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Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: Road Walker who wrote (106930)	1/6/2012 11:44:17 AM
From: RetiredNow	Read Replies (1) \| Respond to of 149317

Here's something to chew on RW. Everyone is assuming that the Fed will eventually raise rates. I think they are wrong. The Fed is now caught in a catch-22 trap of its own making. Since they bailed out all the banks and they are stuck with trillions in bad debt and a Congress that is unwilling to reign in the deficits, the Fed knows they will have to finance corporate america and Congress for the foreseeable future at reasonable rates. The ONLY way they can do that is if they say goodbye to the free market of floating interest rates and selling Treasury debt to foreigners. That means, the Fed will print money to buy up most of all future Treasury issuances. That will keep interest rates in the US at or near zero for the next decade or more. Don't believe me? Look at what happened in Japan over the last 20 years and see how they have continued those policies. During periods of US recovery over the next decade, these policies will create price spikes in all goods corporations and citizens buy, as the banks lend out the newly printed money. During periods of recession, inflation will moderate. But over the longer run, inflation will continue to rise on average in everything, as the value of our dollar is relentlessly destroyed. The only way we avoid this outcome is to fire Bernanke and bring back a Volcker type. In addition, stocks will continue to under-perform bonds in this kind of environment, especially since we have a long term trend of baby boomers selling stocks to buy bonds for income. So my advice is to invest in Total Return Bond funds of one kind or another (I prefer Gundlach's DBLTX) and if you must buy stocks, you'd better make them solid, large caps, highly profitable, with a hefty and growing dividend. Yield is the mantra for the next decade. If your invest doesn't have a yield, then your investment won't be a good one. Oh yeah, and I don't believe too much in gold. Where's the yield? I can't eat gold and our industries don't use much of it. I prefer copper miners, oil producers, or natural gas businesses, since these are all commodity businesses that are useful and produce yield.