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The Fed Still Ignoring the Signs Jack Crooks Discusses Federal Reserve...

Jack Crooks discusses the Federal Reserve and its attempts to ignore the slumping economy in order to boost the stock market. Mr. Crooks takes a closer look at the U.S. dollar and what the Fed is doing to push it lower.

Bank of America, Citigroup, Morgan Stanley, Merrill Lynch, and Bear Sterns are all feeling the pain of reckless investing. Yet despite many of the U.S. "elite" banks coming clean on credit market losses, Main Street investors aren't heeding the warnings. Over-confident investors are throwing good money after bad. And the U.S. central bank is merely postponing the inevitable.

A lot of investors are content with ignoring the warning shots until their portfolios come directly under fire. They're just following the lead set by the Federal Reserve. The Fed knows hiking interest rates will crush the housing market and the economy. And it knows cutting interest rates will further inflate the world's asset bubbles. They're trying to stimulate economic growth rather than worry about asset bubbles.

In the process, the Fed is pushing the dollar lower. The Fed could want the greenback to fade in order for the stock market to stay juiced. And to possibly keep consumers buying into the game. Investors figure there's no reason to stop gambling if the house is going to keep fronting the money.

At the saturation point, money will become less and less stimulative and the party just won't go on any longer. This is the apex of the boom/bust cycle. It's the turning point investors should look out for.

It happened before in Japan in 1989. The Bank of Japan fought hard to escape a deflationary stranglehold. However, all the easy money in the world, even a zero interest rate, did nothing to help. The Japanese economy suffered

14 years in the grips of a deflation bear.

The Fed is running the same risk today, and it needs to be careful of digging an inescapable hole out in the middle of the desert. It's not easy to orchestrate an orderly fall in the dollar and avoid a panic collapse.

"After all, the lowly greenback is still the world's money. Any panic run from the world's money has major implications for every market around the globe. The U.S. is not there yet, but the day of reckoning is getting closer. The grand finale will could come in spectacular fashion," says Mr. Crooks.

To read this issue online, please visit:

www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit

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