Quantcast

What U.S. monetary and fiscal policy means for your personal budget

Nov 28, 2011, 8:40 a.m.

Now if all this astronomical amount of money lent to the U.S. government and private banks has been newly created and thus expanded the money supply, or total amount of money in circulation, without a corresponding increase in actual goods and services available to purchase, then all of this new money will have the effect to dilute the value of the existing money stock, a.k.a. inflation. Now inflation is not really the increase in the price of goods or the value of assets, as is popularly explained, but rather inflation is the decrease in the purchasing power of the currency you hold with which to buy things. This less than desirable reality can already be especially noticed when we go out shopping to buy tangible products and commodities, such as gasoline and food, which directly impacts the personal budget of every American.

But if the actual money supply has nearly tripled in just five years, and the spending and borrowing policies of the government and Feds appear to be continuing unabated, then the true effect on purchasing power and prices that will result in the near future can only be described as hyper-inflationary. Thus, we can expect to require a greater and still greater percentage of our income just to meet the basic living expenses of food, housing, and transportation; and thus we must adjust our personal budgeting priorities, lifestyle expectations, and retirement decisions accordingly.

Content Provided by Spot55.com

Editor's Picks

Most Recent