The Fed just declared a war upon your wallet again and most Americans don’t even realize it.
The Federal Open Market Committee ( FOMC), a committee within the Federal Reserve System, has kept the U.S. interest rate at 0.25 percent (and that was expected) — but the kicker was the comments that followed.
The Fed had said that interest rates would be kept low until around mid-2013. Now Fed officials have revised that to keeping the interest rate exceptionally low through late-2014.
What have they done? They’ve all but ensured that your money won’t earn you any interest in a savings account, money market account or CD for almost 3 years from today.
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It’s a war on savers. Why? It’s because Fed officials want you to spend or put money in stocks … but they don’t want to incentivize you to save right now.
We’re in an election year. President Barack Obama wants stocks to head higher. One way to do that is to make sure that Americans can’t get any yield on their money by socking it away in a bank account. Instead, Fed officials want you to pour that money into stocks.
However, here’s what much of the “smart” institutional money will do. They’ll go into higher-yielding assets that are more fundamentally sound. They’re savvy, so they know how to look abroad.
Here’s what they’re looking at. They can get a maximum of 0.25 percent on their money held in U.S. dollars. But if they go across the pond to Australia or New Zealand, they can get 4.25 percent or 2.50 percent respectively. Well that’s a ton more in interest than a measly 0.25 percent.
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Therefore, this is going to ensure that money flows away from the dollar, causing it to lose in value again. Once again, thank you, Federal Reserve, for ruining our currency and purchasing power.
Then it’s going to ensure that money runs to fundamentally sound, higher-yielding assets like the Aussie dollar or New Zealand dollar. Both of these economies are in far better shape fundamentally than that of the United States and they earn so much more interest than the greenback ever thought about yielding.
So this will cause money to flow into the Aussie and New Zealand dollars over the course of this year (and for many years to come) courtesy of the Federal Reserve.
Another reason why these currencies will benefit is this: When the Fed engineers a “slick” scheme to undermine the dollar like they have this past week, they ensure the dollar heads south. That means your dollars have much less purchasing power when it comes to buying groceries, gasoline, etc.
Therefore, this pushes up the price of commodities which causes inflation. (Remember, the Fed and government as a whole will blame this on Wall Street but Wall Street doesn’t have the power to print money or control interest rates.)
As these commodities rise, most of the world will get hurt because their purchasing power will decrease vs. the increasing prices of goods.
However, the commodity producers and exporters will be the beneficiaries of these higher prices.
Who produces and exports commodities like this? Australia and New Zealand!
The big institutional investors know this too and so it’s just one more reason to go into these currencies and protect themselves and their investors from the rise of inflation, while at the same time earning some of the highest rates of interest in the industrialized world.
Who will get hurt? The average American that doesn’t understand how all of this works. But who can benefit? My readers … because I’ve exposed the slick schemes of the Fed.
Those that put some of their wealth into these commodity-currencies mentioned above will benefit from the ruthless robbery that is being perpetrated by the Fed. You’ll save your wealth from their greedy hands while most will only grow poorer.
So make sure you have your portfolio positioned to benefit from the inflation that the Fed is spurring on. I don’t believe you’ll regret it.
About the Author: Sean Hyman
Sean Hyman is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of Money Matrix Insider. Discover more by Clicking Here Now.
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