Fed Policies and Their Impact On Your Self Directed IRA

Despite all of the political rhetoric coming from the White House about how they are so concerned about the average American and how things need to be more fair, the reality is that between the White House and the Fed, their policies are harming the average, middle class American.

The current objective of the White House and the Fed has been to weaken the US Dollar. The reason for this is because a weaker dollar, means our goods are cheaper to other countries. This increases exports of US goods. That, as a goal, is a good thing for America. We want to sell more of our goods around the world. This means that US companies need to hire people and pay salaries, etc. There is a clear multiplier effect on Americans.

The Fed has tried everything to promote this objective. They’ve done, QE1, QE2, Operation Twist, push more money into banks, kept interest rates low. But, despite these best efforts, the dollar has not cooperated. The dollar still is relatively strong. The fed and White House will most likely not give up on their weak dollar goal, because their goal is to increase exports and basically be a currency manipulator.

However, there is a nasty downside to these policies. By making the dollar cheaper and our exports cheaper, the cost of imports increases. The big issue is that the US is a net importer and as such that translates into higher costs for iPhones, iPads, flat screen TVs, etc. The big winners are the banks and corporations that deal with the exports.

Additionally, the Fed can control the money supply, but they can’t control the velocity. They need the average consumer to actually go out and spend. The issue is that the average American is attempting to pay down debt and save. This is not going to work in a environment where the Fed prints money and needs that money to circulate in order to weaken the dollar and create the inflation.

The losers are the average Joe lunch bucket that is lucky to get a 1-3% pay increase, assuming they have a job at all. What this means is that the Fed and the White House of promoting policies that actually help the big guys, and hurt the little guys. The policies and the words do not line up. Just remember that when you go to the polls in November.

Now, if you look at these policies and you see that the plan is designed to create inflation, through a weaker dollar, then there is only one place to go – precious metals in your self directed IRA.  You really need to consult with your financial advisor and determine what would be a good allocation of metals in your self directed IRA.

Tags: , , ,

Comments are closed.