A buying opportunity…?

I would like to have mentioned this a few days ago but for obvious reasons I was too busy.

If you haven’t been following the economy closely for the last week or two you may not have noticed that the federal reserve has been very active in throwing fluff at the market. This has manifested itself in a misplaced belief that the market may be recovering.

It’s time for a reality check. Nothing has changed fundamentally in the monetary policy of the fed and in fact they have furthered coming inflation through an additional rate cut and attempts at increasing liquidity by dumping money on the market.

This is where the good news comes in. When the fed takes these steps the market typically reacts positively in the short term as it has done for the past 2 weeks or so. This has pushed foreign currencies and precious metals down from their recent highs and created a new buying opportunity. It’s a certainty that until our country stops incurring war debt and our monetary policy is changed to end inflationary credit that the dollar will continue to slide making investments in foreign currency and precious metals a sure bet.

It’s impossible to know in the near term how many more surprises the fed is going to spring in order to delay metals and currencies from returning to their highs, but rest assured they can’t fool me and they can’t fool the market for long.

Mr. Bernanke can tell me one thing but the fact that the Swiss Franc and Canadian Dollar both traded above the value of the dollar and the Australian Dollar is just pennies away proves he is obscuring the facts.

Still watching the AUD?

What’s the big deal if the Australian Dollar increases in value against the US dollar?

To you, not much since you aren’t buying many gadgets made in Australia though you may notice an increase in your meat and wine prices. What it signals is the general failure of the US economy and banking system in direct contradiction to what our political leaders and banking system(Bernanke) would have us believe.

The official Federal Reserve position is that a weak dollar doesn’t hurt the average American. I guess Bernanke doesn’t think the average American needs gas, food and other products to live. I think the absence of these key items from his inflation index probably reinforces that.

Here are some quick currency (inflation) facts that are hurting you right now.
Chinese Currency(Y) has increased in value 2.25% so far this year. That’s an annual rate of 15.2%. That means that the same item you bought for $5.00 just a month and a half ago would cost $5.11 today. If the inflation continues that item will cost $5.76 by year end.

We’ve all heard that China is one of the leading countries in upcoming oil demand. How does this currency increase weigh on that?

At the beginning of the year oil was about $96/barrel or Y701.24/barrel. When the US dollar falls against a foreign currency the other country’s buying power increases relative to our own. When there is an increase of 2.25% in the value of Chinese currency a $96/barrel price translates to Y685.72/barrel. This means that China can afford to continue offering the price of Y701.24/barrel that they are used to which would drive the price in US dollars up to $98.17/barrel. Consider how high oil could go if China actually offered more. With inflation alone oil is likely to cost over $110/barrel by year end and that’s without the Chinese actually increasing their offer per barrel.

Is it any wonder then that oil today traded from 97.16 – 99.37 and closed at 98.81?

It’s time to open our eyes.
This is not some sinister Chinese plot at world domination. This is much more heinous.

This is a continuous and intentional attack on the US dollar in the name of maintaining and saving the economy. This is our government at all levels spending money they don’t have which ultimately results in the printing of money at the federal reserve. This is the result of central banks in most of the civilized world acting in collusion to prop up their failed system of fractional reserve banking and cheap credit as evidenced by their suicidally low interest rates.

This is your warning.
It’s a matter of time before this ball of yarn unwinds.
In fact it may have started already. Don’t rely on the government and their FDIC to guarantee your money because if it comes to that it’s already too late. The FDIC is designed to protect against a single bank failure, not a system wide collapse of public confidence in the banking system.

Wall Street Bank Run – Washington Post
The big plan that’s as flimsy as the Rock it’s built on – Sunday Herald, UK