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Inflation Alert: Fed Pumps Another $7.9 Billion Into The System

After a huge fall on Friday, the markets are floating slightly higher on the day. The SPDR S&P 500 ETF (NYSE:SPY) is currently trading at $120.93, +0.38.  The Federal Reserve was back at work today, pumping money into the markets via their quantitative easing method of POMO.  This stands for permanent open market operations where they buy treasuries from the banks, pumping billions into the markets.  The leading sector today is clearly the banks, as Goldman Sachs Group, Inc. (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM) and Bank of America Corporation (NYSE:BAC) are all sharply higher.  The rest of the market seems mixed.

As the Federal Reserve continues to pump more money into the system, more and more critics emerge. Months after we began to describe the negative effects of the massive money printing of the Federal Reserve, others are joining the ranks. The G20, which was originally supposed to be focused on China for currency manipulation became a bash the U.S. festival over the Federal Reserve and it's policies.

While the Federal Reserve only looks at core inflation, real inflation in food and energy has soared. Ask any retiree on a fixed income after they have been to the grocery store or ask any middle class family.  The Federal Reserve is hurting America by printing money. Every single American needs energy and food.  These prices are soaring, taxing the average American, yet the Federal Reserve is being short sighted.  The Federal Reserve thinks that by printing more money and inflating asset prices, the average American will be out spending. Sure, some will in the short term as they are fooled into thinking they have gained money in their investment accounts, but long term, catastrophe looms.

It is just another bubble in creation that the average American will pay for when it blows up. The Federal Reserve has been instrumental in creating every bubble in the past. After the tech bubble burst in 2000, they lowered interest rates and had a free money policy to stimulate growth.  This gave way to the real estate bubble and the financial crisis.  Now, they are doing it all again.

The one positive thing is that we at InTheMoneyStocks are not the only ones noting this any longer. Many have joined the forces to rally against these actions. We hope it continues and the average American is made aware of the final outcome of this print money policy. 

Gareth Soloway
Chief Market Strategist
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