The Fed has spoken, inflation will continue

The fed met yesterday and today in their regular meeting to determine the future of interest rates and monetary policy. Not surprisingly they have decided to leave interest rates alone.

What does this mean? Inflation and major profits if you’ve been listening to my AUD recommendation.
At this moment the AUD/USD pair is bidding .95899 which is a gain of 9.2% since January.

For the less risk adverse among you I’d recommend trading the pair on Forex, the currency market, for greater gain. MB Trading, my platform of choice, offers 100 to 1 leverage which means that for every penny the AUD/USD pair increases you realize a 100% gain. That translates into a gain of about 800% since January. Of course 100 to 1 leverage can be quite dangerous as well since you lose just as fast as you gain if you end up on the wrong side of the market.

I am confident that until the US ends it’s foreign intervention policy and changes it’s monetary policy there is a 100% certainty that the AUD/USD pair will continue to move skyward. I will continue to invest in this pair in the foreseeable future.

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

Watch the AUD/USD exchange rate.

Feb. 4th the reserve bank of Australia will meet and is expected to raise the cash rate to 7% while most of the other central banks are slashing rates in collusion with one another.

What does this mean? While Canada, England and the US are actively inflating their currency by cutting key rates in a doomed (and misinformed) attempt at preventing recession Australia is fighting the core cause of recession, inflation. If the cash rate is increased to 7% expect the USD/AUD exchange rate to move in favor of the AUD. Already the AUD has gained to the tune of 44% annualized against the dollar this year.

Where is your money?

I’ll keep this short. Get your savings out of US Dollars.

Fed rate cuts and the upcoming economic stimulus package are further demonstrating the inflation of the US dollar (which means your savings, despite having the same dollar amount, are becoming worthless). Consider, so far since January 8th the Australian dollar has gained against the US dollar by 2.12%. That’s an annual rate of 33.63%. This means that if your savings account isn’t paying you at least 33% interest you are not even keeping up with inflation, forget growing your savings.

My advice? Stop asking the government for things. They can’t give you anything they don’t take from you to start with. If they don’t take it through direct taxation than they take it through inflation. Oh, and divest of the US dollar.

The Fed, The Drugs, The Congress. A story of Addiction.

This is a story of two teenagers and their need of intervention.

There was a boy named Bob who had a brother named Dave. Now Bob was the elder and had the task of making sure his younger brother Dave was on the right track and always doing well. This was a large task for Bob and being under such constant pressure it was no great surprise that Bob began experimenting with drugs to help him deal with the pressure.

Soon Bob’s addiction became known to his brother Dave and Dave became addicted as well. It wasn’t far past that Dave established a long lasting relationship with his brother’s dealers.

Now, Bob and Dave have had many fathers who would typically enter and leave their lives every 4 to 8 years. Each father of course had his own concepts of how to deal with the casual drug usage of his boys. Many of them figured it didn’t matter that they used since they had never seen anything negative come of it. There were some however who were around to witness some particularly nasty binges.

There was one near overdose that caused a quite a stir. In response the dealers stepped in and convinced the current and following fathers (who did not know that the dealers were responsible for the trouble) that the real problem wasn’t the drugs, but rather the erratic supply of drugs coming from unreliable sources which allowed the boys to binge so heavily and put their lives at risk. The dealers petitioned the father for a new system in which they could provide an infinite supply of drugs to the boys which were to be doled out in a constant and structured way.

The father, not knowing a better way and fearing for their boys, agreed. The dealers made an agreement with the father. The agreement established an infinite supply of drugs to be given to the boys in a manner which they would establish as best through their representative, the chairman. The plan was to prevent any increase in usage of the drug to which the boys were addicted.

Though it was obvious to any outsider that the dealers had no interest in keeping to that plan and in fact had every motive to stray from it the father remained oblivious with hope. So was established the great drug dispensary, which from then on was regarded by almost everyone of importance as infallible and unarguably necessary.

It wasn’t long after their promise that the dealers, through their chairman, went back on their word and greatly increased the supply of drugs to pad their own pockets. When the boys inevitably ended up recovering from an overdose the chairman quickly laid blame at the feet of a misunderstanding in how to administer the drug. Naught was told of the great increase in dosage and any revelation of it was discredited as quackery with great haste by chairmen who followed.

So it was that the greatest demonstration of the deceit of these dealers and their great dispensary was revealed to the light of day and summarily ignored. At the time of their overdose the evidence showed that Bob and Dave were receiving 1.83 times the dose they took before the great dispensary was established.

Many years later Bob and Dave have begun to show signs of great illness once again. When examined it is revealed that the two are now receiving over 11 times the dose that last caused them to overdose. When the great dispensary learned that it was being found out it simply stopped publishing it’s dosing records.

Today we have a new group of men (and a woman) who would like to become the next father to Bob and Dave. While all will loudly proclaim they see the sickness of the boys it is all but one that fails to see the facts of their sickness.

One group insists that Bob is at fault. That Bob is constantly interfering in the life of Dave and must be making him sick. Bob must be stopped.

The other group suggests that Dave is sick because of his own greed and Bob needs to be more involved in his life to save him from himself.

There is one man who has seen the facts. This man maintains that Bob and Dave are sick because they are being poisoned. He claims that their own fathers have unwittingly caused this hardship. He states that only one thing can save these boys and that is destruction of the great dispensary and the dealers who petitioned for it. Can this man intervene before it is too late? That depends, is he the only one that sees the truth? Will you help him?