Tags: sean | hyman | dollar | US | parity

Wage Your Own War Against Fed's Inflationary Tactics

By    |   Monday, 18 October 2010 09:40 AM EDT

On Friday, for a brief moment, the Australian dollar equaled as much as the U.S. dollar.

That’s the first time that has happened since the Aussie dollar was allowed to free-float in the currency market, which was 1983.

Why is all of this happening?

Well, the Federal Reserve keeps diluting our dollars by what’s called quantitative easing. This is where they print more money, which dilutes the value of your dollar.

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So when our dollar goes down, by default it tends to push up other currencies against ours. However, the Aussie dollar has been exceptionally strong lately too. Why?

Right now, they don’t have it nearly as bad as the rest of the world. They’re going through a commodity boom right now. Their mining industry is bustling at such a clip that not only are they putting to work everyone that they can, but they’ve expressed that they’re also going to have to hire migrant workers in order to keep up with the commodity boom that’s causing the mining boom.

This continues to bring down their unemployment level and its causing the sentiment for their dollar to perk up while many of the other major countries of the world are still dragging along.

It also doesn’t hurt that their country’s currency sports a 4.50 percent interest rate yield that investors love right now. That’s really high when you compare it to our paltry 0 percent to 0.25 percent range that we’re in right now.

Now the question is: Will the Aussie’s strength continue?

In the near-term, it’s very overbought and it could come down a bit.

However, in the longer-term, this trend is likely to stay intact.

Why? I say it will continue because the Federal Reserve is talking about “purposefully” trying to spur on inflation. Can you believe that? They’re desperate right now and they’ll try just about anything.

You see, they’ve shot just about all of the ammo that they have in their “interest rate” gun. They can’t lower rates much further. So they’ve got to engineer another weapon.

Have you ever seen someone shooting at someone and they run out of bullets? The next thing they do is look around the room to see what else they could use at a weapon. If they can find a chair to pick up and throw at the person, they’ll do it.

Well, the Fed is about to pick up a chair and it’s about to be thrown at your checking and savings accounts.

The Fed wants to purposefully spur inflation so that you’ll be more willing to spend your money now when things are cheaper than on down the road some months when items will be more expensive due to higher inflation.

In other words, they’re trying to get you to empty out your savings and checking accounts to buy stuff now before it goes up in price. They hope that this will jolt the economy back into growth mode.

It’s kind of underhanded if you ask me. It ought to be illegal to purposefully spur inflation. Inflation is a robber of your money. It eats it up through higher costs of living. So your pay stays relatively the same but the costs go up disproportionately.

It’s a war upon the savings of America. They’re either going to get you to play their game and put your money to work in the economy by buying more stuff, or they’re going to deplete your purchasing power by you keeping it in your savings account.

Either way, they’re ultimately punishing you because they’re either forcing you to buy now rather than save and increase your “padding” in life ... or they’re going to steal away your money’s purchasing power through inflated prices as you “sit” on your money in your savings account.

The only way to wage a war on the Fed and keep them from eroding your money is to buy up investments that do well during inflationary times. When you buy commodities and/or the currencies of commodity exporting nations like Australia, you’re placing yourself on the right side of that battle.

So if you want to “wage your own war” against the tactics of the Federal Reserve or if you just want to protect the purchasing power of your own money, then you may want to consider getting involved with “commodity currencies” and trade them against the dollar.

In my Money Matrix Insider newsletter, we’re waging this war right now.

We’re putting our money into these commodity-dollars that will go up as inflation goes up and that’s going to keep our money from eroding away. In fact, we’ll profit off of the Fed’s tactics by doing so.

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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On Friday, for a brief moment, the Australian dollar equaled as much as the U.S. dollar. That s the first time that has happened since the Aussie dollar was allowed to free-float in the currency market, which was 1983. Why is all of this happening? Well, the Federal...
Monday, 18 October 2010 09:40 AM
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