Press Esc to close

Welcome to Money Morning - Only the News You Can Profit From.

Close

The Cybersecurity Play That Doubled Once – Will Double Again

Not long ago, a relative of mine was the victim of identity theft. And I have to tell you that I really felt for the entire family.

The thief ran up nearly $20,000 in charges, opened new accounts and tried to open others.

And I can tell you that the frustrations over the losses (most of which ended up being covered) were dwarfed by the helplessness that came whenever new charges showed up – and the worry that was spawned by never finding out how the whole mess started.

As we watch the headlines about data breaches and cybercrime – and watch as the violations move closer and closer to home – those worries only escalate.

  • Featured Story

    There's More Than One Way for the Fed to End QE

    People Bernake praying

    The market has been looking ahead to the inevitable end of the U.S. Federal Reserve's quantitative easing (QE) program with considerable apprehension.

    Most market observers expect the end of the Fed's QE asset-purchasing program to immediately result in a sharp sell-off in bonds and higher interest rates.

    This is expected to hit the mortgage-backed securities (MBS) market, where the Fed has been very active, quite hard.

    As part of a policy to communicate more openly with the markets, Chairman Ben Bernanke and the Fed have been regularly launching QE exit strategy trial balloons into the market to see how quickly they get shot down.

    The latest exit strategy that has been gaining traction is the idea of "tapering" QE asset purchases so that there isn't a sudden halt to supply of money flowing from the Fed into the Treasury and MBS markets. The markets seem to be pretty sanguine about the tapering idea, although there has been no specific suggestion on timing.

    Instead, the markets have been concentrating on how the Fed will get rid of all of the assets it has accumulated on its balance sheet during the QE program.

    To continue reading, please click here...


    Read More...
  • QE Forever

  • Prepare for Years of "QE Forever' with Ben Bernanke at the Helm People Bernake

    When Ben Bernanke testified before Congress Tuesday and Wednesday, he staunchly defended his easy- money policies like quantitative easing, or "QE Forever."

    "We do not see the potential costs of the increased risk-taking in some financial markets as outweighing the benefits of promoting a stronger economic recovery," the Federal Reserve chairman said.

    Bernanke added the central bank takes "very seriously" the excessive risk-taking its dovish policies could provoke and is watching markets carefully.

    He maintained that the bank's accommodative monetary policy has "supported real growth in employment and kept inflation close to our target [2%]."

    But some Fed officials are growing concerned about quantitative easing - the Fed's purchases of $85 billion in securities a month - and believe it would be prudent to slow or stop the buying well before the end of 2013. Esther George, president of the Federal Reserve Bank of Kansas City, is one of the biggest hawks in the Federal Open Market Committee (FOMC) this year, citing unease about economic stability and inflation.

    "While I share the objectives [of the FOMC]," George said in a Feb. 12 speech at the University of Nebraska Omaha, "I dissented because of possible risks and the possible costs of these policies exceeding their benefits...While I have agreed with keeping rates low to support this recovery, I know keeping interest rates near zero has its own consequences."

    Despite the increasingly anxious sentiment, as long as Bernanke remains at the helm, QE Forever will be the policy. Here's why.

    To continue reading, please click here...

    Read More...
  • QE3 and Low Interest Rates Help Savers? Bernanke Thinks So U.S. Federal Reserve Chairman Ben Bernanke wants you to believe his cheap money, low interest policies like QE3 actually have benefits for savers.

    America's savers, many of whom are retired or nearing retirement, would beg to differ.

    You see, low rates at the Fed - which has pledged to keep its interest rates near zero at least through 2015 - means low rates on conventional savings vehicles like bank accounts, certificates of deposit, and money market funds.

    Those rates affect $10 trillion in savings-like products, costing savers billions of dollars.

    For example, if a saver had $100 in a savings account in 2008 that paid 0.35% interest, she'd have just $102 today. But with inflation, $100 worth of goods in 2008 now costs $107.

    That's a loss of 5% in four years, the sort of math that eats away at a retiree's standard of living.

    And the rates of 2008 look fantastic compared to what's available now.

    The Fed's actions have pushed down interest rates to microscopic levels. The average savings account interest rate has fallen one-third in the last year alone, to 0.08%.

    The average yield on five-year CDs last month dropped below 1% for the first time ever. Back in 2007, five-year CDs provided a yield of 4%.

    And yet in a speech he gave at the Economic Club of Indiana on Monday, Bernanke said his policies are helping savers.

    Here's why.

    To continue reading, please click here... Read More...
  • How QE3 and Higher Inflation Are Part of the Fed's Master Plan U.S. Federal Reserve Chairman Ben Bernanke might not admit it, but he just drastically increased the inflation risks for 2013 and beyond.

    That's because Bernanke pledged on Sept. 13 that QE3 -unlike the stimulus programs before it - will continue for an unlimited timeframe.

    QE3 has already led to a rally in commodity prices, like the previous Fed stimulus actions.

    But this time the inflationary surge will get much, much worse.

    "If the governments and central bankers continue to flood the world with cheap money, it has to translate into some kind of inflation," Money Morning Global Investing Strategist Martin Hutchinson recently explained. "We started with asset inflation. But my sense is that the transition from asset inflation to consumer inflation will happen very quickly."

    With median income levels at averages not seen since the mid-90s, U.S. households need to prepare their savings to survive higher prices - especially while interest rates remain near zero.

    Unfortunately, it appears this environment is exactly what Ben Bernanke has in mind.

    "Not only will they tolerate higher inflation, not only will they wish for higher inflation, but they actually may target higher inflation," PIMCO CEO Mohamed El-Erian told CNBC ofthe Fed. "This is a historical bet that our kids will be reading about in history books."

    Here's what Bernanke has planned.

    To continue reading, please click here... Read More...
  • QE3 Becomes QE Forever Welcome to unlimited quantitative easing, or QE Forever.

    The U.S. Federal Reserve goosed equities, Treasury yields, gold, silver, oil, platinum, palladium and investor sentiment on Thursday when it announced additional stimulus to spur economic growth.

    The central bank said it will continue to buy mortgage-related debt and other securities until the job market shows significant signs of improvement so long as inflation remains tame.

    "The market got what it wanted. Stocks immediately shot up," James Meyer, chief investment officer at Tower Bridge Advisers told Reuters.

    In fact, the markets got more than expected.

    As part of the Fed's new scheme, a marked difference from the first two rounds of QE, it will buy $40 billion of mortgage debt per month. Additionally, the Fed reiterated its stance of keeping interest rates at historic low levels, extending the time frame out until at least the middle of 2015.

    "This is definitely a significant shift in FOMC policy," Julia Coronado, chief economist for North America at BNP Paribas in New York and a former Fed economist told Bloomberg News.

    Plus, the Fed said it would continue Operation Twist, its action to bring down long-term interest rates.

    Collectively, the Fed moves will flood some $85 billion a month into the struggling U.S. economy for the rest of 2012.

    The Fed has always set a determined amount of Fed purchases. This time, however, it let America know that easing will endure and no tightening will occur until confidence recovers.

    That's why QE3 is a game-changing move for the U.S. economy.

    To continue reading, please click here... Read More...