In recent statements made by federal reserve chairmen, “Helicoptor Ben” said he would continue to goose the economy with the $600 billion Treasury bond buying program. Despite reports that the program would be cut short due to a strengthening economy we know this simply isn’t possible. The federal reserve must raise the debt ceiling and debase the currency in order to bailout state budget deficits, pension funds, social security and bad debt held by banks and consumers.

“If output is too low and unemployment is too high, then that would be a situation that requires more stimulus.” – Ben Bernanke

Not only do we believe that QE2 will be carried out in its entirety, but we also believe QE3 is already on the table. Rising interest rates on our massive debt load would be catastrophic, as would a failure to raise the debt ceiling for the US government. All of the liquidity injections and bond purchases are destroying our currency. Paying attention to the price of gold and the chart below will help you understand how close we are to piercing through key technical levels.

One of the best aspects of the book is its ability to explain complex economic principles in a simplistic fashion. This allows the book to communicate to a wide range of audiences – especially novice investors. This allegorical tale sheds light on topics that are so frequently discussed but so poorly understood.

From the Back Cover of the Book

• Why governments can spend without ever seeming to run out of money?
• Why some countries are rich while others are poor?
• Whether spending or saving is the best cure for a bad economy?
• Where inflation comes from?
• Why it’s so hard to catch a fish with your bare hands?

Coming off his popular book, Crash Proof 2.0, Schiff compares the United States economy to a small island economy. He describes how an economy that was once on top of the world, is now burdened with unfunded liabilities and massive deficits. Moreover, he presents a case for the United States no longer being the engine of the global economy, but the caboose.

“The conventional wisdom is that foreign economies depend on Americans to buy their exports. This is false. The global expansion of the past decade has created new demand everywhere, and people and businesses in all corners of the world are spending. However, in America, spending has largely been achieved through a massive vendor financing scheme. Foreign supplied credit has allowed Americans to continue buying, even while American income and savings have dropped. As this credit goes bad, the losses are landing on the bottom lines of foreign financial firms. In other words, the global pain is not resulting from American contraction but from having financed our preceding expansion. This is a critical distinction few have been able to make, and it is vital to appreciating the decoupling that has already occurred beneath the surface.”

Lower fuel costs at the pump have also eased concerns over discretionary income among McDonald’s patrons. Although the overall global economy has been weak, the company has been fairly resilient. This is in part due to a “trade down” in dining choices by consumers. When people can no longer afford expensive food they trade down to McDonald’s low priced menu offerings. This point was exemplified in 2008 when McDonald’s took away large market share from rival Starbucks. Consequently, Starbucks stock price got hammered while McDonald’s was one of the few stocks ending the year with gains.

“McDonald’s continues to deliver a relevant restaurant experience that provides consumers with a broad range of quality menu choices, affordable prices and unmatched convenience. Our underlying business performance remains strong. “  Chief Executive Officer, Jim Skinner

In its most recent earnings report McDonald’s (MCD) grew worldwide same store sales by 4.30% . This was while revenues dipped to $5.08 billion in 2009 from $5.61 billion the prior year. Now you might be wondering how same store sales can increase while total revenue decreases. Currency exchange rates play a major role in this phenomenon. Since McDonald’s is a United States based company, they must report financial figures in US Dollars. When the dollar increases, revenue earned in foreign countries is worth less when exchanged into dollars.

“In constant currencies, first quarter results reflect higher revenues, operating income and earnings per share over the prior year.” Chief Executive Officer, Jim Skinner

With more than half of McDonald’s total revenue coming from outside the United States it is easy to see how a weaker dollar helps earnings. Revenue generated in foreign countries gets repatriated at a better rate of exchange. With the United States Federal Reserve lowering interest rates to add liquidity to the credit markets and banking system, the dollar is sure to depreciate in value. This is a great thing for companies like McDonald’s trying to grow globally. Now when McDonald’s repatriates money out of currencies like the Euro and Yuan they will get more dollars in return.

Everything isn’t completely golden at McDonald’s though. One major challenge the company faces is integrating menu options over culturally diverse nations. Menu offerings from the United States don’t necessarily work in other parts of the world. McDonald’s will have to cater overseas restaurants to local tastes, integrating menu options to suit unique cultures.

McDonald’s stock offers a compelling, yet risk averse way to play the global growth story. While the United States has over 300 million people countries like China, Brazil and Japan have several billion. If McDonald’s can execute its growth strategy overseas like it did in the United States early on, you could see a major rise in stock price. Although this growth strategy may take five or more years to execute, the reliable 3.50% dividend allows you to get paid for waiting.

The stock price (MCD) has made a run off a lower support trend-line (see chart) and the 100-day moving average. Starting a position in the $53.00-$56.00 price range seems to be a good entry. A depreciating dollar, global expansion and lowered fuel costs are all reasons to be excited about McDonald’s. Furthermore, they have proven they can successfully operate in the worst economic environment in recent history. Although McDonald’s (MCD) isn’t the sexiest of stocks, we believe it will reward patient shareholders handsomely.

Disclosure: Author holds a long position in McDonald’s (MCD) common stock.