The FED’s Operation Twist will be a bust and how can you profit from it.

The Federal Reserve announced that it will buy $400 billion of long
term bonds over the next year. They are calling it Operation Twist.
The FED says that it will pay for the purchases with the proceeds from
the sale of short term bonds. I’ll believe that when I see it. I
will be monitoring their balance sheet. I think that the FED will
grow its balance sheet over the next year because they don’t want to
admit that QE2 failed.

None of the FED’s actions will help the economy. The FED’s
counterfeiting will actually do harm to the purchasing power of every
holder of dollars. The FED has tripled the monetary base since late
2008. Thankfully, The loss of purchasing power through price
inflation is not occurring at the same rate of FED’s money supply
expansion. This is happening because the big banks that are selling
bonds to the FED are holding over one trillion dollars as excess
reserves. The banks are holding most of the money that the FED
printed out-of-thin-air for them. They are barely lending. If the
bankers loaned this money into the economy, then the money supply
would expand at a much greater rate and prices would increase easily
into double digits. This is how the fractional reserve banking
process work in a nutshell.

The US equity markets lost another 3% yesterday. A new batch of
investors figures out that Keynesian economics doesn’t work each week.
I hope that you are aware of this. Keynesians run governments,
corporations, the FED, and the economics profession. This is what
people are taught in school.

There is another school of economic thought known as Austrian
economics. They are opposed to the Keynesians. The Austrian school
believes in sound money and free markets. The most famous Austrian
economists are Ludwig von Mises, F.A. Hayek, and Murray Rothbard.
Visit www.mises.org to learn more for free.

We are in a bear market. The market is heading lower. You have to be
patient to wait for low prices to maximize dividend yields and
potential price appreciation.

I would be selling the stocks in your portfolio that are trading at
over 20 times average adjusted earnings. Buy physical gold coins on
the dips with the proceeds from your stock sales. The gold price will
continue to trend up so long as the central bankers continue to create
more digital money to bailout banks and to fund Keynesian deficit
spending. Build your gold reserves while the market tanks. Your high
dividend stocks will continue to pay dividends, but the price of the
shares will fall in this bear market. That will wipe out you gains.

Subscribe today for free at www.myhighdividedstocks.com/feed to
discover high dividend stocks with earning power and strong balance
sheets.

Be seeing you!

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Published in: on September 23, 2011 at 4:34 pm  Leave a Comment  

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