War on Savers

War On Savers: 2008-2022 (At Least)

The wait is over!

After multiple delays and an unusually public decision process, President Trump has finally made his choice for the next Fed chair position.

The new chairman of the Federal Reserve will be Jerome “Jay” Powell.

The 64 year old is a lawyer and former investment banker who has served on the Federal Reserve Board of Governors since 2011.

Janet Yellen — the mastermind behind the war on savers — will officially be out of office on February 3rd, 2018.

But that doesn’t mean the war is over…

The “war” started at the end of 2008 when the Fed cut interest rates to zero.

Granted they didn’t have much of a choice after the financial crisis. But the war escalated in the following years when officials refused to normalize.

Keeping rates artificially low for going on 10 years now has devastated the retirement accounts of seniors by crippling their ability to earn a decent return on savings.

And this is a trend that looks to continue with Jerome Powell at the helm…

Jerome Powell — “The Republican Yellen”

Jerome Powell is the ideal choice for President Trump.

It’s no secret what Trump’s number one goal is to boost the economy.

And rightfully so! Why else have a billionaire businessman in the White House?

So far he’s been attacking this goal from three different angles — government spending, tax cuts, and now monetary policy.

The first two are pretty straightforward.

Government spending on infrastructure projects like the border wall between the U.S. and Mexico will create jobs and benefit the industrial companies like Caterpillar (NYSE:CAT) and U.S. Steel (NYSE:X).

While decreasing taxes on both individuals and corporations will increase disposable income which will increase demand for goods and services. (This is a topic that we’ll have more on in the next few days.)

These are givens for a president.

After all, fiscal policy is a basic duty of the federal government.

It’s the third angle that is unusual for a president, and one that will hurt retirees the most… Monetary Policy.

It’s no secret that Trump prefers both lower rates and a weaker U.S. dollar.

Both of these benefit U.S. corporations by allowing them to borrow at lower rates and export more goods at attractive prices.

But up until this year, no other president has been able to influence monetary policy in the same way that Trump has.

That’s because Trump currently has the opportunity to appoint more members to the Federal Reserve’s Board of Governors than any president since Woodrow Wilson in 1913 — when the Fed was created.

Powell was just the first of four Fed vacancies filled so far.

To quote Jim Rickards — “Trump will own the Fed… Whatever Trump wants, he will get”

And this is bad news for retirees, because Trump wants to keep rates low, which means Powell is likely to continue Yellen’s “dovish” monetary policies by keeping rates lower for longer.

He’s not called the “Republican Yellen” for nothing!

So at a time when retirees should be benefiting most from compounding returns, they’ll actually be handcuffed by a timid Fed that’s kept rates too low for too long.

The war on savers just got extended by 4 years…

Here’s How You Fight Back

Here at The Daily Edge, we constantly talk about alternative ideas for protecting your wealth and generating extra income.

Ideas like owning gold to help offset a decline in the value of the dollar.

Or buying corporate bonds at discount prices — to lock in guaranteed payments from America’s strongest companies.

But one of our favorite strategies is selling put contracts on stocks that you want to own, to generate instant income payments that can be used to cover day-to-day expenses.

And while this may sound like a complicated strategy, it’s actually a very easy way to pad your retirement account. The process is so easy, even kids can do it as you can see here.

In today’s market, you simply cannot count on traditional savings accounts to generate the cash that you need. Who knows… With Powell in charge at the Fed and Trump turning the levers, it looks like interest rates could remain exceptionally low for years to come.

So please, make sure you are proactive when it comes to your retirement income.

And if you’re doing well with your income strategies, I’d love to hear about it! Please send your retirement success stories to EdgeFeedback@AgoraFinancial.com.

Here’s to keeping your edge,

Zach Scheidt

Davis Ruzicka
Managing Editor, The Daily Edge
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Davis Ruzicka

Davis Ruzicka is the Managing Editor of The Daily Edge. Davis is an experienced value investor with a degree in Finance from The University of Maryland. Today, Davis is pursuing his Chartered Financial Analyst (CFA) designation in his spare time while continuing to learn from seasoned investors Zach Scheidt and Alan Knuckman.

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