Consumer Price Index
After our government pumped over $100 Trillion into the economy, it recently announced that the Consumer Price Index jumped 6.5% from this time one year ago. The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. Typically, when people talk about “the inflation rate”, it is the change in the CPI that they are talking about.
Not only have we seen increasing inflation for several months, but inflation will also continue to grow as the Federal Reserve Board still has not ended the Niagara Falls of money printing and force-feeding it into the economy.
In addition, the increased corporation tax rate will translate to higher consumer prices for everyone. Milton Friedman, renowned economics professor and Nobel Prize winner, was right when he said, “Inflation is the cruelest tax.” And that’s what the FED’s money pumping policy has given us.
Inflation will make saving more difficult and retirement an afterthought for many people. UNLESS you have:
- Figured out a way to make inflation work for you.
- Started using a method that frees you from the burden of income tax.
For those of us with an IRA account or a Retirement Plan from a former employer, there is a way to accomplish both of the above.
- If you have not done so yet, convert your Traditional IRA or old 401(k) to a Roth account.
- Use the Roth account funds to invest in hard assets or assets that ride on top of the wave of inflation. Such as the assets IRA Club allows in a Self Directed IRA, HSA, or Solo 401(k) accounts.
Of course, it’s up to everyone how they will proceed. Some will act and stay ahead of inflation. Most will wait to see next month’s Consumers Price Index number and the next month, and on and on because they aren’t sure inflation is real.
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