Health fund members have discovered that the best way to avoid means-testing of the nation’s $5 billion private health insurance rebate is to prepay their premiums. After the means test on private health fund subsidies was approved by the Senate, almost 2 and a half million health fund members will start paying up to $1300 more each year for health cover starting July 1. Health insurers all across Australia braced for a huge increase of members choosing to prepay premiums after the Australian Taxation Office sent out letters warning consumers about the changes. … [Read more...]
How Inflation Can Reduce Your Annuity Income (and what you can do about it)
Even though this is written from a UK perspective, it holds true for the rest of the world, too. ~ editor Annuity Income and Inflation Inflation as defined by Wikipedia is "an average index used to measure the rise in the general level of prices of goods and services in an economy over a period of time" which in layman's terms means the average amount by which goods and services are increasing. Monetarism an as economic theory identifies keeping inflation low as the main goal in achieving sustained economic growth, as opposed to reducing unemployment. The reason for this is that whilst unemployment is a burden on the people without jobs, high inflation (it is argued) impacts the entire … [Read more...]
Inflation Definitions
Inflation Adjusted Prices What is the inflation adjusted price of common commodities? Historical Oil Prices Chart - This Chart compares Monthly Average Oil Prices with their Inflation Adjusted Oil Price. Historical Crude Oil Prices (Table) - The first table shows Annual Average Crude Oil Prices from 1946 to the present. Prices are adjusted for Inflation using the Consumer Price Index (CPI-U) as presented by the Bureau of Labor Statistics Inflation Adjusted Electricity Prices - Residential electricity prices in the U.S. have risen from an average of 7.83 cents per kilowatthour in 1990 to an average of 11.44 cents per kwh in 2010. This is a 46% increase in 20 years and sounds like a … [Read more...]
Will Bernanke Save the Equity Markets?
Equity Markets get no stimulus How far is the Fed from reaching the bottom of its ammunition box? Well, both Mario Draghi and Ben Bernanke said no to yet more monetary stimulus last week. Wall Street unsurprisingly was disappointed. Wall Street expected more stimulus, as institutional investors are analyzing monetary policy from their own perspective rather than the central bank's viewpoint – understandable, but a big mistake. Wall Street's Conundrum: with the S&P 500 up less than 7% in 2012, the year is almost over, and the investment firms have little to show for it. This 7% return might be OK in calmer markets, but instead investors have been taken on a rollercoaster … [Read more...]
Housing Prices and Inflation
Average Housing Prices- By Jared Diamond The great recession of 2008 has been a source of enormous anxiety in the financial world. The American economy survived a total meltdown, but just barely. As American society struggles to recover, a major beast looms on the horizon: inflation. There are already increases at the gas station and the possibility of a poor harvest could result in skyrocketing food prices. The housing industry has been buffeted by the financial whirlwinds and is only now beginning to recover from years of deflated prices. Even though average housing prices have dropped along with sales, there still is a question about whether or not housing will experience a near … [Read more...]
The Effects of Inflation on Life Insurance
How Life Insurance Works Premiums on term life insurance are usually paid (monthly, quarterly or annually) for between 10 and 30 years, depending on the particular policy you've chosen. One of the ways that life insurance works is that you pay a fixed rate for the length of the policy and the value of the insurance does not change. Whether you die tomorrow or 20 years from now, your beneficiaries would still receive the same dollar amount of insurance settlement. Therefore, if you have a $500,000 term life insurance policy, as long as the premiums are paid it provides $500,000 worth of coverage from the day you buy it until the day the term ends or it is paid out. The Effects of Inflation … [Read more...]
What Is Fiat Currency?
Fiat currency is a term that is used to describe a currency which is created by "fiat" or "arbitrary order or decree" of the government. It is not created by the free market or backed by anything like gold, silver or real estate. It is essentially an "IOU- nothing". A lot of people do not realize that every currency in the world today is considered to be a fiat currency. (Although the Chinese may be working on creating a gold backed currency and several OPEC countries have considered it as well). The US dollar, the euro, the Great Britain pound, the Japanese Yen, and the Australian dollar are all fiat currencies, to name a few. Since everyone uses this type of currency, why is it such a big … [Read more...]
What is Hyperinflation?
Hyperinflation Hyperinflation is an extremely rapid period of inflation, usually caused by a rapid increase in the money supply. Usually due to unrestrained printing of fiat currency. See: How Does Gold Fare During Hyperinflation? Unfortunately, there is no exact percentage where inflation turns from "ordinary Inflation" to "Hyperinflation". So you can't say for instance that 9.9% inflation is ordinary but 10% inflation is hyperinflation. Typically in hyperinflation it just gets progressively worse. Every month the inflation rate just gets higher and higher until the curve goes hyperbolic. Classic Hyperinflation Classic examples are the Hyperinflation of Weimar Germany and the more … [Read more...]
How the Dollar Affects Gold Prices
Interview with Jim Puplava, by Jeff Clark, Casey Research Jim Puplava has robust convictions….The CEO of Financial Sense News Hour, Jim is a man you should listen to carefully if gold factors in your portfolio or if you are thinking about adding gold anytime soon. In this interview, Jim talks about how the dollar affects gold prices. He discusses whether we are moving into a phase of deflation or inflation and gives his views on what exactly that will mean to gold investors. He discusses the likely impact of inflationary or deflationary forces, which one he believes will win out, and the effect it will have on our economy. Finally, he makes a very interesting prediction. Of course, … [Read more...]
The US Economy Puzzle- Is the U.S. Really Capitalist?
Is the United States really a "free market" economy and the bastion of "capitalism" as we claim? Or is it a Bureaucratic mess? Is it a "command economy"? Obviously we haven't reached the depths of socialism or communism that China and Russia reached before their fall and reemergence as capitalists but none-the-less our economy is not as free as it once was. There is burdensome regulations that prevent competition, political cronyism, corruption, and as David Galland contends in the following article "Europe and the economy of the United States is – and has been for decades – increasingly under the control of central planners at the expense of the free market." ~ Tim McMahon, editor The … [Read more...]
