By Gordon Philips
Here is a quick lesson about your investments and the necessity of overcoming inflation as JOB #1.
First, inflation is not a nice word. It's a bad word. A very bad word.
When writing of an unpleasant outcome I could say that "the s**t hit the fan."
Or I could say that "the feces hit the rotary airfoil" which is a polite and euphemistic way of saying the same thing.
Likewise I could say that we're experiencing some "mild inflation" which makes it sound a bit like a pleasant weather forecast.
ANNOUNCER: "There's a financial cold front moving in tomorrow, so we should see a little light inflation."
But that's not what inflation is at all.
Inflation is not the gracious term you hear bandied about at financial conferences.
Inflation is dangerous. Inflation is like cancer for your money.
Why? Because inflation eats away at your life savings, a little bit more each day, like a thief in the night.
Hold an ice cube in the palm of your hand and watch it slowly melt away. Now you see it, now you don't.
From now on, every time you hear the world "inflation" you must automatically translate it in your mind to PURCHASING POWER DESTRUCTION.
And purchasing power destruction is bad. Very bad. Let me show you what I mean.
On January 2nd of this year (2018) the Dow Jones Industrial Average (DJIA) closed at 24,824.01.
This week, as I write, nearly a year later, the DJIA closed at 24,285.95
Meaning that the "DOW" is down 538.06 for the year, or about 2%.
But wait, it gets worse.
True inflation is NOT running at around 2% per year as the government would have you believe.
The REAL rate of inflation is actually bubbling along at about 6%.
For reference see Shadow Stats.
Now I'm sure we wouldn't want to think that the nice people in the government would want to fib about something this big and this important.
Except that every 1% rise in the cost of living that is admitted to translates into BILLIONS of extra dollars the government must pay out in COLA (Cost Of Living Increases) to everyone receiving Social Security, Medicare, Medicaid, government pensions, military pensions, the list goes on and on.
So they pretend that inflation is much lower than it actually is.
To help convince everyone that this is true, they remove food and energy from the calculation of the Consumer Price Index (CPI).
Please try to suppress your guffaws.
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