The Global Impact of ‘QE Infinity’

You might not have heard the phrase “QE Infinity,” but you’re already starting to feel its effects. After all, the Fed’s commitment to printing more dollars naturally reduces the value of those dollars.

However, this unlimited money-printing is causing other countries to compete by devaluing their own currencies. And this race-to-the-bottom currency competition presents an intriguing profit opportunity — two of them, actually — which I’ll outline for you in today’s video.

Best wishes,

Tony

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Video Transcript

Hi, this is Tony Sagami for Uncommon Wisdom Daily.

The Federal Reserve proved earlier this month that there is no end to the amount or duration of money-printing it will undertake to boost the economy. That’s why I’m not calling the latest monetary easing QE III — I’m calling it “QE Infinity.”

Just listen to what U.S. policymakers said themselves:

“If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability.”

One immediate effect of “QE Infinity” was a decline in the U.S. dollar against other major currencies. Printing more dollars naturally reduces the value of those dollars.

But the Fed’s actions are causing a ripple effect around the world. That’s because a falling dollar hurts companies in export-driven economies such as Japan. The higher those currencies are, the less attractive their exports are to international consumers. The result is a quiet global currency war — a race to see which country can debauch its currency the fastest.

The early leader in that race is Japan, which responded with its own version of quantitative easing. The Bank of Japan said it will expand its asset purchases by an additional 10-trillion yen, or about $126 billion. And its total asset purchases could equal as much as $1.1 trillion by the end of next year.

For investors, the global currency race to the bottom could produce some long-lasting and potentially profitable investment opportunities.

One way to profit from a declining dollar is with ETFs and mutual funds, such as the Merk Hard Currency Fund, or the PowerShares DB U.S. Dollar Index Bearish ETF.

An even more profitable strategy would be to invest in American companies that get a large portion of their revenues from outside the U.S.

A cheap dollar gives them a double-whammy of profits. First, their goods and services are suddenly cheaper to overseas buyers. Second, they get a big boost in currency gains from their overseas sales.

I predict that American companies with big international footprints will report better-than-expected profits, and enjoy outsized gains in their shares over the next year or so. In fact, I’ve identified five of those companies in my new special report, “The Only Game in Town.” In it, I show you how to jump on this emerging trend, and make bundles of stock market profits.

I’m Tony Sagami for Uncommon Wisdom Daily. Thanks for watching.

Your thoughts on “The Global Impact of ‘QE Infinity’”

  1. I think the falling of the US dollar value will generate more industries popping up within the US in the future. If the US dollar value goes down, then it is a good environment for export because the US products will be considerably cheap compare to those from other countries, just like China today. I think this is the whole point why the Fed keeps printing the US dollar. Besides, it will also keep the stock market strong. Yes there is an intention to devalue the US dollar, but it is all for the good cause so that new jobs will be created, but this thing can all happen after the money is ready to be released to private sectors such as business loans and mortgages.

    The question is when will the Fed stop feeding the banks to cover their losses and start distributing the money to the open market ? The speculation question is whether or not the Fed can actually cope with the total interest uncle Sam has to pay by printing more money.

  2. tony, tony, tony….You need to look beyond the headlines….Yes the U.S. said they were going to purchase the mortgage backed bonds from the banks. But when they do, they banks are not putting the money into the economy, they are giving the money back to the federal reserve and collecting .25% on their money for doing nothing. The money is not in circulation (as evidenced by how hard it is to get any loans from the banks) and it becomes a closed loop system except for the headlines that is keeping the other countries doing the same thing. What the government is really doing is re-financing the long term debt with todays low rates….It is all a three card monte keeping everyone guessing where the money is (that is why they do not want the Ron Paul bill to pass where they audit the federal reserve !!!)

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