79.035.

Buffett points out that "the current account deficit - dollars that we force-feed to the rest of the world and that must be invested - will be $400 billion or so this year." He adds that there have recently been indications that foreign nations holding U.S. dollars have been investing in our companies, financial markets, and real estate in addition to U.S. Treasury instruments. According to Wikipedia, lenders from Japan and China own over 45% of U.S. foreign debt.

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Could it be possible to think in our current economic times that America may lose complete control over its own economic future? Has an economic and financial process begun that may not easily be undone that could threaten the very core of what is left of our economic, financial and social well-being?

I believe one big problem lies with the pyramiding of debt over decades by our elected officials: the rapid expansion of the United States public debt and our country's expanding yearly budget deficits. The national debt is now $11 trillion. Wikipedia states that under the 2010 Obama budget projections, the debt is projected to reach $20 trillion by 2015, but is expected to increase to nearly 100% of GDP by 2010 and remain at that level. Vice President Joe Biden has now admitted to miscalculating the "strength" of the potential recovery. All bets are off. And that is what I believe the Obama stimulus plan(s) are doing: adding to our debt and betting our future on failing companies and industries.

As the dollar begins to cascade down once again with the dollar index at 81.64, many market participants, including this writer, are coming to the conclusion that America's domestic and foreign debts will be repaid with dollars that are worth much less. Many participants agree that the U.S. Treasury bonds that we and other nations hold will end up being worth less in real terms (i.e., will be able to buy fewer goods and services), and perhaps a great deal less in future years.

I am not a great believer in the governing abilities of our former President, George W. Bush, but I do think his concept of having wide swaths of Americans participate in an ownership society was a laudable goal. The concept included large numbers of Americans riding a wave of prosperity engendered through ownership in appreciating assets such as homes, businesses and retirement accounts. This was viewed as a ticket toward upward mobility. At least that was the theory.

Background: I remember in February 2007, the Shanghai market cracked, and ours followed sharply downward the next day. However, both our markets and the Shanghai Exchange snapped back shortly thereafter as quickly as they had fallen.

This was a wakeup call for me, and the first time that I questioned the American bull market in stocks that began in 2003. I wrote about this in my article, Are Stocks Still Worthwhile Investments? A Reconsideration: The Odds of a Panic, posted in April 2007, where I wrote that there may have been an "unsupported speculative fever" underlying the stock market.

Many people who place their money in the stock market are really traders rather than investors. In fact, I do not think that there are too many long term investors left after what has happened to the market in since September 2008, when the Dow Jones has fallen 6,000 points to 7,500. Long term investing has been somewhat discredited and both a well known financial commentator and an often interviewed hedge fund manager have declared end of such an investing style. See my article to the contrary: Why Long Term Investing in the Stock Market is not Dead.

The Federal Reserve was set up originally as an independent body to so that it would be free of being influenced by the winds of political opinion. Robert Reich made the point recently in his blog that the Federal Reserve has committed 2.5 trillion dollars thus far to rescue our financial system from its credit seize up and from the black hole in the housing market. Most of the Fed's actions are being done behind closed doors. This is all in the name of the "monetary ease" to which Fed Chairman Bernanke referred in a speech on February 18, 2009. I agree with Reich that the bailout process is hardly transparent, as the true eventual cost for which taxpayers may be on the hook is unknown.