Ben Bernanke
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Beat Ben Bernanke with These Juicy Double-Digit Yields
With the economy beginning to stall, Ben Bernanke's war on the nation's savers rolls on.
From his promise to keep the Fed funds rate near zero through late 2014 to his efforts to push ten-year note yields even lower, the Fed Chairman is a saver's worst nightmare.
You see, in Ben's world, the safety of money in the bank earning a reasonable interest rate is a dangerous thing.
It's why folks with savings have been virtually forced into the market these days in search of higher yields.
One place where income investors can find them is in closed-end funds.
A few of these funds even pay juicy double-digit yields -- like the one my Permanent Wealth Investor subscribers have earned 20% on in two years.
But here's the best part. You can actually buy closed-end funds like these on sale.
Let me explain.
Buying Closed-End Funds at a Discount
Developed in the 19th century, closed-end funds are the oldest type of mutual fund. If you understand the idea behind a mutual fund, then understanding a closed-end fund is easy.
In essence, they are the same thing- pools of money controlled by a professional money manager.
However, in contrast, a typical mutual fund is also what's known as an open-ended fund.
This means that the fund itself can issue as many shares as it needs to meet the demand on any given day. So the total number of shares in this type of fund isn't fixed at all-hence the term open ended. Shares are added as needed.
As a result, the cost of any share in one of these funds is always bought or sold at its current Net Asset Value (NAV). That's why shares of open-end funds don't trade per se on the exchanges.
A closed-end fund, on the other hand, is totally different. Unlike an open-ended fund, closed-end funds issue a limited number of shares. That means the number of shares outstanding is fixed.
So closed-end funds actually trade on an exchange like a stock, and are bought or sold minute-by-minute with a price driven by market sentiment.
That means that just like a stock, shares may trade at a premium or discount to their net asset value. That's a key difference, and why I say closed-end funds can be bought on sale.
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FOMC Meeting: Will Ben Print?
Most investors expect Federal Reserve Chairman Ben Bernanke to announce more stimulus when the FOMC meeting concludes tomorrow (Wednesday).
But what if he doesn't?
Money Morning Chief Investment Strategist Keith Fitz-Gerald joined Fox Business' "Varney & Co." Tuesday to discuss this outcome with host Stuart Varney.
"Keith, what happens if Ben doesn't print any money, makes no such announcement, and the Germans don't agree to let Europe print any money," asked Varney. "What happens?"
To hear what Keith said investors can expect from the Fed, and the market reaction, watch this video.
Keith also analyzed the Microsoft Corp. (Nasdaq: MSFT) announcement that it will release a tablet to compete with the Apple Inc. (Nasdaq: AAPL) iPad. -
U.S. Economy Showdown: Krugman vs. Bernanke
Nobel Prize winning economist Paul Krugman has some critical words for how Team Bernanke is handling the U.S. economy.
The Princeton University professor suggested on Bloomberg Television's "Street Smart" program Monday that U.S. Federal Reserve policy makers, under the guidance of Chairman Ben Bernanke, are "reckless" for refusing to pursue inflation.
Krugman argues that higher inflation could lower the staggering U.S. employment rate that has lingered for more than four years.
"The reckless thing is to allow mass unemployment to continue," Krugman said Monday. "We have had a massive failure of our political system that has come to accept that 8% unemployment is the new normal and there is nothing that can be done. We're in a low-key version of the Great Depression."
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You Asked, He Answered: Shah Gilani on China, Ben Bernanke, the Fed and Much More…
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Is Gold Money?… Don't Ask Ben Bernanke, Examine the Federal Reserve
If you really care about your financial future, here's something you need to know.
It's about a story that received almost zero coverage from the mainstream press. I can't say that I am surprised.
It involves gold.
Thanks to requests by Bloomberg News under the Freedom of Information Act, the Federal Reserve has revealed unprecedented details concerning the personal holdings of its regional bank presidents.
What they found is nothing short of stunning ...
Ben Bernanke on Gold
But let me back up a little.
There's an exchange between Fed Chairman Ben Bernanke and Congressmen Ron Paul you need to hear first.
During a monetary policy report delivered to Congress last summer, Congressman Ron Paul asked Bernanke if he thought gold is money.
After a clearly uncomfortable pause Ben said, "No. It's a precious metal." [By the way, if you haven't seen Ron Paul questioning Bernanke about gold, click here. It's already had over half a million views.]
Paul went on to ask Bernanke why it is then that central banks hold so much gold. Bernanke answered that it was simply a tradition.
Well, congrats Ben, you did get that one right, just for the wrong reasons. (Deep down, you surely know the true reasons).
The fact is gold has been a monetary tradition for millennia.
Nearly 2,000 years ago Aristotle laid out what characteristics make for good money. According to Aristotle:
- It must be durable.
- It must be portable.
- It must be divisible.
- It must be consistent.
- It must have intrinsic value.
You might want to reread that: the most common basis for money - in all of human history - has been gold. It's no accident.
After all, only gold meets all five of those requirements for sound money.
It is only in the past century that fiat money has supplanted gold or gold-backed currencies on a worldwide basis.
What makes today's central bankers and their system of printing fiat currencies and setting interest rates so special? It is hubris and nothing more.
Fiat currencies are just a relatively recent, and failing, experiment in economics. So much so, it's become exceedingly dangerous to hold them of late.
Here's why.
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Another Bernanke Market Rally
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How to Win Bernanke's War on Savers with a 19% Yield
There is no other way to put this... With his zero interest rate policy (ZIRP), U.S. Federal Reserve Chairman Ben Bernanke has declared a virtual war on the nation's savers.
That's why savings-conscious investors have been forced out into the markets these days in search of higher yields.
Between 10-year notes offering yields under 2% and CD rates hovering near 1%, savers have been left little choice.
It is one of the reasons why high-paying dividend stocks have been in demand ever since the ZIRP crisis began.
For savvy investors looking to boost their yield, there's only one place to look...
They're called mortgage REITs, and they offer investors the chance to collect some of the highest dividend yields available today.
In fact, one of these investments is actually paying a 19% yield, right now!
That's not a typo. Double-digit yields like those really can be found if you know where to look for them.
I'll tell you more about this company in a moment. But first I'd like to explain to you what mortgage REITs are all about.
Mortgage REITs Explained
Real Estate Investment Trusts, or REITs, came into existence because of U.S. President Dwight Eisenhower's "Cigar Tax Excise Tax Extension" of 1960. Under this initially obscure tax provision, REITs can avoid corporate income tax, provided they invest in real estate-related assets and pay out at least 90% of their income in dividends to investors.
Mortgage REITs, as their name suggests, invest in residential and commercial mortgages.
Within the residential mortgage REIT category, some invest in agency-guaranteed REITs while others specialize in REITs that are not guaranteed.
Given the recent default rate on home mortgages, investors would be wise to concentrate on guaranteed agency mortgage REITs. This is due in part to Ben Bernanke's monetary policy since 2008.
Let me explain...
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Never Bet on Ben
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Team Bernanke's QE17: A Glimpse of America in 2015
At the end of last month, the U.S. Federal Reserve brought down the curtain on its $600 billion "quantitative easing" initiative, a U.S. Treasury-bond-purchase program that investors liked to refer to as "QE2."
Fed Chairman Ben S. Bernanke has indicated that he does not intend to carry out a follow-up "QE3" program.
But here's the reality: The U.S. federal deficit is running at about $1.6 trillion, meaning we need to sell a lot of Treasury bonds to finance the shortfall. So if the Treasury-bond market gets a case of "indigestion" - meaning there aren't enough buyers to fulfill our massive financing needs - many folks believe that Bernanke will have to step in with the-much-talked-about "QE3" bond-buying program.
But Ben, please be forewarned: If you do this, our future is clear ...
A Glimpse of Our Future
The year is 2015, and it's late in the month of June. Central bank policymakers have been meeting for two days. Now it's late in the afternoon of that second day, and Bernanke's traditional press conference is set to start at any moment. Investors the world over have stopped everything to hear what the U.S Fed leader has to say.
Bernanke is still not the longest-serving Fed chairman: With only nine years under his belt, he has a decade to go before he'd have more service time than predecessor Alan Greenspan, or the legendary William McChesney Martin.
But as Fed chairmen go, Bernanke is uniquely powerful - perhaps even more so today than he was back in 2011. We all know that he won't change interest rates, which have now been held in a target range of 0.00% to 0.25% for nearly seven years. The real question - and the reason we're waiting for the press conference to start - is whether the former Princeton economist will indulge the financial markets with a further round of quantitative easing.
This round of Treasury bond purchases would be "QE17" - but these days, nobody's counting.
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