Tag: federal reserveSort
The Dangers of the Current Monetary Policy Program
Dear Mr. President: Now It’s Time to Deliver on Your Promises
By the time you are reading this, either Barack Obama or Mitt Romney will have won the race to be the 45th President of the United States.
Those on the edge of retirement may be forced to take a step back. By taking “income” out of “fixed income,” the Federal Reserve has made retirement a pipe dream for many. And you can send all your letters of thanks to Federal Reserve Chairman Ben Bernanke.
According to Sasha Cekerevac, contributor to Profit Confidential, the recent Federal Reserve policy meeting ended in a somewhat neutral outcome for investors interested in gold bullion, as had hoped for additional monetary stimulus to be enacted. However, Cekerevac thinks that from recent moves in the price of gold, there are signs that there are increasingly more buyers for gold bullion than there are sellers, and investors should watch for some key levels that gold bullion will soon hit.
Why the Big Banks Offer a Good Risk-to-reward Play
The sub-prime credit crisis that surfaced in 2008 drove Lehman Brothers to bankruptcy, caused significant upheaval, and drove the U.S. and global economy into a recession. The aftermath was a structural change to the way banks do business, specifically the amount of risk that is assumed by a bank via sophisticated strategies. So far, the change coined the “Volcker Rule,” set in place by economist and ex-Federal Reserve Chairman Paul Volcker, appears to be capping the speculative trades made by the banks, which is good.
Inflation About to Become a Massive Headache for Central Bankers
With the recent new monetary policy initiative by the Federal Reserve, one area that I’m becoming more worried about is the impact this will have on inflation. While inflation has declined from the highs in the 1970s, there is always the worry that monetary policy could ignite the flame of higher prices in the future.
Many analysts and investors have been hesitant about the rally in the S&P 500. While I wasn’t surprised with the rally into the Federal Reserve announcement, I thought it highly likely that the S&P 500 would have a pullback in the fall. However, it appears that the S&P 500 is continuing its strong move up and, at this point, it would be quite dangerous to bet against this rally and the Federal Reserve.
In the article “Didn’t Get into Gold Early Enough? This Other Metal’s Your Second Chance,” Lombardi states that, in the past few weeks, silver prices have increased significantly. While he concedes that gold bullion prices have done the same, he notes that by looking at the percentages of these increases, you can see that silver prices have outperformed gold bullion.
Original Article Published at www.investmentcontrarians.com
In a recent editorial, I talked about QE3 (a third round of quantitative easing implemented by the Federal Reserve) and how it was a reward largely for the upper echelons of income-earners. The middle class will benefit due to the lower carrying costs, but the rich will really be the net benefactors of this monetary policy.