Worldview Investing - Ruminations on the World Economy

                                         Source: Shutterstock      In our last post we discussed two ugly realities that savers and investors must be  aware of if they hope to avoid retirement penury: Reality Number One: the insidious effects of price inflation, and Reality Number Two: the ongoing debasement of our currencies. To demonstrate their corrosive effects we included two graphs. We include them again. The first shows that an eventual reduction in the rate of inflation never returns us to pre-inflationary lower prices. That is because the effects of price inflation are  cumulative.  A new lower rate of inflation merely means that existing high prices will increase at a slower pace.  The first chart shows that prices (in blue) remain painfully high even after the rate of inflation falls from 8% to 2%.  So the Fed's trumpeted goal of returning the rate of inflation to 2% is no solution for these higher prices.