This is what most people refer to as "inflation."
For instance, let's say you have $100,000 in the bank. At 9.6%, which many folks believe to be the real rate of inflation...here's what your money would look like over time:
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After a decade of 9.6% inflation, you'd be left with $39,985.
A $60,000 loss, just by doing nothing!
With inflation, the Government is stealing money from your bank account!
But really, the way it works out is that instead of dipping into your bank account and taking money, your money gets stolen in other ways...
Food, energy, water... consumer goods...
You see, with each new dollar that's created out of thin air being worth less, producers have to raise prices.
Why?
Because the goods they're selling aren't changing in value. But the dollars you hold certainly are. They have to raise prices just to keep up.
Same deal with wholesalers, retailers... all the way down the line.
Inflation Explained
The scary thing about inflation is how even a small amount – especially if you're retired on a fixed income – can eat away at your money...
Let's assume, just for the sake of illustration, that the Government is right... that Ben Bernanke is right... and that the Bureau of Labor Statistics' changes to the CPI over the years have just been important tweaks, not manipulations...
Here's the effect 2.6% inflation would have on $100,000:
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As you can see, after 4 years, even at that relatively low rate of inflation, you've still lost ten grand...
After a decade, you've lost $23,000 and change...
What about hyperinflation? What would that look like:
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Could this really happen?
Many folks believe we're heading down that path...
Quantitative Easing Explained
For those who knows Chinese language, the comic illustration about inflation in 钱不等于财富 钞票不等于资产 may give you some insights. You may also want to figure out How the Government is Stealing Your Food through inflation.
When A Gallon of Milk Costs Seventy Dollars
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