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    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.

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  • QE3 and inflation

  • How QE3 – Like QE1 and QE2 – Will Trigger Inflation The traditional safe haven assets of gold (NYSE: GLD) and silver (NYSE: SLV) have surged in price due to the announcement of the latest round of quantitative easing, QE3 - but those aren't the only assets QE3 will push higher.

    While QE3 might seem harmless to U.S. consumers, it is present every time they gas up their cars or buy food at the grocery store.

    In fact, all three rounds of quantitative easing have led to higher priced commodities.

    Whether you realize it or not, QE3 - same as the stimulus programs before it - is adding greatly to the costs of everyday life. QE3 is directly leading to higher prices for oil, food and the cost of imported goods.

    Over time, that results in a tremendous consumer expense in all product and service categories.

    To continue reading, please click here...