Avoid the Fed’s Retirement Destruction Before it’s too Late

Is Civilization About to Short-Circuit? It's one of the strangest stories you will ever hear, but the impact it could have on every aspect of your life in the months to come could be profound. To find out how you can protect yourself from the effects of this unexpected shortage, click here for our urgent video. Is Your Portfolio Ready for this Coming Disaster? By Evaldo Albuquerque, Editor of Pure Income Dear Sovereign Investor Subscriber, Imagine a drunk driver who has lost all his sense of direction. He not only has no idea where he's going, but is also controlling his speed by looking at a broken speedometer. How would you feel being a passenger in that car? Unfortunately, that's the reality we're facing. We're all passengers in that car. Our economy is under the control of a drunk driver, who is now making decisions based on broken metrics. Advertisement "Your Discount Brokerage Account May Be Costing You Thousands of Dollars a Year!" Millions of investors save a bundle of money trading online. But one industry expert claims you could be intentionally cut off from the most powerful wealth-building stocks on the market right now. To find out what this brewing controversy could mean for your account, click here. I'm talking about the Fed. It has announced its newest plan to boost the economy. And the plan is based on two key, terribly flawed numbers. This is likely to end in disaster. Here's why… Why the Fed's Measure of Inflation is Meaningless The Fed has recently announced it will print $85 billion every single month until inflation rises above 2.5% or unemployment drops to 6.5%. Printing money in itself is a dangerous activity. When you decide how much you print based on two flawed metrics, then it almost ensures disaster. The numbers the Fed uses to measure inflation and unemployment are useless. Let's take a look at inflation first. Besides ignoring food and energy costs, which are big parts of our daily lives, the Fed uses other tricks to keep reported inflation artificially low. I wrote about this in an article last year. Since 1980, the government has implemented several changes in the calculation of inflation. Because of those changes, the reported inflation is much lower than the true rate of inflation. According to Shadowstats.com, which calculates inflation by using the original methodology, inflation is now close to 10%. Meanwhile, the Fed keeps telling us it is below 2%. How can the Fed control inflation by using a meaningless measure of inflation? It can't. And it gets worse… Why the Fed's Measure of Unemployment is Useless The Fed has also said it will only stop printing money when the unemployment rate drops below 6.5%. That threshold is also terribly flawed. Just like the reported inflation doesn't really measure loss of purchasing power, the reported unemployment rate doesn't really measure the health of the labor force. You see, the Fed doesn't count those who are not looking for a job as unemployed. As a result, when people give up looking for jobs, the unemployment rate goes down. This gives the impression things are getting better when they're not. In fact, that's a big reason why the unemployment rate has been falling recently. Millions of Americans have dropped out of the labor force. In November alone, 540,000 Americans dropped out of the labor force. The chart below shows the drop in labor force participation rate. Labor Participation Rate is at its Lowest Point in Three Decades This is important because a significant improvement in the economy will encourage more people to start looking for a job. This influx of people into the labor force could push the jobless rate UP because more people would be officially looking for work. The Fed would start counting those as unemployed. An improvement in the labor market could push the unemployment rate up, not down. Under that scenario, the Fed would keep printing money, despite the improvement in the economy. Why This Will End Badly Because of the artificially low reported inflation, the Fed will keep printing money. And if the economy improves, a higher unemployment rate will give the Fed another excuse to keep printing. The Fed can control how much money it prints. But it can't control where that money goes. All this money-printing will result in asset bubbles. There's already a massive bubble in the bond market… and stocks wouldn't be trading at current levels if it wasn't for all the money-printing. The problem is bubbles always end badly. The booms are always followed by massive busts. Investors who follow a "buy and hold" strategy will be crushed by the next Fed-induced crash... just like they were in 2000 and 2008. If you want to reach your retirement goals, you don't have the luxury of time to ride out another major crash. It's time for a new approach… one that avoids catastrophic loss, while keeping you in bull markets. I've spent the last few months developing a strategy that does exactly that. It's a revolutionary way to save for retirement that has averaged an annual return of 13% over the past decade. It could be the safest, and perhaps only shot you'll have at securing the retirement you deserve. You will be hearing more about this strategy in the coming weeks. Stay tuned. Regards, Evaldo Albuquerque Editor, Pure Income P.S. Events this winter will converge to create, what may be remembered as, America's most cataclysmic crisis yet. An event so catastrophic, it could short-circuit civilization as we know it. In fact, it's the very same kind of crisis that triggered the final unraveling of Rome in the 5th century… and it also brought down other mighty empires like the Egyptians and Mayans… To learn all about it, including the deeply-undervalued investment opportunity set to soar as this crisis unfolds click here. Related Reading: Yes, the unemployment rate has dropped. But the jobs that are being created are part-time, don't pay as well and are no substitute for the higher-wage jobs that we've lost. This does not bode well for our economy in the long-term. And as long as the economy is struggling, the Fed will stick to its zero interest rate and money-printing policies. Now that the Fed has gone nuts with unlimited QE, there's another financial bubble in the making. Greenspan's cheap money policies led to a bubble in housing – this time, the Fed's "cheap money on steroids" policy will result in a bubble in precious metals. Chart of the Day Chart of the Day will resume after the holidays. Our team here at The Sovereign Society would like to wish all our readers a safe and happy holiday. TODAY'S EDITOR Evaldo Albuquerque As near-zero interest rates eliminate traditional income sources, and QE spurs inflation, Evaldo's Pure Income advisory helps find new ways to generate the income you need. Click here to learn more. BECOME A MEMBER Don't let yourself be caught unprepared when the next economic crisis hits. As a member of The Sovereign Society, you'll have the information you need to start protecting yourself today. JOIN NOW RECENT ARTICLES 12/28/2012 California's New Democratic Supermajority is the Path to a Smaller America California's new supermajority will lead to a smaller america - and the collapse of the American empire. 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