How Can I Save Money When The Fed Is Hell Bent On Lowering Rates

Fed’s only option to lower interHow Can I Save Money

How Can I Save Money When Fed Wants to Lower Rates

 The straightforward and easy to understand chart shown below quite clearly illustrates why the Fed has no option but to lower interest rates.  Central bankers worldwide have already embraced negative rates, so it is just a matter of time before our central bankers are forced to walk down the same path.  The Fed is trying to put on a brave act, but you can already see them backtracking from the firm stance they took last year. Now they are stating that all is not well, and the economic outlook is weaker than expected. Rubbish we already said in several articles that they would take this path and that the only reason they even raised interest rates was so that they could come out with an excuse to lower them again.

velocity of money shows that Fed's only option to lower interest rates

When an economy is booming, the velocity of money increases

And as you can see from the chart below, the velocity of money has been dropping and quite precariously we might add. Hence, the only thing supporting this market is hot money. Take away the hot money and this illusory economic recovery crumbles.

The chart topped out in 2000 with a double top formation.  We did get a small pop up when Greenspan flooded the markets with money to create the housing bubble, but it put in a lower high. After that, it has been nothing but a downhill ride, and this is why Gold prices have tanked. The money supply has increased, but the money is not moving, the masses do not have access to these funds yet.

If the Fed wants to create a monstrous bubble, they need to put this money into the hands of the masses. Only the masses are foolish enough to take markets to levels you can only envision after smoking some illegal substance; this is why we are dead sure that the Fed will come out with another stimulus plan; this economic recovery is being held up by hot money and nothing else.

Economic recovery fake, and hence, Fed’s only option to lower interest rates & trigger a massive stock rally

If the recovery were real, interest rates would not be held low for so long, and the Fed would need to support the stock market. After it stopped the corporate world stepped in via the illegal usage of Stock Buybacks. Now instead of trying to improve the bottom line, they focus on only buying back more shares and in doing so artificially boosting the EPS. It’s a perfect scam, no work and big pay; and as interest rates are low, the incentive to borrow large sums of money to do these dirty deeds is greater than ever.  As a result of this policy, investors should expect stock buybacks to surge to levels that will appear insane one day.

The answer to how can I save money question is very simple. Invest in the stock market and view all pullbacks ranging from mild to wild as opportunities.

 Negative Interest rates and the War on Cash

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How can I save money in a low rate environment