On 02/19/2010 05:00 PM, Stephen Russell wrote: > On Fri, Feb 19, 2010 at 12:40 PM, Leland F. Jackson, CPA > <[email protected]> wrote: > > >> An inflation policy by the USA to cope with the huge debt would be bad >> news for those who have retired, because they will pay the bulk of the >> hidden inflation tax. While most of the economy can adjust to >> inflation, those who have retired and depend on Social Security, >> Medicare, 401Ks, etc, to provide a material amount of their standard of >> living are lock into a constant that will buy less and less, as >> inflation whittles away at their buying power. >> > ----------------------- > > The real issue is the poor. Feeding the family, paying for rent, > utilities and auto with their respective expenses is going to be very > hard. > > I agree that fixed income people will be hurting as well. > > >> Although no one is spared from the hidden tax created by inflation, >> those in retirement will be hurt the most. It would be much fairer to >> have an above board tax increase on those most able to pay, and leave >> retirees alone. >> > ----------------------- > > I like how you designate that inflation is a tax. >
The article also pointed out what a policy of inflation would do to the bond market. Interest rates must rise above the inflation rate in order for lenders to have any real return, so inflation will kill currently issued bonds with maturity dates 10 to 30 years into the future. If and when inflation begins to occur, it might be a good time to sell long term bonds short. #--------------------------------- Excerpt: Rather than demand higher interest payments on its Treasury investments, however, China has been concentrating its purchases on Treasury bills that mature in the next three months to three years, when inflation is not expected to be a major problem because of the weak economy, analysts say. The Chinese and other buyers appear to be shunning long-term Treasuries such as 10-year notes and 30-year bonds, whose value is eroded by higher inflation over time. Investors recently have been demanding somewhat higher yields on Treasury's long-term securities to compensate for the possibility of higher inflation in the future. #------------------------------- Regards, LelandJ _______________________________________________ Post Messages to: [email protected] Subscription Maintenance: http://leafe.com/mailman/listinfo/profox OT-free version of this list: http://leafe.com/mailman/listinfo/profoxtech Searchable Archive: http://leafe.com/archives/search/profox This message: http://leafe.com/archives/byMID/profox/[email protected] ** All postings, unless explicitly stated otherwise, are the opinions of the author, and do not constitute legal or medical advice. This statement is added to the messages for those lawyers who are too stupid to see the obvious.
