FNC
Mike Norman
This week FOX News business contributor Mike Norman answers YOUR money questions. Ask FNC's business team your questions by e-mailing yourquestions@foxnews.com and check back each week. Plus, tune in to "The Cost of Freedom," Saturday starting at 10am ET.

Question: Is there a savings account that will pay good interest without locking up funds? Presently, our savings interest rate has dropped to .07 percent. Thank you. — Ed in Oregon

Mike Norman: Ed, try Capital One. They have a high yield savings account that pays 4 percent annually and you can transfer money directly to your checking account if needed.

Tune in this weekend to our Business Block, Saturday beginning at 10am ET, for more with Mike Norman and the entire FNC business team.

Question: Do you have what you consider to be top mutual funds to hold in my 401K? I have many low-performing 401K accounts. and I'm not sure if I should consolidate them or change to different mutual funds that have a higher return. I tried to look at the Morningstar website but there are so many funds to wade through. — Lina

Mike Norman: Lina, the best performing funds of today eventually become the underperformers of tomorrow and vice-versa. That's why you should have a long term time horizon and be patient and disicplined. I would advise you steer clear of mutual funds and their high fees and go instead with an exchange-traded fund like the Diamonds Trust Series I (DIA) or the iShares Dow Jones Select Dividend Index (DVY). In addition and for some diversification, add the iShares Lehman 1-3 year Treasury Bond fund (SHY), which has been an underperformer and is likely to rebound soon.

Question: My friends and I want to know your overall predictions of emerging markets overseas. They have been paying extremely well, (10 - 30% over the last 6 months); do you see this trend continuing? I know they can be fairly volatile. I would appreciate you addressing this. Thanks. — Steve

Mike Norman: Steve, in the past three years emerging markets have outperformed every other equity market sector by a huge amount. That being said, it is probably time for some cooling off. With protectionist sentiment on the rise in the U.S. and elsewhere, I'd stay away from the emerging markets for now and go with the "Dogs of the Dow."

Question: Is it true that as long as the government is printing new money, the market will keep going up? — Robert (Michigan)

Mike Norman: Robert, I'm glad you asked that question, but first let's clear up some common misconceptions. We often hear it said that the government is "printing money." Technically, this is not entirely accurate. In a large, sophisticated economy like the U.S., very little actual printing of money goes on. Only the amount demanded by individuals for "wallet cash" or what is needed by banks for check cashing determines how much actually gets printed and minted.

In contrast, the vast majority of money in our economy is bank credit, which is created in the banking system when loans are made. Loan demand can be highly independent of what the Treasury does or, for that matter, what the Federal Reserve does. But the Fed can have a strong influence on the cost of credit and therefore can manipulate lending trends.

Your question about the printing of money by government refers to deficit spending, which is spending in excess of what the government collects in taxes. The Treasury almost always removes that excess spending through the sale of its own securities. However, if too little of that is done, the economy will end up receiving too much liquidity, and that excess liquidity could go into the stock market or it could go into gold, real estate or some other asset if investors believed that it was leading to inflation.

Mike Norman is a FOX News business contributor and the founder and publisher of the Economic Contrarian Update.