Unsurpassed inflationary surge. Prices out of control.

Unsurpassed inflationary surge. Prices out of control.

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We are seeing an unsurpassed inflationary surge. Prices are out of control.The Fed is obviously concerned over the current inflation reports. Americans everywhere are seeing growing prices for gas, food, housing; basically all human necessities.

As inflation rises, seemingly out of control, the Federal Reserve is using its only tool…raising interest rates in hopes to return the economy to its natural state. So taking out a loan just got more expensive as well, but will that help return us to a place of stability?

Terrifyingly, The numbers may be much worse than we are lead to believe. This is a serious cause for concern for people who are struggling to survive before prices got out of control. The same Federal Reserve that promised that inflation was transitory, only to take back that same claim a year later, could be in over its head. Inflation numbers may be well above any point in US history.

Inflation per the Federal Reserve

Federal Reserve chairman, Jerome Powell is understandably very concerned about the recent inflation reports. The Bureau of Labor Statistics reports that inflation (measured with a method called the Consumer Price Index; or CPI for short) is at a staggering 7.9%. In basic human terms, if you didn’t receive a 7.9% raise last year, you effectively got a pay decrease.

Everything around you is getting more expensive and your pay is struggling to keep up. DC Poc outlines the damage caused by inflation in his article Why a 6.2% COLA is not good news for the average person stating “Wages often fall behind inflation, which means the working class could take the brunt of this. If you don’t receive a raise in 2021 or early 2022, you have effectively lost money. “

Wages often fall behind inflation, which means the working class could take the brunt of this. If you don’t receive a raise in 2021 or early 2022, you have effectively lost money. 

DC Poc

Jerome Powell vows to return stabilize the market by raising interest rates, “We will take the necessary steps to ensure a return to price stability…and if we determine that we need to tighten beyond common measures of neutral and into a more restrictive stance, we will do that as well.”

For people living pay check to pay check, which is about 64% of Americans or for people living on a fixed income, this is extremely disparaging news.

Unsurpassed inflationary surge. Prices are out of control, inflation is much worse than you think

Articles much like this one by CNN, This is the worst inflation in nearly 40 years. But it was so much worse back then, suggest that todays economy is troublesome but not nearly as bad as before the 1980s.

However, they fail to mention that we have totally changed the way we measure price increases since the 1980s. Shadow Government Statistics, an institute with the purpose of attempting to track and report on the differences between government reports and real data, argues that the government has drastically changed the way it reports on economic statistics since the 1980s.

In the last 30 years, a growing gap has been obvious between government reporting of inflation, as measured by the consumer price index (CPI), and the perceptions of actual inflation held by the general public.

Shadow Government Statistics

In a recent article, Shadow Government Statistics reports that real inflation has reached points higher than anytime during the peaks of the 1980s.

This would mean that the poor, middle-class, and fixed-income populations are being affected much more than is being reported. If Jerome Powell is concerned about a 7.9% inflation number, imagine when he discovers the real number is upwards of 15%, almost double.

It’s more than likely that Jerome Powell and Federal Reserve already know this to be the case. It could explain why he talking about a “more restrictive stance.”

Is there anything we can do?

While we aren’t licensed financial advisors, we do hope this information nudges in the direction of seeking more data for your future.

Our suggestion would be to invest now and invest often. As the economy begins to struggle with these hair-raising inflation numbers, every thing is about to go on sale. It’s tough to buy and invest when the market is down because the feeling is that it will continue to fall. However, the people who can continue to invest now will reap the benefits of long term gain on the other side of this inflationary bubble.

There are two major timeframes in the market, 1. everything is going great, 2. everything is on sale.

AJ Sheff

Here are the steps that will see you through this storm:

  1. Reduce your lifestyle as much as possible
  2. Seek financial advice and diversify
  3. Invest as much as your budget will allow
  4. Find extra sources of income to invest
  5. DO NOT SAVE MONEY, the dollar is losing value at a rate faster than anytime in US history
  6. Strap in for the long haul

It’s going to be a bumpy road ahead, but you found the right place to help guide you along the path. Jerome Powell can only attempt to correct the numbers as he sees them. It’s up to us to setup, protect, and actively manage our own futures.

Author

  • After attempting college, AJ joined the Marine Corps. When he left active duty, he worked in retail for a few years before returning to college. Several years later AJ was awarded his Bachelor in Science in Computer Science. Soon after, AJ began working in the tech industry as a Junior Developer. AJ continues to work in tech, however, he began to cultivate a passion for personal finance. For AJ, the concepts began to click and he felt a need to help others understand how to be financially free. If AJ can do it, any Idiot can.