{"id":15688,"date":"2010-11-22T08:01:21","date_gmt":"2010-11-22T13:01:21","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=15688"},"modified":"2010-11-22T08:01:21","modified_gmt":"2010-11-22T13:01:21","slug":"are-we-living-in-the-federal-reserves-twilight-zone","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/11\/22\/are-we-living-in-the-federal-reserves-twilight-zone\/","title":{"rendered":"Are We Living in the Federal Reserve’s Twilight Zone?"},"content":{"rendered":"

By Jared Levy, Editor, Smart Investing Daily, TaipanPublishingGroup.com<\/strong><\/a><\/p>\n

n Monday, an old friend sent me a link to a now virally famous cartoon clip via YouTube. The clip is a depiction of the Federal Reserve’s second round of quantitative easing<\/a> in a simplified, humorous manner and has been viewed over 1.6 million times, not to mention it had a front and center showing on CNBC.<\/p>\n

It comically poses questions that pretty much sum up the entire state of our economy right now. Is this some kind of a nightmare? Are we in an episode of The<\/em> Twilight Zone<\/em>?<\/p>\n

Please watch the clip before you continue.<\/p>\n

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I couldn’t have said it better myself.<\/p>\n

Quantitative easing, in theory, should put money into consumers’ hands to spend and into companies’ hands to hire. The Federal Reserve is worried about deflation.<\/p>\n

But is this really the case?<\/p>\n

Let’s take a look at prices of the things over the past year that we use every day and see…<\/p>\n

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A party in Beijing’s Great Hall of the People could be worth four times your money<\/strong><\/p>\n

China’s domestic security “national champion” was recently given preferred status in the building of the most expensive, technologically advanced police state in the history of civilization.<\/p>\n

Now, a “secret” deal with this company could potentially give one senior Communist official a million-dollar retirement.<\/p>\n

Act immediately, and you could make four times your money off this China investment<\/a>.<\/strong><\/p><\/blockquote>\n<\/div>\n<\/div>\n

Energy Prices Are Up…<\/h3>\n

Crude oil futures were trading in the upper $70s in November of 2009 and in early November 2010 spiked up to over $87. That’s a roughly 13% jump. In the world of natural gas, we’re looking at a very similar story in our cost as consumers. Even though natural gas futures were flat(ish) compared to last year, you as the end user have been paying higher prices from April up until September.<\/p>\n

And Are Is Electricity Prices…<\/h3>\n

According to the EIA (U.S. Energy Information Association<\/a>), our average cost in cents per kilowatt-hour for 2009 was $11.55. Up until August of this year the average was $11.53, but don’t forget that September, October and November are still relatively high usage months for many homes, so expect that number to rise as well.<\/p>\n

Getting to and from your job or job interviews and running errands is definitely costing you more: The average price of a gallon of gasoline is up 26.3 cents from a year ago, which represents an almost 9% increase in cost.<\/p>\n

AAA says that the average driver travels 15,000 miles per year. Assuming two drivers per household getting an average of 20 mpg, that’s 1,500 gallons of fuel. If fuel jumps another quarter, we are talking a $750 per year increase for the average couple with no kids.<\/p>\n

And — You Guessed It — So Are Food Prices…<\/h3>\n

I always found it humorous when analysts strip out food and energy when looking at consumer prices! As a human being, I need to keep myself at a certain temperature and eat and drink just to stay alive! While energy costs are moving higher, feeding your family is really costing more than it did last year.<\/p>\n

Raw commodities alone are through the roof!<\/p>\n