Inflation Kills Wage Increases

In the last four years inflation has moved in lock step with wage increases earned by workers. With so many unemployed and under-employed, inflation is like a tightening noose strangling the economy. The numbers are very mind numbing but also just as compelling showing the effects of inflation on the economy.

Eric Fry an editor for the Daily Reckoningwrote this:  Based on official US data, the Consumer Price Index (CPI) is up 3.2% over the last 12 months, while the Producer Price Index (PPI) is up 6.8%. Both numbers are higher than in recent history, but neither one seems particularly terrifying…on the surface. When you dig down into the numbers, however, you discover that these inflation rates are accelerating rapidly. During the first four months of this year, the CPI has jumped 9.7% annualized, while the PPI has soared at a 12.8% annualized pace.

According to Fry it is only getting worse, US average per capita weekly earnings have increased about 12% since the beginning of 2006. But since the CPI has increased the same amount, that means inflation has wiped out allthe growth of weekly earnings. This takes us back to where we started wages & inflation are dead-locked and it looks like inflation is about to ramp up to the next level.

So for the shrewd investor what is the next move? It should be what we have recommended time and again like a broken record, increase or add to your Tangible Asset Portfolio with rare coins and precious metals. Continue to contribute to your future and stave off the inevitable inflation that is crippling the current economy. Take control of your financial future today.

Read more: Daily Reckoning Preparing Your Investments for an Inflationary Future


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