I sat down with my financial advisor the other day and calculated the ideal amount that I would need to save for retirement. I determined that me and my wife would like to have between $5,000-$6,000 per month for retirement.
Amazingly, my advisor told me that due to inflation, at 65 years old I would need $20,000 per month to have the same buying power.
I had to pause and clarify that what he was saying was accurate. How could that be possible?
His projections were correct –with inflation at a predictable 3%, I would need 4 times the dollar amount to have the same buying power at retirement! And that is if all goes as expected.
Disclaimer: I am not a monetary expert or financial guru. I have not gone to Harvard Business School or Columbia U. for a doctorate in Macroeconomics. I will not mislead you into believing that I possess the ultimate understanding of the effects of monetary policy or how inflation affects our economic prosperity.
What I can offer is some very logical and reasonable points regarding how inflation works and the devastation that results when the U.S. government continues to flood our markets with 56 Billion dollars per month. This incredible practice called ‘quantitative easing’, allows the government to create money out of thin air by buying securities, treasuries, or bonds and crediting it to member banks- or by just printing it.
Abracadabra! More money!
Forbes recently stated in an article, “Quantitative easing, by its very name, involves the corruption of money’s sole purpose as a stable medium of exchange. “
The causes of inflation are complex, according to many economic experts. However, inflation is a very basic principle, which can be explained with the concept of supply and demand. If you follow the logic of supply and demand you’ll find: If there is more money in circulation, inevitably, the prices for goods /services will be higher.
As I stated before, I’m not an economist; however, I do possess some sense of morality. I find it rather immoral to create money from thin air when you don’t have enough to pay your bills or for any other reason. I also find it immoral for our government to accumulate debt without any real intention of paying it back.
This has been the habitual practice of the U.S. government when purchasing securities, bonds, or treasuries to add to the money circulation, which has doubled our national debt since 2009.
If you glance back into the history books, all economic catastrophes have been caused largely by hyperinflation. Venezuela, for example, had an estimated inflation rate of 741%, which has resulted in economic devastation and turmoil. Germany’s inflation rates after World War I resulted in economic turmoil and the political climate to allow Hitler to spearhead the National Socialist Revolution and gain power.
The point of all this is that we should pressure our government to take a long hard look at our monetary policy and what we can do to minimize the effects of inflation.
Perhaps there is a looming crisis, which will drive up prices to unprecedented levels, perhaps not. Regardless, this is an ongoing issue which should hold the public’s attention and encourage some pushback to the ‘quantitative easing’ of the Federal Reserve.
Jason Allinder is a contributing writer for The Bradlo. Any views expressed by contributors should not be interpreted as the view of The Bradlo.