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There have been lots of cries around the investment world since yesterday's Fed rate cut about the inflationary pressures that are likely to be buoyed by the 50 basis point cut. A large amount of economists and strategists alike believe the Fed should have been more worried about inflation than they were. Jim Rogers and Marc Faber, two famous investors both believe this large rate cut will spur inflation that will end up bringing a recession. The fear is that the dollar will collapse as will the bond market, and a severe recession could ensue. Bernanke and the Fed took heat from other circles from simply caving into the equity markets wishes rather than putting what is best for our economy first.

There is no doubt that there is a real risk for inflation in the future. Gold prices continue to hit their highest levels in over 15 months, while oil prices are hitting new all-time highs daily. The US dollar is showing significant weakness and is unlikely to see any near-term bounce. Commodity prices all over the map are extremely high, with numerous new highs being set daily.

If you want to see just how just how strong commodity prices are right now, just look at some major basic material stocks. Barrick Gold Corporation (NYSE:ABX) hit a new 52 week high today. Southern Peru Copper (NYSE:PCU), a major producer of copper also hit its high today. The more diversified basic material company BHP Billiton (NYSE:BHP) also traded to its highest level of the year today. Fertilizer stocks such as Potash Corporation (NYSE:POT) have also gained as much as 300% in the past year, with many of them hitting new highs daily of late.

All of these high commodity and material prices certainly lends credence to the fact that inflation could be coming at some point down the road. As of now, inflation appears to be contained, but it does seem like it would be hard to sustain that deflationary period for too long.

I understand all the arguments about inflation, and believe it should be monitored closely. The area where I differ from others is that I believe that the Federal Reserve still made the right move, for now. I believe the Fed reacted to economic data that shows signs of real trouble in the economy, not the volatility of the stock market. The housing market needs any boost it can get, the fixed-income debacles are laying off employees all over the industry, and the consumer is beginning to slow down. The economic picture has gotten much weaker, and the Fed was, in my opinion, justified to cut rates by 1/2 a point. The cut was the right move, but the Fed must keep at the forefront of their mind the possible damage to the economy from a possible future inflationary stage as well. The monitoring of every piece of economic data hasn't seemed so important in years.