By now, I'm sure you've heard the dismal job report: Only 112,000 new U.S. jobs were created in November -- far below the 200,000 new jobs analysts had been expecting.

Combine November's weak job growth with a soft pre- Christmas retail market and slowing U.S. factory growth and you have to wonder why interest rates are rising.

Four consecutive rate hikes of one-quarter percentage point each this year (on June 30, August 10, September 21, and November 10) by the Federal Reserve are now expected to be followed by a fifth interest rate increase of another quarter percentage point on December 14, 2004. How certain is another rate hike? All 20 of the largest U.S. bond dealers are expecting the Fed to move rates up again when it meets.

The last time the Federal Reserve lifted its Federal Funds Rate five consecutive times was in the period ended May 2000. We all know what happened to stocks since 2000 -- they've gone nowhere.

While the Fed has always maintained that its main purpose in bringing the Federal Funds rate up or down is to keep inflation in check, inflation is not a threat this time as interest rates continue to move higher. If we take the volatile energy and food elements, inflation is well below 2%. So why are rates moving higher?

Personally, I believe the motive behind the Fed's actions has never been so clear: While the U.S. obviously favors a weak U.S. dollar scenario, it cannot have its currency experience a freefall. Such a display of a weak currency would make it difficult for the U.S. to finance its daily negative cash of $1.6 billion (yes, that's how much the U.S. spends every day, compared to what it takes in).

By steadily raising interest rates, the Fed is showing foreigners that investment in U.S. bonds pays a decent, rising return. And because many foreign countries will not be able to increase their domestic interest rates because they want to keep their currency as soft as possible against the U.S. dollar, it's a way for the Fed to say "yes, our currency is falling... but we're raising interest rates to prop it up." The real question is, for how long will foreigners buy the story?