Best of the Week
Most Popular
1. Crude Oil and Water: How Climate Change is Threatening our Two Most Precious Commodities - Richard_Mills
2.The Potential $54 Trillion Cost Of The Fed's Planned Interest Rate Increases - Dan_Amerman
3.Best Cash ISA Savings for Rising UK Interest Rates and High Inflation - March 2018 - Nadeem_Walayat
4.Fed Interest Hikes, US Dollar, and Gold - Zeal_LLC
5.What Happens Next after February’s Stock Market Selloff - Troy_Bombardia
6.The 'Beast from the East' UK Extreme Snow Weather - Sheffield Day 2 - N_Walayat
7.Currencies Will Be ‘Flushed Down the Toilet’ Triggering a ‘Mad Rush into Gold’ - MoneyMetals
8.Significant Decline In Stocks On The Cards! -Enda_Glynn
9.Land Rover Discovery Sport Extreme Driving "Beast from the East" Snow Weather Test - N_Walayat
10.SILVER Large Specualtors Net Short Position 15 Year Anniversary - Clive_Maund
Last 7 days
Watch This Group Signal Stock Market Trend Changes - 22nd Mar 18
Stocks are Gapping Beneath the Trendline Support - 22nd Mar 18
Fed Action Casts Shadow on Bullish Case for Stocks - 22nd Mar 18
A Strong Economy and Weak Stock Market is Bullish for Stocks - 22nd Mar 18
Fed Raises US Interest Rates 25bp – Where Are We In The Stock Market Cycle? - 22nd Mar 18
Why Spotify Will Likely Surge During Its IPO - 22nd Mar 18
SY Police Arrest Woman for Blowing Trumpet at Sheffield Tree Felling Protest - 22nd Mar 18
Facebook: The Anti-Social Network Covert Data Gathering - 21st Mar 18
Additional Signs for Gold and Silver Amid Increasing FOMC Tension - 21st Mar 18
Credit Concerns In U.S. Growing As LIBOR OIS Surges to 2009 High - 21st Mar 18
Stock Markets Are Flat-to-lower Before the FOMC - 21st Mar 18
Will Powell’s Actions Pop Stock Market Perfection - 21st Mar 18
Economic Moral Hazards of the International Criminal Court - and Philippines Withdrawal - 21st Mar 18
Larry Kudlow vs. Vladimir Putin on Gold - 21st Mar 18
Trump Builds Economy and War Machine - 21st Mar 18
This Stock Market "Illusion" Can Destroy Once-Vibrant Portfolios - 21st Mar 18
Gold Short-term Pull Back in Progress - 20th Mar 18
Stocks Appear to be Under Pressure - 20th Mar 18
Time To Eliminate Your Wall Street Tax? - 20th Mar 18
The Beast from the East Snow, UK Roads Driving Car Accidents - 20th Mar 18
Can Bitcoin Price Rally Continue After Paypal Fake FUD Attack? - 19th Mar 18
2018 Reversal Dates for Gold, Silver and Gold Stocks - 19th Mar 18
This Tech Breakthrough Could Save The Electric Car Market - 19th Mar 18
Stocks Set to Open Lower, Should You Buy? - 19th Mar 18
The Wealth Machine That Rising Interest Rates Create Conflict With The National Debt - 19th Mar 18
Affiliate Marketing Tips and Network Recommendations - 19th Mar 18
Do Stocks Bull Market Tops Need Breadth Divergences? - 19th Mar 18
Doritos Instant £500 Win! Why Super Market Shelves are Empty - 19th Mar 18
Bonds, Inflation & the Market Amigos - 19th Mar 18
US Housing Real Estate Market and Banking Pressures Are Building - 19th Mar 18
Stock Market Bulls Last Stand? - 18th Mar 18
Putin Flip-Flops Like A Drunken Whore On Bitcoin Cryptocurrency Legalization - 18th Mar 18
How to Legally Manipulate Interest Rates - 18th Mar 18
Return of Stock Market Volatility Amidst Political Chaos and Uncertain Economy - 18th Mar 18
Bitcoin Price Trend Forecast, Paypal FUD Fake Cryptocurrency Warning - 17th Mar 18
Strong Earnings Growth is Bullish for Stocks - 17th Mar 18
The War on the Post Office - 17th Mar 18
GDX Gold Mining Stocks Fundamentals - 16th Mar 18
Nationalism, Not the Russians, got Trump Elected - 16th Mar 18
Has Bitcoin Bought It? - 16th Mar 18
Crude Oil Price – Who Wants the Triangle? - 16th Mar 18
PayPal Cease Trading Crypto Currency Bitcoin Warning Email Sophisticated Fake Scam? - 16th Mar 18
EUR/USD – Something Old, Something New and… Something Blue - 16th Mar 18

Market Oracle FREE Newsletter

Urgent Stock Market Message

US Inflation and the Falling Dollar - You're being lied to!

Currencies / US Dollar Apr 12, 2007 - 01:34 PM GMT

By: Money_and_Markets


Larry Edelson writes : Recently I told you how the Dow has lost over 50% of its value since 2001, despite its recent gains. Put another way, if you bought all the stocks in the Dow Jones Industrials back in 2001, the purchasing power of your investment today would be less than half what it was back then.

I don't know about you, but I think losing 50% of your money's purchasing power is an outright disaster. Even worse, most investors fail to recognize this has happened. That's because the government is lying about inflation.

Today, I want to talk about the root of the problem — the terribly weak U.S. dollar. And I'll tell you what its consequence, rising inflation, means for your portfolio. Because if you don't grasp what's happening, your investments will get killed.

The Dollar Continues To Get Creamed …

Since early March, in barely a month's time, the U.S. dollar has lost another 1.9% of its value against other major currencies. It's lost the same — in some cases even more — when compared to minor currencies, such as the Thai baht, Malaysian ringgit, and more.

You can see the decline in the chart to the right. It's not a pretty picture. What's behind the dollar's fall? All the forces I've been warning you about:

The huge debt problems in this country, in both the public and private sectors … the terrible real estate market … political infighting that is making the U.S. look unstable to the rest of the world … and the fact that Washington is continually pulling the wool over the public's eyes.

I've been saying this repeatedly, but it's so important that I want to remind you again: Central bankers, when faced with a choice between deflation and inflation, will always opt for the latter, attempting to avoid recession and deflation at all costs.

They keep interest rates artificially low. They pump up the supply of money and credit by effectively printing money behind the scenes. And they let bubbles expand wherever they can.

In the process, the main instrument of the economy — the currency — is the first to suffer. That's why the dollar has plunged 17.5% in the last four years, and why it continues to be weak at the knees right now.

It's also why the Dow can rise, but you can actually be losing money all the while. It's simple … if the Dow goes up 10% but the value of the dollar falls 20%, you've lost 10% in terms of your money's purchasing power. [Editor's note: For more on this, see " How the Dow is already getting killed ."]

And the falling dollar has an important side effect …

Inflation Goes
Through the Roof!

Do you believe what Washington is telling you about inflation, that it's running at about a 3% annualized rate?

I sure hope not, because you're being lied to. By my estimates, inflation is rising at more like 10% a year. I'm not just talking about oil and gas prices, either. Just look at these national figures:

  • According to the Wall Street Journal , health care costs rose 10% in 2006.
  • The average property tax has jumped 27% since 2000.
  • Tuition at private colleges has been rising at an annual average of more than 9%. The national median tuition for one year at a private school (including room and board) is now $33,533!
  • Tuition at public universities is also rising sharply, up 6.2% in 2006.
  • And in just the last three years, the average grocery bill for a family of four has skyrocketed from $280 to nearly $400 a month. That's a 42% increase, or an average annual inflation rate of 14%!

I could go on and on, but there's no need. I'm sure you're already acutely aware of how much prices are going up in your own life. All you have to do is look at your monthly bills and regular purchases.

So, enough said. Inflation is here. And, it's only going to get worse as the dollar continues to weaken against nearly all major — and most minor — currencies.

What to Do About the Falling Dollar and Inflation

First, don't be deceived by Washington or the Federal Reserve. Their inflation figures are hocus-pocus. They are not giving anyone an accurate measure of true inflation.

Second, don't be fooled by the Dow Industrials. Your stock investments can be losing money, even when they're going up!

In fact, for the Dow to regain the purchasing power it had six years ago, it would have to double to more than 24,000.

And that's if the dollar were to stop declining! I don't think that's going to happen. Hence, I do not recommend investing in broad-based U.S. stock markets right now.

Instead, for your U.S. holdings, I continue to like stocks that act as inflation hedges, namely select natural resource companies like the ones recommended in my Real Wealth Report .

Third, diversify your investments.

For starters, that means a direct stake in gold. Gold is the only asset that is universally beating out inflation. In my view, one of the best ways to own gold is through the streetTRACKS Gold Fund (GLD). Each share represents 1/10 of an ounce of gold, and the fund eliminates storage and shipping worries because the metal is held in trust for you.

And if you aren't doing so already, look at select overseas markets, too. Many of these investments will benefit from a falling dollar and are beating out inflation hands down.

Best wishes,

Larry Edelson

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit

© 2005-2018 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


07 Nov 07, 10:42
invest Canadian

over the past 5 years I have told everyone to invest in utility stocks in Canada. If any have done so they have more than doubled the investment. In 2002 the Can dollar was .62 USD. Now Nov 6 2007 it is 1.09 USD. Coupled with the annual 5-6 % that is a sure investment in the utility companies here (Gas, Electricty etc), your profits would be over 100%. The Can Dollar in my opinion is still underrated, and will rise on its own with the worlds currencies as well as rising against a continually falling USD. I predict that within one year from this date, (Nov 6 2007) the Canadian dollar will be 1.50 USD.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules