How Inflation Really Works to Make You Poorer
More About the Government’s Shell Game!
The inflation numbers for September are in and they are running red hot! They also provide a perfect opportunity to shine a light on the government’s inflation and cost of living shell game.
Consumer prices (CPI) are up 8.2 percent from a year earlier. Wholesale prices (PPI) are up 8.5 percent. Meanwhile, gas prices have been rising this month so it is likely that next month’s consumer price index will be even higher.
Groceries were up 13 percent year-over-year.
The Social Security cost of living increase for 2023 will be 8.7 percent. But recipients have been paying these higher prices for a year. The benefits increase lags what people have been spending just to stay even. For example, at the beginning of 2022, beneficiaries received a 5.9 percent cost of living increase. That number was calculated from a price increased in 2021, but it was inadequate for the sharply higher prices in 2022 as inflation raged much higher through the year.
Stated differently, retirees pay higher prices all along until those prices are used to calculate a benefit increase that will be made months from now. So, the cost of living outruns the increases.
Oh, and by the way, our Phoenix-metro clients will remember that their prices have risen 13 percent. So, they are slipping even further behind. And that is without counting the brutal hit that many have suffered with stocks and bonds in their savings or retirement accounts.
For those who take a long-term view of wealth preservation and know the history of inflationary periods throughout history, gold makes perfect sense!