Power: Inflation Has No Effect On Your Buying

Inflation acts as a de facto tax on held currency. If you have $100 today and inflation is at 5%, those same goods will cost $105 next year. If your $100 is sitting in a standard savings account earning 0.01% interest, you can no longer afford the same basket of goods. Your value is the same ($100), but your real buying power has shrunk. 2. The Wage-Price Gap

For retirees living on fixed pensions or social security (without adequate Cost of Living Adjustments), inflation is a direct hit to their standard of living. Their "buying power" evaporates because their income remains static while the price of healthcare, food, and energy climbs. 4. The One "Positive": Debtors inflation has no effect on your buying power

Wages are often "sticky." They tend to lag behind inflation. Even if you get a 3% raise, if inflation is 6%, you have effectively taken a 3% pay cut in terms of what you can actually buy. Inflation acts as a de facto tax on held currency

There is one specific scenario where inflation "helps" your buying power: If you have a $2,000 monthly mortgage payment, and inflation causes wages and prices to rise, that $2,000 represents a smaller percentage of your total income and a smaller "real" value to the bank. In this case, you are paying back the bank with "cheaper" dollars. Your value is the same ($100), but your