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How to Profit From the Great Dichotomy

To mark its 75th anniversary this year, the Federal Deposit Insurance Corporation (FDIC) has recently launched a series of full-page advertisements in U.S. newspapers from the Wall Street Journal to The New York Times.

But the most telling FDIC advertisement wasn’t about their anniversary at all. The headline simply read:

KNOW YOUR LIMITS

Underneath this headline, in bold print, “FDIC protects depositors up to the basic insurance amount of $100,000 per account and retirement accounts, such as IRAs, to $250,000.” Then — and here’s the key — they go on to say…

BUT IT DOESN’T PROTECT EVERYTHING!

So I wonder why now? Why is the FDIC concerned that you know your limits for the first time in 75 years? And why, just days before the biggest, most important Fed announcement of the year?

Maybe it’s not just a 75th year celebration, but a series of full-page advertisements in the midst of the countries worst financial crisis since 1990 (when more than 1000 American banks failed) seems just a bit suspicious. I can’t help but think the FDIC is firing a warning shot to Americans in response to Washington’s rant for a “strong dollar” and possibility of a Fed rate hike.

Well, on June 25th, when the Fed makes their announcement, IF THEY MAKE THE MISTAKE OF HIKING RATES, it will almost certainly force dozens of smaller banks to fail because of already weak capitals and bruised balance sheets…Spelling doom for millions of Americans.

The Fed has desperately tried to help FDIC member banks rebuild their capital ratios by cutting interest rates to 2% in recent months — which is why their “posturing” about a strong dollar has no validity.

This is EXACTLY Why I'm Calling Their Bluff!

Since its creation in 1913, the Fed has never hiked rates while unemployment rose — and they won’t hike now.

If it could, the Fed would increase rates now, as commodity prices continue to skyrocket. But no central bank worth its salt will raise interest rates amid a severe deflation in housing and consumer credit, and a deteriorating labor market.

But you can’t assume the government will make the right decision. If they choose to hike rates, it would be, at most, be a one time, mostly symbolic 25 basis point hike — and that would be the end of the Fed “getting tough” on inflation. Why? Because anything more aggressive would only fast track the 200 or more bank failures expected in the coming year or two — further worsening the crisis.

The Fed has no choice but to keep rates right where they are, at least for the moment, and let inflation continue to erode the purchasing power of Americans and all dollar-based investors.

How to Protect Yourself and Profit as the Fed Throws in the Towel on Inflation!

The Fed meets nine times a year. But once every year or so, a change in policy occurs that will have long-term implications for currency markets, as well as all financial markets — from stocks to bonds. We are facing such a meeting this coming Tuesday and Wednesday.

My mission is to bring home the vital importance of The Great Dichotomy — the unprecedented contrast between the sinking ship of the U.S. economy and the rising tide of emerging markets.

I'm trying to show you ways to profit from both. And as the events two weeks ago clearly illustrates, the timing couldn't be more critical:

The record surge in U.S. unemployment — the worst in 22 years — signals a swifter slide into recession than any government indicator I've seen so far.

The record surge in crude oil — the biggest of all time — promises to gut household budgets and squeeze the profit margins of thousands of U.S. manufacturers that use petrochemicals to produce their products.

The nonstop plunge in home prices promises to deliver a deeper and longer lasting recession than virtually anyone on Wall Street dares admit in public. And...Friday's nosedive in the Dow could be just the first salvo of a major attack on U.S. stock portfolios.

The most convenient vehicles to profit from this decline are inverse ETFs. Two examples:

Short Dow30 ProShares (symbol DOG), designed to appreciate 10% for every 10% decline in the Dow Jones Industrial Average. On Friday, for example, while the Dow plummeted by 3.13%, DOG surged 3.15%.

Ultra Short Real Estate ProShares (SRS), designed to go up in value by 20% for every 10% decline in the Dow Jones Real Estate Index. This ETF's performance was far better than DOG's — up 8.62% on last week alone.

For more good sound investments to protect your portfolio from the upcoming crisis, contact me to setup an appointment so we can make sure you aren't deflating your wealth along with the US economy.

Also, please get on this week’s conference call "Straight with No Chase - Pt 2" as I'll be discussing more ways to get yourself "FOOL-proof" double digit returns in an economy where most people are raking in double digit losses. Visit our website, and click on the calendar link for more details. If you missed Pt 1 of the call, you can listen to the playback by dialing in on the number below.

Playback Number: (641) 715-3487
Access Code: 974124#

Thanks

Gary Gray
Tax & Financial Consultant, RFC
G&G Associates
877-817-6031 toll-free
866-361-3872 toll free fax
www.gngassociates.net

"Those who do not learn the lessons of history indeed are condemned to relive them."

LEGAL NOTICE: This work is based on SEC filings, current events, interviews, corporate press releases and what I've learned as a financial consultant. It may contain errors and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility. G&G Associates expressly forbids from having a financial interest in any security that is recommended to our subscribers