Segment 1: Understanding Options w/ Michael Sincere SEGMENT BEGINS AT 04:40 In this exciting, highly illuminating segment, economist/investor Jerry Robinson is joined by someone he has long admired. Best-selling author, MarketWatch columnist, and freelance writer...
An excerpt from Follow the Money Weekly Radio with Jerry Robinson – 10/16/10
To hear the entire program, click here.
Most of you are aware that there has been little improvement in the over all economic outlook…
The official unemployment rate has risen from 5% at the beginning of the recession in December 2007 to 9.6% in September 2010.
Unemployment has increased from 7.7 million to 14.8 million.
But remember, those are just the “official” numbers and we all know that they are doctored.
For teenagers, it’s much worse. The job market for young people is worse than it has ever been. The official unemployment rate for teenagers now sits at 26%.
And of course, there’s the housing sector. Since 2006, the equity that Americans have in their homes has plunged by $6.5 trillion, or 48%.
Of course, the Federal Reserve sought to remedy these massive economic problems by lowering interest rates to nearly zero and by buying $1.7 trillion of securities including mortgage backed securities, which was an unprecedented act.
And now, the latest CPI report was just released showing that the index for U.S. consumer prices rose only 0.1% in September.
All told for the year, core prices have risen just 0.8% for the year according to government data… That’s the lowest 12-month gain since 1961.
That’s right… according to the “official” numbers produced by the U.S. Department of Labor, the annualized rate of core inflation is at its lowest level in nearly five decades.
Now while economists fear inflation, the one thing that they fear even more is deflation. If you have been listening to this program for any length of time, you know that the inflation-deflation debate is regular topic on many of our shows.
For the last couple of months, the Fed has appeared to be in a quandary without a clue on how to proceed.
Now, however, it appears that they have designed a plan. And if you pay very close attention to this plan, I believe that it will help you make major profits throughout the next 12-15 months.
The Federal Reserve’s intial goal is to get you to consume more and save less. They want to go shopping, buy more cars, another home, and take vacations. The last thing that they want you to do is to save money or pay off debts. This is because we have a debt-based monetary system. MONEY IS DEBT. The Fed knows how the system works because they created it. They know that if you don’t stop paying off your debts, and continue your efforts to save money then it will be game over and the whole house of cards will collapse.
So if the Fed can get you to consume more and save less, then this will help them achieve their ultimate goal of boosting domestic demand and reducing the unemployment rate.
But U.S. consumers do have the ability to go consume like they did in the good old days because many of them don’t have jobs anymore and they are upside down on their houses, or worse, they are facing foreclosure. And businesses are in the same boat. They are reluctant to hire and they are certainly not going to expand their operations when consumer demand is weak.
Despite all that the Fed has tried over the last two years… they just cannot seem to fix the problem.
The reason that their efforts have failed is because the Fed cannot fix the problem. The Fed is the problem.
Nevertheless, the Fed is still going to try to fix this mess and if you have been listening to Fed Chairman Ben Bernanke lately, then you know exactly what their next move is…
On Friday, while speaking about the economy at a conference, Bernanke stated that the stubbornly high unemployment rate and the low level of inflation indicate the need for further quantitative easing. This means that the Fed is going to be cranking up the printing presses again to purchase hundreds of billions – and possibly even up to $2 trillion – more dollars worth of government bonds.
Why? Didn’t they notice that the first round money printing did not work?
Yes, they did. The Fed may be malicious, but they are not stupid.
I believe that the Fed is attempting to raise fears of inflation. They want you to think that they are going to cause inflation. Why? Because if the public perceives that inflation lies ahead, what will they do? Let me ask the question another way. If the American public believes that the price of everyday goods and services may be going up soon, how do you think they will respond? By consuming more now rather than later.
The Fed is attempting to create general expectations of inflation through its policy statements and actions.
Now, in early 2010, I told you that I did not believe that there would be any interest rate hikes until 2011. I am now revising that prediction and stepping out on a limb and am going to say that I believe that interest rates will be left at record lows levels throughout the majority of 2011, and possibly into 2012.
While we don’t know anything for certain now, on Nov. 3 the Fed will meet and announce its decision on how to proceed.
At this Nov. 3 FOMC meeting, I am 99.9% certain that we are going to hear that the Fed is going to pump massive amounts of currency into the system.
While others go out and buy perishable goods, you should be investing in hard assets. If you think that gold, silver, and other commodities have gone up, you are in for a surprise.
Massive inflation lies ahead and the Fed is telling you that it is going to create it. Fortunes are made in times like these…
How are you preparing?
This is an excerpt from Follow the Money Weekly Radio with Jerry Robinson – 10/16/10
To hear the entire program, click here.
About Jerry Robinson
Jerry Robinson is an economist, published author, columnist, international conference speaker, and the editor of the financial website, FTMDaily.com. In addition, Robinson hosts a weekly radio program entitled Follow the Money Weekly, an hour long radio show dedicated to deciphering the week’s economic news.