Kenneth has always contended that the Consumer Price Index (CPI), is a faulty measure of inflation. Incidentally, the CPI is what the price of living adjustment for Social Security Income (SSI) is linked to. In the event you believe that your SSI is not maintaining pace with the rising cost of living, you are correct. What is frustrating is that oftentimes when SSI is adjusted upwards because of the CPI, there's generally a corresponding increase within the Medicare component B premium. One of the shortfalls from the CPI is the fact that it excludes two of the biggest costs that we face these days: power and meals. We all know that the cost for energy and food have increased significantly.
Many people are concerned about inflation and also the dollar loosing worth over time. The good news is the fact that you will find inflation linked securities that really profit in the improve in inflation. Once again nevertheless, this profit is tied to an increase in inflation as measured by the CPI.
With a long term schedule, Kenneth feels that this nation might find a lot higher inflation then the 3% that we've noticed for a lot of years. Many seniors remember the early 1980s when we had double digit inflation. As a result of the Federal Reserves intervention, Ken believes that we'll see inflation stay low through 2016. Component of this really is because of a Fed target inflation rate of 2% and to the reality that the Fed will keep the overnight lending rate to much less then 2%. Consequently, we'll see the bond marketplace continue to stagnate and equities should continue to complete well (especially when the Fed continues their bond buying program).
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