First, you never acquire wealth or become rich merely keeping pace with inflation. More important to most however, standard of living and-or way of life becomes stagnant. Stuck, with no way out. Second, you assume your lifestyle EXACTLY matches the lifestyle-basis of COLA. I'll bet you forget about that bag of chips that cost .99¢ last year now costs $1.29, a 30% increase. But that wasn't included in CPI therefore is misleadingly absent from COLA. Third, a 10% raise, $200 bucks in your example THIS YEAR equates to something closer to $175. Something called taxes, ever changing and dependent on where you live. Welcome to Serfdom serfdom, A state of subjugation to an owner or master
SomeYoungGuy, I agree with you 100% and have been saying basically the same thing on other threads - inflation is not always bad and CAN in fact be VERY VERY good in certain cases. Of course, large inflation would be very bad for someone who: 1. Works at a job where only minimal raises are possible. 2. Rents most everything. 3. Isn't prepared / doesnt know how to prepare etc. I.e. no/minimal gold, long term investments, real estate, etc. People always come out and say the old "what if your salary doesn't go up as much" and to some extent that can be true, but in some cases, you might even get a bigger raise then the inflation, so the average should be about even. I know if I was making say $20 an hour and the prices went up big over 3 years, I would now expect to make a new wage based on that - if the company couldn't do it, I would try find one that would, etc. Again, if a person is really stuck salary wise, it could be bad for them then. I also agree with the other guy - it's not just real estate - being in debt in general (at lower interest rates) is a good scenario in inflationary times (i.e. also car payment wouldn't go up - personal loans, student loans, etc). JJacksET4
Your logic is flawed because your property taxes will go up along with your home owners insurance and the costs of maintaining your home. You gotta buy snow shovels, lawn mowers, gasoline for both, fertilizer, salt for the ice patches, and whatever other pleasantries come with owning a home. Oh yeah, a new roof in a few years. Inflation is going quickly eat into that extra 1k (plus raises) you got for the whatnots. And then there's the problem of your wages not keeping up with inflation. It's funny how it works....everything goes up 10% per year <b>except</b> your wages.
You really have not thought this through very well. Massive inflation will cause oil to rise. OPEC doesn't like being paid in worthless paper and they can do something about it. Oil as the major source of energy is not going away overnight. Thinking that you can game your way through massive inflation is foolish. Even gold during Weirmar Republic hyperinflation phase experienced rapid decline in purchasing power and high volatility. See first chart: http://www.nowandfutures.com/weimar.html Secondly, what is this nonsense about "intrinsic value" and real estate?? You assume that during deflationary periods for real estate, as we've just had, that somehow these properties retain intrinsic value??? That is based on a set of assumptions that regard the future as ever coming close to the expansionary credit cycles that we've recently grown accustomed to. Are you trying to go to your family holiday dinner to argue in favor of inflation?
Did you read my post? Where did I say Massive inflation is always good? Where did I talk about oil? Where is this "intrinsic value" of real estate? I was talking about ones ability to pay the mortgage. I stated that high inflation can be very bad for some people. It is however very true that some inflation can be very good for people (those whose paychecks keep up with inflation and who now have a higher paycheck with the same mortgage payment - maybe you never heard of fixed rates). Some people do good in high inflation, others not so good - I am just pointing out like the OP that it is not all gloom and doom if there is some inflation. JJacksET4
My post was poorly worded, it was not meant to reply to you alone. I think that the scenarios you're painting are too cute by half. There are exceptions in all extenuating circumstances, but overall inflation is not a positive development that people should look forward to. The idea that the OP is so cocksure that he's employable forever is also just flat out funny. Entire paradigms can change before your eyes. Why doesn't the OP tell us what he does and see if his assertion stands the analysis of his profession and the future direction of the global economy. Somehow I don't think any profession short of government hack can be said to be safe from inflation or economic peril.
OK. No problem. I agree, but remember in his post he was implying that he would get a COL increase that would match inflation, or at least that was what I read into it. Of course, that might not happen, and would be impossible to "guarantee" to any employee or anything. My response was basically that he is correct IMO that if inflation hit, but he had the same raise in income while at the same time having the same old mortgage, that can be good. I know a guy who knows a guy in So. Cal who bought a house back in like the 60s for maybe $30K and today rents it out for $2,500 a month. Of course, it was long ago paid off now. Oh, and I think after a while longer my friend told me he bought 2 or 3 more and those are paid off as well. Inflation can be good if used correctly JJacksET4
If you get a raise after a year, you just found out the hard way that you been paying for inflated goods with a steady income for a year, and now you are just playing catchup...Sucked didn't it...and that was only a year...repeat that for 10 years.