Archive for June, 2006

According to this article on MSNBC.com, the average salary range increase for this year is 3.5%.  This doesn’t exactly keep up with the government’s released figures of 5.2% CPI-U inflation rate.  Essentially, the average salary worker is losing $17 per $1000 earned to inflation this year.  For someone making $40,000/year that translates to a loss $680/year to inflation!

I don’t think the fed has any option but to continue to raise interest rates.  The next fed meetings are on

  • June 28/29 2006
  • August 8 2006
  • September 20 2006
  • October 24 2006
  • December 12 2006

It seems to me that the fed should raises rates in the following manner to control inflation:

  • June 0.25%  —> new rate at 5.25%
  • August  0.25% -> new rate at 5.5%
  • September —–> pause and stay at 5.5%
  • October 0.25% –> new rate at 5.75%
  • December ——–> pause and keep rate at 5.75%

Of course with an election looming it’s anyone’s guess about the order but I see interest rates rising to 5.75% by the end of the year.

Holy cow! According to the latest inflation report http://www.bls.gov/news.release/cpi.nr0.htm , inflation is growing at 5.2% but what is truly scary is that these are government manipulated numbers that have “substitution”, “exclusions”, and other “anomolies.” As a general rule, always had 20% to government numbers so you really get inflation growing at least 6.25%!

What are some suggestions for fighting this…

  1. Go to your local Costco or Sams and load up on as many non-perishable goods as possible. i.e. it’ll all be cheaper today than in 3 months.
  2. Look for the highest yielding money market, CD, safe bonds out there. Stock market, in my opinion, will continue to drop.
  3. Lock in contracts at lower rates if possible (natural gas, fuel, energy, etc)
  4. Invest in tangible property that holds value agains inflation (gold, diamonds, silver, real estate rental property)
  5. Be cautious with your money!