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Will the Fed hyper-inflate to solve today’s economic problems?

*Dow Theory Letters, Richard Russell, September 21, 2007

“The Fed is currently increasing M-3, the broad money supply, at a 14% rate, and if the economy doesn’t respond to that, they’ll push the M-3 growth rate even higher — to 15%, 17% or 20%, whatever it takes. They’ll also drop interest rates again — and again. If, despite all the Fed’s machinations, the economy doesn’t respond, we could easily experience something akin to hyper-inflation as the Fed funds go totally wild.

Ironically, all this is providing the ideal background for gold. For our protection, it’s OK to sell dollars and switch into euros or Canadian loonies (dollars), but what if we’re moving into a situation which can best be termed competitive devaluations? That’s a condition where all fiat currencies tend to lose purchasing power? And what would these various currencies be losing purchasing power against? Currently, the fiat currencies are losing purchasing power against wheat, soy beans, heating oil, gasoline, basic foods such as bread and vegetables along with the cost of utilities, medical care, college tuition. And, of course, fiat currencies have been losing against gold.”

*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.