Sometimes a subject comes up and you have to picture yourself sitting around a pot bellied stove at the old hardware store with your favorite hot beverage on a very cold day.
One such subject popped up today.
What is inflation? The classic answer is the Federal Reserve increasing the money supply.
I'm sure that any economist has a very academic answer to this question but remember these are the people that predict unemployment rates before the report is given and are wrong, predict housing starts before the report is out and are wrong, and whether the federal reserve is going to raise interest rates and what difference does it make.
The Federal Reserve raises short term interest rates to control inflation.
This causes the cost of money to rise and slow consumer and business spending.
The growth rate levels off or declines and the income tax revenue does the same.
In our current conditions, we are experiencing a spike in energy costs.
This adds cost to producers and price increases for the consumers.
The Fed says that this in inflation and raises rates again.
The economy slow down more but the energy consumption makes little change.
Inflation does not stop, the economy comes to a halt, and the cycle begins all over.
The federal government automatically adds a rate of inflation to its budget process every year.
Most of the budget "cuts" are a reduction in the amount the particular item was going to be inflated.
Using hardware store mentality, is this a main source of inflation? Do you sit down at the end of the year and add inflation to your pay check? When was the last time you had a raise that increase your spendable income? Have your pay increases gone to increased health care premiums? Do governmental employees have to pay increased health premiums? Paychecks are not keeping up with inflation.
Government is taking an ever increasing percentage of our income and we are living on less.
We need to teach government to remove inflation from their budget process and decide how much government we can afford.
To your financial success, Martin Braddock
One such subject popped up today.
What is inflation? The classic answer is the Federal Reserve increasing the money supply.
I'm sure that any economist has a very academic answer to this question but remember these are the people that predict unemployment rates before the report is given and are wrong, predict housing starts before the report is out and are wrong, and whether the federal reserve is going to raise interest rates and what difference does it make.
The Federal Reserve raises short term interest rates to control inflation.
This causes the cost of money to rise and slow consumer and business spending.
The growth rate levels off or declines and the income tax revenue does the same.
In our current conditions, we are experiencing a spike in energy costs.
This adds cost to producers and price increases for the consumers.
The Fed says that this in inflation and raises rates again.
The economy slow down more but the energy consumption makes little change.
Inflation does not stop, the economy comes to a halt, and the cycle begins all over.
The federal government automatically adds a rate of inflation to its budget process every year.
Most of the budget "cuts" are a reduction in the amount the particular item was going to be inflated.
Using hardware store mentality, is this a main source of inflation? Do you sit down at the end of the year and add inflation to your pay check? When was the last time you had a raise that increase your spendable income? Have your pay increases gone to increased health care premiums? Do governmental employees have to pay increased health premiums? Paychecks are not keeping up with inflation.
Government is taking an ever increasing percentage of our income and we are living on less.
We need to teach government to remove inflation from their budget process and decide how much government we can afford.
To your financial success, Martin Braddock
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