That's why I was able to predict, and profit from, this nascent move up in rates, despite criticism from some who argued that the removal of government mortgage market support and higher interest rates had already been priced into the market.

It's not only removal of Federal Reserve purchases of mortgage-backed securities that are sending rates higher. I believe the move higher in mortgage rates presages a higher cost of money across the yield spectrum, due to rising concerns about inflation.

The Fed's program of buying $1.25 trillion in mortgage-backed securities caused rates to fall to 4.71% in December 2009. After the Fed departed from the market, however, 30-year fixed mortgage rates jumped to 5.21% as of last week. That's up from 5.08% the prior week and the highest level in nearly eight months.

Unfortunately, this is just the beginning of interest rate woes as we now see the warning signs of burgeoning inflation all around us. The Institute of Supply Management's prices paid index surged in March from 67 to 75. Oil prices are up 65% in the last 12 months, and gold has reached a four-month high as it creeps back toward its all-time high of just over $1,200 per ounce. Even the prices of base metals, such as copper and iron ore, have surged recently.

The Fed seems to regard these warning signs as things to ignore. Instead of dealing with our inflation problem, central bank officials have focused on stubbornly high unemployment numbers and troubles in Greece. The fact that people are unproductively sitting home in the U.S. and Greece does not obviate the need for the Fed to eventually deal with its mandate of providing stable prices.