How Uncle Sam Inflates Away Your Life

The comments above & below is an edited and abridged synopsis of an article by M.N. Gordon

As more money is issued relative to the output of goods and services in an economy, it is watered down and loses value. Price inflation is not rising prices; it’s the loss of purchasing power resulting from an inflating money supply.

In its October Consumer Price Index Report, the Bureau of Labor Statistics said that prices are increasing at an annual rate of 2%. Anyone living and working in the real world knows they are rising much faster.

ShadowStats.com calculates the CPI using 1980s methods. By their calculations, it is increasing at an annual rate of 9.8%. Many would agree that price increases are far greater than 2% per year.

If price inflation is 3% per year, the purchasing power of cash drops by 30% over a 12-year period. So if you retire at 62, you’ll see the purchasing power of each dollar you own decline to $0.70 by age 74. At 86, your purchasing power will be halved.

In short, 3% annual price inflation reduces each dollar to just $0.50 in less than 25 years, a significant loss. Generating investment income to overcome this loss is a tall order.

Your life savings is stored time you traded a portion of your life to earn. It’s a measure of your financial discipline and ability to save and invest over time in lieu of supersized spending.

When your life savings are stolen via inflation tax, something more is happening. Not only are you being robbed of your money, you’re being robbed of your life; it’s simply inflated away.

With income taxes, social security, disability, Medicare, capital gains taxes, health insurance costs, subsidizing luxury electric vehicles and a vast array of fees and exactions, and it’s a miracle anyone has any money left over at all. What money you manage to hold onto will be inflated away long before you need it most.