While the U.S. has technically been out of recession for the last four years, most people would be hard pressed to see any improvement.  Unemployment numbers have remained high.  And more and more people are dropping out of the workforce.  Because of the way the government accounts for labor participation, the actual unemployment numbers should be much higher.

Of course the scenes that were so common in the Great Depression of the 1930′s are nowhere to be seen.  Soup lines are a thing of the past.  Instead of having to wait in line for food, we simply direct deposit food stamp money into individual bank accounts.  This creates the illusion that things are much better than they seem.

But for most middle class Americans, this is the most difficult time in recent memory.  While the stock market is setting new highs every single day, average wages are declining.  Additionally average hours per week are steadily declining as well.  This means that companies are slowly but surely cutting back on their employee’s salaries.

When this is added to the higher taxes associated with ObamaCare, people are making significantly less than they used to.

This doesn’t even take into account inflation.  While the government states that inflation is a tame 1.5%, anyone who has been to the grocery store in the last couple of years knows this to be complete fallacy.  Many staples such as milk are higher in price to the tune of 35%.  This is obviously not insignificant.

Many household items are increasing in price as well.  Room darkening shades are slowly creeping up in price.  So are things such as household cleaners, detergents, and other necessities.  In fact some prices are up more than 100%.

Some manufacturers have created some interesting tactics to deal with this.  A couple of years ago, while in the checkout line, I noticed the clerk mention that the orange juice carton I was buying was slightly smaller than what she remembered.  But the price was the same.  Turns out she was right.  Rather than raising the price, to which consumers are very sensitive, they made the container smaller.  I probably never would have noticed.  This practice is not uncommon.

Makeup is another area in which price increases have been significant.  The best under eye concealer that my wife has found recently increased in price by 15%.  This is not an insignificant increase on a product that costs $50.

And when things don’t seem like they could get any worse, just wait.  Because of the fiscal policies of the Federal Reserve, retirement savings are slowly being eroded as well.  As of right now, the Fed is creating upwards of $85 billion per month.  The definition of inflation is an increase in the money supply.  And that’s exactly what they’re doing.  In order for the government to service the massive debts they have created, they are creating more and more money out of thin air. All this has the effect of making every dollar you earn and own less valuable.

Many people are turning to hard assets such as gold, silver, and real estate in an attempt to protect themselves from this policy.  It’s probably a good idea for you too.

With pretty much everything in the financial world revolving around the action of the Federal Reserve and Ben Bernanke, how do investors find ways to actually get a decent return?

The Federal Reserve is currently dumping roughly $85 billion per month into monetizing our national debt.  The Fed’s balance sheet from these operations is roughly just over $1 trillion.  By constantly issuing debt, and then printing the money to purchase it, they are able to keep interest rates artificially low.

But this also has the effect of pushing ALL interest rates lower.  Recently junk bonds, the lowest quality and highest risk of all bonds, hit an all time record low yield.  That means that for debt that is basically considered worthless, you are now earning less than 6% per year.  And of course this trend will continue for as long as the Fed can manage to hide inflation.

Their stated target rate of inflation is 2%.  Of course, if you’ve been to a restaurant or grocery store in the last 2 years, you know that actual inflation is well beyond 2%.  But our country has become so conditioned to believing everything the government says, and that the mainstream media then repeats, that the average citizen sometimes misses the connection between the two.

So what is actually happening to the $85 billion per month that the Fed is creating out of thin air?  If you’ve been watching the stock market’s meteoric rise, then you can make a pretty good guess.  This money gets pushed to the banks.  The banks of course want to make money with this capital, so they put it in whatever asset class they think will return the highest yield.  And right now that is stocks.

So essentially the Fed is printing money, burdening every citizen in this country with additional debt, and then handing this money over to the banks.  This may seem somewhat crazy since the banks were the ones that got us into the massive mess of 2007-2008 and which continues today, but that is the reality.  Due to the rules governing banks, they can then purchase assets with these funds, and then use these assets as collateral to purchase more assets.  This essentially allows them to leverage taxpayer funds on riskier and riskier assets.

This may sound absolutely crazy, and for the most part it is.  But that is the reality of the situation.  As an investor looking to make a return on your money, reality is all you can deal with.  So what’s the best way to get any kind of return on your money?  10 year CD’s return perhaps slightly more than 1%.  The 10 year bond is currently 1.91%, slightly lower than the Fed’s supposed target level of inflation.  So you’re essentially losing money by buying these bonds.

That leaves corporate bonds.  A bond from a company like Microsoft might offer as much as 3.5%.  All of these are historically low rates of return.  When actual inflation is taken into account, they’re downright pathetic.

Precious metals are another alternative.  While gold and silver have cooled off since they’re big gains of 2011, they are historically a great hedge against inflation.  Precious metals can take the form of coins, bars, and even jewelry such as pear cut engagement rings.

And if what is happening in Cyprus is any indication, having hard assets in gold and silver in your possession could be the best thing you could ask for.  The fact that every central bank in the world is now in the process of devaluing their currencies to pay off their exploding debt levels only makes precious metals more attractive.

This may not be welcome news to those with expectations of the average 10% return for investors in the U.S. stock market.  And it will certainly make saving for retirement more difficult for everyone.  But those are the facts.  Of course, the implementation of ObamaCare is only going to make things worse.  But don’t even get me started on that.  (For more on ObamaCare, check out the X Ray Technician Salary Guide)

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