Even a casual observer understands that the economic "road to recovery" is filled with pot holes.
Trillions in government stimulus has only left us with economic uncertainty.
The Federal Reserve's "monetary easing" seems to have done practically nothing but punish financially conservative Americans. The fed funds rate has gone from 5.25% in the fall of 2007 to a measly 0%-.25% today.
Those puny returns are the "reward" that goes to the savers who have some $5 trillion in banks -- many of which remain financially shaky because of the bad debt on their books.
And all of the above was true before the Fed announced its $600 billion purchase of Treasuries. How does the central bank justify this? This is from Investors Business Daily (11/15):
"The Fed has justified its latest Treasury buying program as an effort to avert deflation. In September, consumer inflation stood at just 1.1%. Core inflation, which excludes food and energy, was at a 49-year low of 0.8%."
Even so, EWI's Robert Prechter believes the Fed will not be able to stop the deflationary trend. Here's an excerpt from a Q&A with The Daily Crux from the June Elliott Wave Theorist:
Crux: Can you give us a brief, easy-to-understand explanation of how deflation could happen in a paper-money, reserve currency system like ours, and why you think it’s likely?
Prechter: Sure. In the simplest terms, creditors will stop lending, which will keep the credit supply from inflating. And debtors will default, causing the supply of outstanding debt to deflate. This will overwhelm government and central-bank efforts to inflate, and will result in deflation. These trends have already begun.
In fact, Prechter believes the deflationary trend will turn extreme in ways that almost no one expects -- including a rise in the value of the U.S. dollar.
So where can you safely store actual greenbacks in anticipation of a rise in their value? Indeed, where can you safely store gold, silver, or platinum?
If these questions have come to your mind, we suggest that you consider reading Wealth Preservation in Very High-Risk Financial Times from the SafeWealth Group. Here's what Prechter wrote in his book Conquer the Crash, 2nd edition, p. 172:
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