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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75633  
Subject: Re: O.T: Declining Standard of Living? Date: 2/17/2011 2:17 PM
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>> The real risk is that the U.S. faces a poverty cycle rather than an inflationary one. <<

Actually, I think we're facing what some call "biflation" -- the worst of both worlds where discretionary items (and wages) have a very low inflation rate (possibly negative) while the inflation rate of 'essentials' like food, energy, health care and the like remain fairly high.

How many of you are paying the same for your food, health care, electric bill and gasoline as you were a year or two ago? Yet the government's contrived CPI results would lead you to believe there is no inflation. Maybe for someone buying mostly electronic gadgets and cruise vacations, but not someone mostly buying the essentials of modern life.

For ordinary folks, 'biflation' has the same effect as inflation, but without the wage increases to keep up with it.

In reality, the government is best served by a moderately high rate of inflation that can be masked by a low reported inflation rate. They can inflate their debt away without handing out large COLAs. Seems like that's what is happening today.

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