By; Kathy Frettke

It’s no secret that our economy has been manipulated financially in a frantic attempt to pull out of the greatest recession since the Great Depression.

Chairman of the Federal Reserve, Ben Bernanke, is known for his strong beliefs about the use of “quantitative easing,” a fancy term for creating money out of thin air. He stated once that he’d dump money out of a helicopter to stimulate the economy if he had to.

That tactic would be exciting for those lucky enough to know where the helicopter was flying. But instead, the Fed chose to buy $85 billion dollars worth of bonds every month. Why? Traditionally, investors buy bonds when they want safety in US government-backed IOU’s. There wasn’t exactly a market for that over the past few years.

Doesn’t it seem odd that a quasi-government, but mostly private entity would have the authority to create money out of nothing, buy government bonds with it, and then expect to get paid back with interest?

I won’t focus on my concerns about the Federal Reserve’s highly dangerous tactics in this blog, Instead, I will focus on the affect their decisions will have on those of us who live on Main Street.

But first, let’s look at Wall Street. What happens when a bunch of free money is created out of thin air and then poured into the market? Most likely an asset bubble is created. That’s what the Federal Reserve wanted and that’s exactly what they got.

A booming stock market makes it look like all is well in the Land of the Free. But is it? The real question on every investors mind is “What will happen when the free kindling stops? What will fuel the fire?”

The Federal Reserve has announced that it will begin to taper it’s $85 billion-per-month bond-buying program in January. The plan is to reduce it by $10 billion per month.

This is either a sign that the economy truly is recovering or that even Ben Bernanke agrees that free money is not the answer to our financial problems. Let’s face it. Free money eventually becomes just that – free and worthless. Who does that affect? People with money.

However, people who own assets that others want and need will always be OK. Citizens need food, shelter and housing to survive. These are the three things they are known to pay for first, before other items.

So even if the mighty dollar gets so devalued from this senseless financial experiment that the US government is forced to do what other governments have done in the past: create a new currency, those with valuable assets will prosper.

Now may be a really good time to look into self-directing your IRA, pulling out of the precarious stock market, and investing in hard assets like real estate.

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    As a seasoned real estate investor I have used bank financing, hard money financing, mortgage loan brokers to fund my deals. Because these are very limited in the type of "loans" they are allowed to sell they can only accommodate a certain few types of real estate deals.

    For individuals who like to "keep their money working" through these "lenders", thinking that their investment money is more secure through them miss out on investments "secured by real estate", (just as secure as the lenders deals) some deals will have much greater returns under terms that can keep your money longer and that you decided upon.


    January 2014