Today, the Fed, along with other central banks around the world cut interest rates in lock step with the Fed’s overnight rate target being dropped to 1.5% from the prior 2%. Essentially what they will do is flood the money markets with even more fiat cash. They are clearly in uncharted territory as  balance sheet reserves were exhausted long ago.

All of this is being done with the goal of filling the void left by the implosion of bad debts, swaps and other derivatives. While on the outside, we are still seeing deflationary effects, this will change once the Fed actually prints faster than the money is disappearing. Once that happens, look out. We will be in for a bout of inflation that will make the 1970′s look like nothing.

The balance sheet of Joe Q. Public is still in shambles. Everyone is focused right now on freeing credit markets so the borrowing may resume. However, nobody is asking the more important question: Who is going to borrow? Yesterday, the consumer credit report showed that consumer borrowing CONTRACTED in August. The Fed and Congress know that the only way this economy ‘grows’ is by debt accumulation, not contraction. Yet, in typical greed-driven manic fashion they are more worried about making their cohorts on Wall Street whole. Middle America is the epicenter of this crisis, not the banking system.

We will be following the all-important transition from the current deflationary environment to an inflationary one in The Centsible Investor. The CI Model Portfolio is specifically designed to combat the wealth destroying effects of inflation by providing a high level of current income. The diversity of the Portfolio has also resulted in substantial insulation from the ongoing crisis as well. Due to reader requests, we are offering several additional subscription terms including single-issue and 6-month terms in addition to the standard one and two year offerings. For more information or to request an evaluation copy please visit:

The Centsible Investor