Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Evergrande China's Lehman's Moment, Tip of the Ice Berg in Financial Crisis 2.0 - 21st Sep 21
The Fed Is Playing The Biggest Game Of Chicken In History - 21st Sep 21
Focus on Stock Market Short-term Cycle - 21st Sep 21
Lands End Cornwall In VR360 - UK Holidays, Staycations - 21st Sep 21
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan
Gold Price Back Below $1,800! - 10th Sep 21
The Inflation/Deflation debate wears on… - 10th Sep 21
Silver Price seen tracking Copper prices higher - 10th Sep 21
The Pitfalls of Not Using a Solicitor for Your Divorce - 10th Sep 21
Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
This Boom-Bust Cycle in US Home Ownership Should Give Home Shoppers Pause - 9th Sep 21
Stock Market September Smackdown Coming Next? - 9th Sep 21 - Monica_Kingsley
Crazy Crypto Markets How to Buy Bitcoin, Litecoin for Half Market Price and Sell for TRIPLE! - 8th Sep 21
Sun Sea and Sand UK Holidays 2021, Scarborough in VR 180 3D! - 8th Sep 21
Bitcoin BTC Price Detailed Trend Forecast Into End 2021 - 8th Sep 21
Hyper Growth Stocks - This billionaire is now using one of our top strategies - 8th Sep 21
6 common trading mistakes to avoid at all costs - 8th Sep 21
US Dollar Upswing, S&P 500 and Nasdaq Outlook - 7th Sep 21
Dovish Assassins of the USD Index - 7th Sep 21
Weak August Payrolls: Why We Should Care - 7th Sep 21
A Mixed Stock Market - Still - 6th Sep 21
Energy Metals Build Momentum; Silver & Platinum May Follow - 6th Sep 21
What‘s Not to Love About Crypto Market Fireworks - 6th Sep 21
Surging US Home Prices and Gold – What’s the Link? - 6th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

US Dollar Devalution - When Cash Is Trash: What To Do ...

Currencies / US Dollar Nov 08, 2007 - 10:10 AM GMT

By: Money_and_Markets

Currencies

Best Financial Markets Analysis ArticleLarry Edelson writes: Your cash — whether it's in money markets, bonds, or hidden under your mattress — is quickly becoming trash.

You see, just as I've been predicting all along, the Fed continues to flood the market with unbacked paper dollars. The latest: An injection of $41 billion, the day after the Fed cut interest rates last week.


That $41 billion amounts to $135 for every man, woman and child in the U.S. But it's not going directly into your pocket, it's just out there, floating around the world.

Unfortunately, this is just the beginning. Because ultimately the Fed will have to supply HUNDREDS of billions of dollars to the U.S. economy to help it get over the real estate and mortgage crisis it's now saddled with.

Even once that crisis eases, because of the pyramid of bad debts piling up in this country from a variety of sources, the Fed will be forced to continually pump billions upon billions of additional dollars into the economy.

As I've said many times before, this is the only action the Fed can take in this kind of an environment. Deflate the value of the dollar — and thereby inflate asset prices!

Inflate them to make debts smaller relative to assets …

Inflate them to thereby make it easier to pay off debts …

Inflate them to make U.S. citizens feel as if the economy is doing fine when in real terms, it's going nowhere or even down, fast!

End result:

The U.S. Dollar Continues to Plunge in Value, Reaching a New All-Time Low Just Yesterday!

The dollar is getting absolutely killed by all of this pumping. Take a look at a chart of the dollar index and you'll see what I mean. The greenback is continually hitting new record lows against a basket of the world's major currencies.

Just yesterday it plunged to the never-before-seen level of 75.08!

This is why I say "cash is trash." Look at it this way, if you're holding savings in a money market account at 4% interest, and the value of the dollar is falling by 4% a year, your cash isn't even keeping up with inflation!

And in reality, the dollar has been declining more rapidly than 4% a year! So let me give you a more specific example of what has actually happened over the last five years …

Suppose you put $500,000 into a money market account earning 4% a year back on November 7, 2002. Compounded daily, you'd have $610,694.69 as of yesterday.

The Fed is essentially taking money out of your wallet and throwing it into the trash can …

But wait! Over that same five years, the dollar has lost another 28% of its purchasing power. So, what one dollar bought in 2002, will only buy $0.72 worth of goods and services today.

So that $610,694.69 in savings that you accumulated and thought you protected so wisely in a money market fund? Well it will only purchase $439,700 worth of goods and services — 28% less than you thought!

That's $170,994 LESS than what you started with!

Great deal, eh?

And going forward, it will likely get worse, especially if you invest in Treasury notes or bonds, making the same kind of low-single-digit interest rates.

Reason: The dollar will continue to fall … the value of your bonds will fall as the dollar sinks … and you'll ultimately lose much more in the principal value of your bonds than you'll earn in interest payments.

Who is doing this to you? Your own central bank!

So What Should You Do If Cash Is Turning to Trash?

The simple answer: Don't keep all your money in cash!

In my opinion, the only cash you should keep on hand is roughly six months worth of living expenses.

All of your other money should be invested in assets that are going to benefit from what the Fed is doing to the dollar, including …

#1. Select foreign currencies , which are rising in value against the dollar, and where you can also get a nice return. Two of my favorites right now are the New Zealand and Australian dollars.

#2. Select foreign stock markets , especially those that are rich in natural resources and where billions of new consumers are driving their economies upward. Examples: China, India, and most of Southeast Asia.

#3. Select natural resource companies that control in-demand commodities … the very same commodities that are also rising in value as the dollar plunges.

The list includes gold … oil … gas … iron … steel … aluminum … zinc … nickel … uranium … wheat … corn … soybeans … sugar … coffee … even water!

Want a sense of how much money can be made in natural resources? Take a look at the recent performance of the recommendations from my Real Wealth Report ! As you can see from the table, subscribers have had numerous opportunities to go after big gains.

Never forget that three billion new consumers in Asia are entering the modern world and buying all sorts of products that are made from these scarce natural resources.

Also remember that many of these very same commodities are priced in dollars, which as I just showed you, are being systematically devalued.

Combined, those two forces are creating some of the greatest profit opportunities you're ever going to see!

Best wishes,

Larry

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 http://www.moneyandmarkets.com .

Money and Markets Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Aqualung
28 Feb 08, 13:23
why not spent your precious money on Euro??

Why not spend your precious cash into EURO?

Yes the answer is simple, EU is the economical opposite to holydollar.

Spend more to Euro and the US economy meets the banana...


Post Comment

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