Mark your calendars. Today is the day the global currency war broke out into the open. This after the Bank of Japan announced it would ramp up its monetary policy stimulus efforts -- on an unlimited basis -- until it achieves a 2% inflation target.

Now, all three major central banks have committed to open ended easing.

As central banks ramp up one last time, the end game for all this -- given the fiscal austerity, budget fights, and policy turmoil just ahead -- is higher inflation combined with economic stagnation. This is the dreaded "stagflation" outcome that is the bane of central bankers, especially the aggressive, overconfident ones that are in charge right now. Here's why.

Russian officials warned that other countries may follow Japan's efforts to weaken the yen -- something that reverberated after the outgoing head of the Eurogroup of finance ministers and the Prime Minister of Luxembourg said the euro was "dangerously high." Officials and Norway and Sweden also expressed concern. Other officials, from the head of the Bank of England to policymakers in Korea and Australia, have all recently voiced their concern about what's happening.

It's no wonder that export-oriented German factories are suffering from a drop in output.

The surge of cheap money stands in contrast to an ongoing deterioration in the economic data. The Philly Fed regional manufacturing survey came in well below expectations this morning -- the latest datapoint pulling down the Citigroup Economic Surprise Index.

The index, which I've frequently highlighted, is about to fall into negative territory for the first time since early 2012 as the hard data continues to disappoint lofty Wall Street expectations. That's coincided with weak performance for the stock market.

If inflation kicks higher because of risking geo-political risks in oil producing regions -- illustrated by the rise of AQIM in North Africa -- the market's theme of "central banks will solve everything" will be in jeopardy.

What's really scary in all this is that if we tip into a recession now -- as Japan and Europe have already done -- there will be no easy salves. Washington is embroiled in a struggle over how much fiscal austerity to dole out. Who gets tax hikes? What programs should be cut?

If the Fed's hands are tied, with more hawkish members there already doubting the effectiveness of its ongoing QE3 and QE4 initiatives, we face the prospect of higher inflation, tighter money, and less government support. All in the context of a loss of cooperation at the G20 level as the major economies fight to boost exports via competitive currency devaluation -- or "beggar thy neighbor" policies -- all at the same time.

As the race to debase accelerates, it will boost the fortunes of precious metals in a big way as investors scramble for alternative stores of value. No surprise then that both gold and silver are quietly moving to the upper end of recent trading ranges in preparation for what looks to be a breakout uptrend.

I'm adding more exposure to the sector via the VelocityShares 3x Silver (USLV), Seabridge Gold (SA), and Coeur D Alene Mines Corp. (CDE) to my Edge Letter Sample Portfolio.

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