"Retail Sales Growth Stalls in June," said a headline yesterday.

The Ben Bernanke Fed is in a pickle. It is raising rates. But it is as terrified of rate increases as it is desperate for them. If it raises rates too high, it will exterminate the housing boom itself. No housing boom, no consumer spending. No consumer spending, no economic growth. Without the boom, there will be a bust.

Is the housing boom on the verge of going bust?

The National Realtors Association says sale prices are still running 10% ahead of last year. And stocks are holding up. The economy, say the weathermen, is still sunny.

But the Economic Cycle Research Institute says house prices are going down.

And the weathervane is pointing toward a storm. Gold is steadily recovering. The dollar is quietly giving way.

We repeat: The U.S. economy depends on consumer spending (70% of GDP). Consumers are not earning any more money. So, the only way they can increase spending is by borrowing. And what they borrow against is their houses. Any decline in housing will knock the wind out of the consumer...and out of the economy.

As much as 43% of the new jobs added since 2001 were added by the housing boom. America's economy today is housing. And should the housing boom go down, it would be a double whammy for the economy - people will have neither jobs nor credit. And they will most need exactly what they most don't have - savings.

What's more, Ben's Bank knows that there is a lag between its rate increases and the economic hit that follows. It knows that if it keeps raising rates it will eventually stumble over the quarter point that will break the back of the consumer. But no one will know until several months after the fact, which means our camel driver will have piled on another couple of "rate straws" in the meantime...before realizing that the beast's legs are buckling.

Why raise rates at all under those conditions? Ah, here we have the perverse elegance of financial markets. While it may crush the housing market with rate increases, it may crush it even faster without them.

In the first place, buyers and borrowers may rush to take action now, anticipating tougher conditions in the future. For a few months at least, it will look like the boom continues. The second place is described by a Reuters report from yesterday:

"While mortgage rates are linked to long-term U.S. Treasury yields, higher short-term rates lead investors to recalibrate their long-term rate expectations. Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.80 percent, down 0.06 percentage point from the previous week, which was its highest since April 12, 2002 when it reached 6.92 percent."

Ben Bernanke must feel like poor King Harolde, the last of England's Anglo-Saxon monarchs. In 1066, the man raced up to beat off an invasion of Norwegians in the North, and then had to make tracks for the South, where William, Duke of Normandy, was waiting for him at Hastings.

Like Harolde, Bernanke must fight inflation in the north, and then turn his forces to be ready for war with deflation when the economy sinks. We wish him well. But what we expect is success no greater than that of Harolde. He will win the first battle and lose the second, we predict.

A housing boom cannot last forever. But without one, homeowners cannot keep spending. And without more consumer spending...well, you know. In his battle against inflation, Bernanke has powerful allies: The Chinese are investing billions in order to make things more cheaply. All through Asia, cheaper labor is pushing down prices, and debt service takes more and more money out of the chase for consumer goods.

Approximately two trillion dollars in mortgage loans are being adjusted to higher monthly payments over the next 18 months. And, in yesterday's news, our old friend Jim Rogers predicts that oil will go over $100 a barrel and stay there. In short, consumers have to spend more just to stay in the same place. With no increase in earnings on the horizon, they're going to have to cut back on spending. The economy will slow; deflation will be Bernanke's new enemy.

But this is a fight that Bernanke will have to take up by himself. His elite troops - the bond market, the stock market, the financial industry, the lenders, the housing industry - will all collapse or betray him. Even the Federal government, no longer able to borrow at conveniently low rates, may be unable to come to his aid.

Oh, Ben...consult an oracle...read the stars...read the paper! Abdicate before it is too late.