Salient to Investors:
Matthew C. Klein writes:
- Bernanke suggested that the CPI probably overstates inflation. He is right if all we talking about is things we buy in stores and services. The problem is that most people also have to spend money on assets that they hope will provide for them when they retire. No comprehensive measure of the cost of living accounts for this.
- Social Security and Medicare by themselves are not enough for most people.
- For most people, the price of retirement goes up when yields go down. But for people with a lot of assets falling yields are great because it means that the value of their savings is rising relative to their other expenses. Workers struggling to save for retirement have to cut back on current purchases of goods and services in order to cover the added cost of their future liabilities. Rising yields makes the asset-rich feel poorer and makes the asset-poor freer to spend more today.
Read the full article at http://www.bloomberg.com/news/2013-07-19/a-better-way-to-measure-inflation.html
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