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Inflation is sky-high – retirement plans aren’t keeping up

4 points by RickJWagner 5y ago

theandrewbailey 5y ago
401k contribution limits are going to have to go way up. It went up by $1000 this year to $20,500. That's only 5%!
incomingpain 5y ago
https://tradingeconomics.com/united-states/money-supply-m1 https://tradingeconomics.com/united-states/money-supply-m1 Money supply should be around 5 trillion but it's above 20 trillion. That is 400% inflation if they don't do something about it. Raising rates does not do something about it. It seems increasingly realistic they aren't going to be doing something about it. Hell, where did this 15 trillion go? Ultimately who will pay for this? Not workers. Workers can jump to new jobs for big raises and keep ahead of the inflation wave. It's not anyone who has big debt, you benefit with high inflation against debt. So really it's anyone who has their wealth stuck in the currency or currency equivalents like bonds. Retirees are who get to pay. Some retirement funds are heading into housing to try to insulate against inflation and negative real yields on the bonds. In so doing creating a bubble. In the near future the retirement funds wont be solvent and no worries there. Obama made the rule change in that retirement funds that aren't solvent can reduce benefits. A ton of retirees will be returning to the work force and they wont be qualified for the jobs they hope for. They will be working a mcjob.
- eddyg 5y ago
  I understand what you're saying, but it's worth noting the M1 definition changed in 2020 to "recognize savings deposits as a type of transaction account". > This change means that savings deposits have had a similar regulatory definition and the same liquidity characteristics as the transaction accounts reported as "Other checkable deposits" on the H.6 statistical release since the change to Regulation D. Consequently, today's H.6 statistical release combines release items "Savings deposits" and "Other checkable deposits" retroactively back to May 2020 and includes the resulting sum, reported as "Other liquid deposits," in the M1 monetary aggregate. This action increases the M1 monetary aggregate significantly while leaving the M2 monetary aggregate unchanged. M2: https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL
  - incomingpain 5y ago
    >I understand what you're saying, but it's worth noting the M1 definition changed in 2020 to "recognize savings deposits as a type of transaction account". I have read about this claim. Interesting that they changed this definition at the same time as the pandemic and pandemic stimulus/QE? Why didn't they do it 5 years ago during a boring time while everything was under control? https://tradingeconomics.com/united-states/government-debt https://tradingeconomics.com/united-states/government-debt Gov debt increase ~6 trillion. https://tradingeconomics.com/united-states/central-bank-balance-sheet https://tradingeconomics.com/united-states/central-bank-bala... Central bank about ~5 trillion. Those are separate accounts. $4 trillion missing? It's just a definition change, but the 11 trillion never made it to money supply? Wonder where it went. M2 is looking rather vertical as of late. Still printing more and more eh? Lets assume that I am wrong and it's just a change in definition; afterall who am i but an anonymous name on the internet. If I'm the fed, it's business as usual. Not going to do anything at all about this. Going to sit back and watch inflation climb. 8.5%? No, nothing to worry about. Dont need to do anything. We only changed a definition. Yes, inflation is increasing faster than previous intervals despite hiking interest rates and even repo rate. Nah, nothing to worry about. Nothing to do here at all. I can't wait to see what happens.

4 points by RickJWagner 5y ago

401k contribution limits are going to have to go way up. It went up by $1000 this year to $20,500. That's only 5%!

https://tradingeconomics.com/united-states/money-supply-m1 https://tradingeconomics.com/united-states/money-supply-m1 Money supply should be around 5 trillion but it's above 20 trillion. That is 400% inflation if they don't do something about it. Raising rates does not do something about it. It seems increasingly realistic they aren't going to be doing something about it. Hell, where did this 15 trillion go? Ultimately who will pay for this? Not workers. Workers can jump to new jobs for big raises and keep ahead of the inflation wave. It's not anyone who has big debt, you benefit with high inflation against debt. So really it's anyone who has their wealth stuck in the currency or currency equivalents like bonds. Retirees are who get to pay. Some retirement funds are heading into housing to try to insulate against inflation and negative real yields on the bonds. In so doing creating a bubble. In the near future the retirement funds wont be solvent and no worries there. Obama made the rule change in that retirement funds that aren't solvent can reduce benefits. A ton of retirees will be returning to the work force and they wont be qualified for the jobs they hope for. They will be working a mcjob.

eddyg 5y ago
I understand what you're saying, but it's worth noting the M1 definition changed in 2020 to "recognize savings deposits as a type of transaction account". > This change means that savings deposits have had a similar regulatory definition and the same liquidity characteristics as the transaction accounts reported as "Other checkable deposits" on the H.6 statistical release since the change to Regulation D. Consequently, today's H.6 statistical release combines release items "Savings deposits" and "Other checkable deposits" retroactively back to May 2020 and includes the resulting sum, reported as "Other liquid deposits," in the M1 monetary aggregate. This action increases the M1 monetary aggregate significantly while leaving the M2 monetary aggregate unchanged. M2: https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL
- incomingpain 5y ago
  >I understand what you're saying, but it's worth noting the M1 definition changed in 2020 to "recognize savings deposits as a type of transaction account". I have read about this claim. Interesting that they changed this definition at the same time as the pandemic and pandemic stimulus/QE? Why didn't they do it 5 years ago during a boring time while everything was under control? https://tradingeconomics.com/united-states/government-debt https://tradingeconomics.com/united-states/government-debt Gov debt increase ~6 trillion. https://tradingeconomics.com/united-states/central-bank-balance-sheet https://tradingeconomics.com/united-states/central-bank-bala... Central bank about ~5 trillion. Those are separate accounts. $4 trillion missing? It's just a definition change, but the 11 trillion never made it to money supply? Wonder where it went. M2 is looking rather vertical as of late. Still printing more and more eh? Lets assume that I am wrong and it's just a change in definition; afterall who am i but an anonymous name on the internet. If I'm the fed, it's business as usual. Not going to do anything at all about this. Going to sit back and watch inflation climb. 8.5%? No, nothing to worry about. Dont need to do anything. We only changed a definition. Yes, inflation is increasing faster than previous intervals despite hiking interest rates and even repo rate. Nah, nothing to worry about. Nothing to do here at all. I can't wait to see what happens.