
Originally Posted by
rkd24
Do you rely on fixed income for retirement and are hurt by rising prices? Tell your congressional representatives. Inflation is caused by the creation of excess money by the Federal Reserve Bank. Since the Federal Reserve receives its mandates from Congress, Congress can stop inflation.
The Federal Reserve thinks that an inflation rate of 2% per year is okay. However, at that inflation rate, a pension payment that a retiree starts receiving at age 65 will suffer a 33% purchasing power loss over his/her life expectancy (20 years). The inflation rate needs to be under 0.25% per year, since at 0.25%, the loss of purchasing power is 5%.
Right now, the Federal Reserve is creating enormous amounts of extra money to combat a severe recession and to rescue Wall Street financial firms, the very same firms that triggered the recession in the first place. As a result, interest rates are abnormally low, reducing interest income to practically nothing while enabling banks to earn big profits. Our government is rescuing Wall Street at the expense of retirees. Retirees are being hit by low interest on their savings and reduced purchasing power, all at the same time.
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