Oh lord, here comes another article about the poor, poor. I hate to sound calloused, but I don't know a single person in financial trouble who didn't bring it on themselves. I know this is not always the case, but I believe "bad luck" is the exception, not the rule.
At the same time anyone who doesn't have a mortgage or debt can live on less than that $100K from a CD. Therefore they'd be adding to their invested capital year by year and generating more income -- offsetting the effects of inflation.
That trend shows no sign of slowing It isn't important if 41 million Americans cant make ends meat when corporations will derive an increasingly larger percentage of profits form overseas. We're in a global society and the American middle /lower class has little plance in such a society.
The barking dogs of poverty are alerting us once again. After awhile all you want to do is shoot the dog and teach the owners to train the next one.
But inflation is higher than the interest rates paid on CDs. They are losing purchasing power ever year assuming they don't spend any. When they do spend, they lose even more purchasing power. One can retire off of $2,000,000 in many areas, but you can't live a very luxurious lifestyle.
I'd disagree --- I have a CD now that I just opened this week paying over 5% -- inflation isn't going to run that high. I'm looking at maybe 3% inflation longer term which was why I was concluding that the capital would grow year by year assuming one didn't spend the entire $100K the CD kicked off. You'd have a net plus 2% (CD @ 5% vs. inflation @ 3%) plus any money from the $100K (CD income) left over at the end of the year to add to the base amount. I think "luxurious" lifestyle is what's in question here maybe. Having no debt of any sort I can do quite well on $2000/week.
CD's Yeah, you get 5% and the value of those dollars declines by 10%, but it gets you a tax bill of 2%, netting to a total loss of 7% Where is the sense in that? You just THINK you are getting 5%.
Reality check time: as of now, the paper currency getting hit is the dollar. That's the trade. But the dollar will "recover", as the next paper currency gets hit, the euro (most likely, especially given today's events, which shows that the entire ECB board is a bunch of utter stoops), the pound or the yen. (The commodity currencies, the rand, the loonie, and the Aussie and NZ dollars, will probably do OK, but it'll be chancy even for these.) This will mean that inflation, as measured conventionally and in dollars, will recede. It'll take a while, but eventually the lesson will take that all of these, not just the USD, is in deep, deep water, with no obvious means of rescue. As that lesson slowly sinks in, just keep buying gold on the inevitable sharp dips, because in between one or more of those dips, the shot up is going to be breathtaking, regardless of which piece of paper you call legal. As for these folks who can't make ends meet: they've been unnaturally quiet, but that's about to end, and for most of the folks on this board their awakening is not going to be a pleasant thing. Watch out.