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.

Thanks for nothing Bernanke

Once again Ben Bernanke has demonstrated his marked ability to harm us all in a vain attempt to prevent a recession he and his predecessor have caused.

Ben Bernanke believes that our economy can’t be stable without control from the federal reserve. I think Ben Bernanke doesn’t know what he’s talking about.

Consider, our economy has never been more unstable than it has since 1913 and the inception of the fed. Since then we’ve had 100 years of the very booms and busts the fed claimed it would prevent including the Great Depression.

Bernanke’s response? The great depression was caused by the wrong kind of government intervention. My response, read a book Mr. Bernanke. Take a few days and sit down somewhere solitary and think on it.

I’ll even suggest one.
Mr. Bernanke’s response to the great depression and creating a stable economy reminds me very much of the Democratic response to government interference in health care. I say the problem is too much intervention, they say not enough of the right kind.

If you haven’t figured out the “right” kind of intervention in 100 years, Bernanke, give up. Let a sound economic theory prevail and put this country back on the right track.

Mr. Bernanke says the market crash is a problem that must be fixed through intervention.
Mr. Bernanke says the Mortgage crisis must be fixed by the government.
Mr. Bernanke thinks the recession is caused by a lack of economic stimulus.

What Mr. Bernanke refuses to admit is that these are just symptoms of the problem and treating them won’t cure the illness, in fact it will make things much worse by trying. Our economy has a virus and the virus is called the federal reserve.

Please, don’t take my word for it. Read any of a multitude of books from minds much greater than mine. Fee.Org and Mises.Org

Oh thanks for the rate cut Mr. Bernanke. You sent my Australian Dollar denominated CDs straight up today. Too bad for those still invested in the US dollar though.