Inflation was up 4.1% last year. Why should this matter to us?
Here is why. My mom & Nick and Jo & Don. Now that they are all retired and living on savings or pensions (I don't know which or how much and it's none of my beeswax) they have a steady income stream.
Let's say they started last year with $10,000 in savings. They got 3% interest. They end the year with $10,300 ($10,000 + interest). But that $10,300 only buys $9,890 worth of stuff. This might seem pretty esoteric - I grant you.
But if inflation accelerates then they will be broke in a few years . And they they will try to move in with me - and that isn't esoteric at all! I like them all, but I only have a 1 bedroom (you know - if inflation continues).
So why is inflation high? the price of energy.
Why is energy getting more expensive? because it is priced in dollars, and the value of dollars is falling in relation to the crap sheiks like to buy (Mercedes, Tag watches, houses in Monaco- all priced in Euro's). So... in order to buy the same amount of crap, the sheiks need more dollars.
Why is the dollar falling? because the government spends a shitload more than it earns. They can print money or borrow to make up the difference (unlike you and me). But if they print / borrow extra money there are more dollars chasing the same amount of crap.
Let's say there were 100 Million Dollars chasing 100Million Euros of stuff. But the US government has a deficit of 50 Million Dollars. It prints an extra 50 Million Dollars. Now there are 150 Million Dollars chasing 100 Million Euros of stuff so the Euro is worth $1.50 instead of $1.00. Ta-da!! Inflation
There seems to be 4 ways out of this.
One way would be to stop pouring money down the rat hole of Iraq.
One way is to raise taxes to pay for everything we provide in the states and blow up in Iraq.
One way is to have the dollar drop in value and we all consume less (recession).
One way is to print more money, have the dollar drop in value and just let inflation ruin our savings.
Now.. on to my question: Why has our President - who has a MBA from YALE - chosen the method that makes my relatives move in with me?! (not that it is all about me - of course).