Inflation does more than push up prices at the store — it also makes borrowing more expensive because banks need to raise interest rates to cover the loss of purchasing power of the money they are loaning out, since they are getting repaid with "cheaper dollars". When prices rise faster than wages, household money shortages lead to mounting debt. And, unless you have a fixed interest rate lown, your monthly payments on loans and credit cards will climb higher each month. With these rising costs, you need a clear plan for tackling debt. The Impact of Inflation on Debt When inflation rises, it affects your debts in two different ways. Rising prices change how much your debt really costs. … [Read more...]
Would DOGE Dividend Checks Stoke Inflation?
With all the potential savings DOGE is uncovering some people are suggesting that some of those saving be rebated to taxpayers. Others are saying that doing that would be inflationary in the same way that Biden's stimulus checks were. In this video, Bob Murphy, Senior Fellow of the Mises Institute looks at the implications of this possible rebate. https://youtu.be/NltFVYom1lc?si=knQzinKc45MuuWv4&t=101 Rothbard's Making Economic Sense Bob's Understanding Money Mechanics … [Read more...]
The Correlation Between Job Market Turnover and Inflation
Inflation, the rate at which the general level of prices for goods and services rises, erodes purchasing power and poses significant challenges for economies. During periods of high inflation, individuals face increased living costs, prompting many to reassess their employment situations. Further, inflation influences job market turnover rates, as workers seek better opportunities to maintain their financial stability. We will explore the correlation between rising prices and employee mobility, the psychological factors driving job changes during inflationary periods, and the implications for employers navigating this turbulent landscape. By understanding these dynamics, we can gain … [Read more...]
How Inflation Destroys Civilization
The following article by Jörg Guido Hűlsmann was originally published in 2004. Dr. Hűlsmann is a professor of economics at the University of Angers, where he directs the Master in Law and Finance and codirects the double bachelor program in Law and Economics. He teaches classes on macroeconomics, money, banking, and finance. He is the author of Abundance, Generosity, and the State (2023), Krise der Inflationskultur (2013), The Ethics of Money Production (2008), and Mises: The Last Knight of Liberalism (2007). His books and articles have been translated into twenty languages. His current research focuses on the political economy of financial markets, as well as on the theory of money … [Read more...]
Inflation and Retirees
Inflation presents significant financial challenges for retirees living on fixed incomes, as rising costs strain budgets. Although Social Security has a Cost of Living Adjustment (COLA) built in, Social Security was never meant to be your only source of income after retirement, but rather it was intended to supplement your other retirement income. This article will explore key areas most affected by inflation, such as food, energy, healthcare, and discretionary spending, and provide practical tips to help you adapt. For those planning to retire in 2024 or the next few years, identifying and managing everyday expenses is more important than ever to maintain financial stability. #1 Keeping … [Read more...]
Inflation Causes Inequality
By Lenart Wagemans Many claim the problem with fractional reserve banking is that it loans money into existence. It does, but under normal circumstances, the money created by commercial banks disappears when loans are repaid or defaulted on, which therefore doesn’t create a permanent inflation of the money supply. Government intervention, however, converts temporary money into permanent money through bailouts like the Troubled Asset Relief Program. They purchase loans that would have been defaulted on, preventing the evaporation of credit. When banks hold loans that are at risk of default, they face having to write them off, which would remove this part of the money supply. Bailouts turn … [Read more...]
Navigating High Inflation: Should You Buy, Sell, or Hold Off on Real Estate?
It’s no secret that inflation is high nowadays. While the rate of inflation is significantly lower today than it was in 2022, it’s still sitting at about 3%; which is higher than the FED’s stated goal of 2%. Although, FED Chairman Jerome Powell has hinted that he now considers the range of 2% to 3% acceptable... so he might consider lowering interest rates. But currently, interest rates are considerably higher than they have been over the last decade, which causes higher costs for those interested in buying property. For homebuyers, real estate investors, and brokers inflation is lower than 2022’s record of 9.1% but it is still concerning. Inflation affects various aspects of the real … [Read more...]
If Trump Won the 2020 Election Would Inflation Be Lower?
I recently saw this question on Quora and thought it was interesting. It made me think. Does the President control inflation? My first thought was that inflation is controlled by the FED printing money or perhaps by Congress spending money, but how much difference does the President make? Then I read the following response by Valerie Rhea who graciously gave me permission to reprint her response here. Valerie is a Thirty-something PhD economist, and former military pilot, with a law degree. So, she has an interesting background and is well qualified to answer this question. Here is her response. ~ Tim McMahon, editor Inflation is always and everywhere a monetary issue" If … [Read more...]
How Social Security Tax and Inflation Affect Couples’ Retirement
Planning for retirement is an essential part of couples' financial management. As life expectancy increases and healthcare costs rise, ensuring that you have sufficient funds to maintain your lifestyle during retirement has become more critical than ever. Two major factors that can significantly impact retirement income are Social Security tax and inflation. Many people don't realize that Social Security income can be taxable, (which doesn't seem right since Social Security was a "tax" from your income to start with). Understanding how these elements affect your financial future can help you make more informed decisions and better prepare for the years ahead. What is Social Security … [Read more...]
How Inflation Is Reshaping the Job Market for New Entrants
As you enter the workforce, there are myriad challenges and strategies to navigate — particularly around finding a job in the first place. Inflation rates only complicate this intricate dance you are doing to land a career as a recent graduate or new professional on the scene. Whether you’re sure or unsure about your career path, there are plenty of opportunities to be found in the current job market. Although the rate of rising prices changes things a bit, there are ways to be savvy about the system and land the job of your dreams. The Current State of Inflation and Wages There always seems to be a debate over whether or not wages are keeping up with inflation. However, it’s not always a … [Read more...]
