Today's comment is by Jack Crooks, editor of World Currency Options and The Money Trader.

Sometimes the most interesting remarks don't come from the pundits or the floating talking heads on CNBC. Instead, the really intriguing insights come from normal investors like you and me, who aren't afraid to tell it like it is.

I had such a reader write me recently. He wrote: "Ben Bernanke is like the death star. Destroyer of worlds."

In case you're wondering, the comment refers to the movie, Star Wars. In the film, the evil empire builds a moon-sized space station that can (and does) obliterate an entire planet with a single shot.

Of course, Bernanke's official job doesn't involve destroying planets, but some might argue that his official mandate has been destroying the U.S. economy lately.

Two Days before Congress, Two Days of Lip Service

In fact, last week Bernanke had to answer for his actions during two days of Congressional testimony.

Accompanied by Treasury Secretary Henry Paulson and SEC Chairman Christopher Cox, Big Ben paid lip service to the panel of Congressmen bombarding him with questions. Bernanke gave the normal reassurances about the state of the economy and inflation. He also asked for additional Fed regulatory responsibilities. That made for a heated discussion.

The best quote came from Senator Jim Bunning. When it was his turn to address the Fed Chairman, he noted, "The Fed is the systemic risk."

Both my Star-Wars-loving reader and that Congressional testimony basically say the same thing: People are sick and tired of the Fed's decision to fight fire with a lot of hot air.

Let the Good Times Roll...Even if the Economy Rolls Right Over Us

Almost any economist will tell you that every boom period is followed by a bust period. And typically, the larger the boom, the larger the bust.

But it seems like lately the Federal Reserve is disregarding the historical boom-bust cycle. Instead, Bernanke and his team are doing everything in (and beyond) their power to keep the good times rolling.

Sounds nice, but there comes a point when the economic system needs to cleanse itself. Hence the subsequent bust to every boom.

By making every effort to sustain the boom when it's already naturally run its course only delays the inevitable. The impending bust will be that much more painful, if you keep putting it off.

Many analysts, including myself, are beginning to believe the Fed needs to stop fighting the fire with bailouts and cheap money. Instead, they need to tighten up and let the market process work things out from here.

Right now, the Fed is no doubt in bailout mode. The Bear Stearns bailout is still fresh in investors' minds. (No doubt that bailout will go down in market infamy for quite some time.) Now we have the Fannie/Freddie fiasco. And who knows how many other firms the Fed has saved - so far - by opening up the vault doors to nearly everyone? 

Free Fed Money Anyone?

Check out the two graphs below. This first one shows how many banks borrowed from the Federal Reserve from 1980 until 2006:

You can see a major spike to roughly eight billion dollars of borrowing in 1984. That spike is probably from the economy's recovery from recession in years prior.

This spike in total borrowings was also coupled with a brief surge of inflation (of similar proportions to what we're experiencing today) after Fed Chairman Paul Volcker brought the inflation rate down from 13.5% in 1980 to as low as 3.2% in 1983.

Now, this next chart shows the exact same series of data, only it takes us through the present...

As you can see, the period up through June 2008 completely dwarfs how much the Fed lent out prior to that year. In fact, it makes all other periods look like a flat line!

The spike to more than US$170 billion dollars of borrowings reflects the newly created auction facilities.

How Do the Fed's Actions Affect Your Savings?

Bernanke recently admitted that the U.S. dollar needed to work off some of the excesses from the rally that began in the mid 1990s. That's part of why the bear market has extended so deep for the buck.

The dollar has done that — and more. But the charts I just showed you prove that the dollar is not nearly out of the woods yet.

Bottom line: If the Fed doesn't change its attitude and stop feeding debt creation, asset prices will spiral higher, and more pain will be crammed into the closet until someone or something knocks the door open.

JACK CROOKS, Editor of World Currency Options and The Money Trader

EDITOR'S NOTE: Assuming Bernanke keeps passing out more funds, and refuses to budge on interest rates, there will be more pain for the dollar this year. Find out how to trade your dropping dollars for stronger foreign currencies - that have TRIPLE-DIGIT potential. Get all the details here.

Why 487 People Swear By This Currency “Sub-Niche”?

Delray Beach, FL -- While most people anxiously await the next big “thing” – whether it’s a start up or get-rich-quick scheme… a small group of ordinary Americans have been enjoying a so-called “undiscovered” niche market.

Led by currency expert, Jack Crooks, this currency sub-niche trades only about $308 million per day, small in comparison to the major markets, and represents far less than .0001% of the total Forex market – yet still provides this small group with the ability to enjoy a very profitable hobby while having fun just 10 minutes each week.

By last report, each participant on average had the opportunity to supplement their current income with an extra $5,970 every 30 days. If you’d like to read the full story and learn more about this amazing group of pioneers, click here.

The Calm Before the Next Bank Storm

As expected, stocks are charging higher since Wednesday following weeks of protracted selling. That's not a surprise. I've been saying we could see a big rally because the VIX was heavily overbought.

A dose of good news finally arrived last Thursday following Wells Fargo's (NYSE-WFC) Q2 earnings report. A day earlier, State Street Bank (NYSE-STT) also delivered better than expected numbers. And this morning, Bank of America announced their Q2 profit fell less than expected.

The result, of course, is an incredible rally for financials. Heading into Wednesday's trading, the financials were down more than 55% from their highs last summer. Since financials also represent the largest index weightings for international indices, it's no wonder foreign markets are also running hard along with Wall Street.

On Wednesday, bank stocks posted their best single-day rally since 1989, gaining more than 17%. More of the same is expected today following J.P. Morgan's numbers.

I'm not sure those numbers are worth uncorking a bottle of champagne.

From where I see it, these results are just forecasting worse things to come. All we're seeing now is a dead-cat bounce following weeks of relentless financial sector pounding.

The sub-prime debacle has now largely been written off by most American, Canadian and European banks. But what lies ahead is worse. Consumer loans are now coming undone. Banks are witnessing a significant rise in delinquencies, which I expect to rise dramatically as the economy and employment trends worsen over the next several months.

In a bear market, a dead-cat bounce is typical market action following weeks of pervasive selling. More banks will fail this year, more write-downs will occur and the Fed can't reduce interest rates any further because of the highest inflation in 15 years.

Sell into market strength.

ERIC ROSEMAN, Investment Director

Why Buy U.S. Gold Eagles?

Recently, a reader contacted me about a recommendation I made in Austrian Money Secrets. In my book, I recommended purchasing U.S. gold eagles, rather than other gold bullion coins.

I stated that for U.S. persons, unlike other forms of gold, eagles are eligible for the reduced 15% tax rate on capital gains. However, that's only true if you're in the 15% tax bracket (e.g., married filing jointly with an adjusted gross income under US$63,700).

Gold eagles along with all other forms of gold bullion are considered "collectibles." If you've held them for over one year, your gains are taxed at your marginal tax bracket. For collectibles, the maximum rate is 28%, not 35%.

However, if you're concerned about the government confiscating gold (as FDR did back in 1933) you may want to purchase gold eagles instead of some other form of gold. The 1985 legislation that authorized producing the coins, now known as gold and silver Eagles, stipulates that these coins are to be considered "numismatic items."

They're not specifically exempted from any future government confiscation of gold. However, the terms of the emergency order President Franklin D. Roosevelt issued in 1933 that forced owners of privately owned gold to sell their holdings to the government specifically exempted "gold coins having recognized special value to collectors of rare and unusual coins."

I don't think another gold confiscation is particularly likely, mainly because the takings would be pretty slim. If the federal government gets desperate enough to begin confiscating property under some emergency decree, it would likely start with assets that are easy to identify and with a much greater value. That includes real estate, stocks, pension funds, etc.

However, if you do believe a confiscation could happen, then you should consider you purchasing the only coins specifically defined in U.S. law as "numismatic."

MARK NESTMANN,
Privacy Expert & President of The Nestmann Group
www.nestmann.com

P.S. Not interested in Gold Eagles, but still want to buy gold? My colleague, Eric Roseman just wrote a special report with all his favorite gold and silver plays. Now you can order your own copy.

Silent Wealth Killer Strikes Again...

Inflation is rising at the fastest pace in 26 years.

Every dollar and every stock is worth less in real terms that it was the day before.

But one little-known U.S. currency is helping investors put a halt to the hemorrhaging dollar - while lining up potential gains of 341%.

To learn more about it, click here.