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Ever higher prices are merely the \’result\’ of inflation.

\”Inflation\” itself is a deliberate, covert government policy of devaluing the currency (Dollars) by recklessly \’creating\’ huge amounts of new money out of thin air.

It is legalized counterfeiting, short & simple — Federal politicians quietly counterfeit money for precisely the same reason as any other counterfeiter — it\’s free money to spend as they like.

Most all Americans would quickly scoff at the notion that their federal public-servants had either the will or ability to run a huge counterfeiting operation. And that national counterfeiting operation is so enduring & profitable because most citizens are indeed clueless about it. They see higher prices and weaker Dollars, decade after decade — but can only work harder and wonder what\’s really going on in the world.

{ \”It is well enough that the people of the nation do not understand our banking & monetary system for, if they did, I believe there
would be a revolution before tomorrow morning.\” — Henry Ford, Sr }

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The U.S. Federal Reserve System (central bank created in 1913 specifically to inflate the U.S. Dollar) controls the money machine. When it buys government debt, it creates new money from nothing to make the purchase. Federal politicians then spend this newly counterfeited money into circulation as they like. This how Congress can continually spend vast amounts of money each year, while in debt for Trillions that it can never repay.

These huge amounts of phony money eventually bid up the general prices on everything — but only those who got the phony money early in the game get to spend it before general prices rise. The cycle repeats as phony money is created and prices slowly respond. But the cycles end eventually as inflation snowballs, the public finally realizes the scam and refuses to hold the funny-money anymore — unloading it on anything they can still buy.

The official, inflated funny-money always ends up as worthless wall-paper. It will happen here, too.

This means that if you are young and looking for your first home, you may have to look at condos (300K for a one bedroom to 400K for townhouse w/out garage to 600K for a townhouse with garage) or co-ops (170K for a one bedroom or 250K for a two bedroom).

But this also means that if you are lucky enough to have bought at the bottom of the 90s housing slump, you could have a lot of money in equity alone. If you count anybody with a net worth of 1 million include primary residence as “millionaires”, a lot of those with huge equity will qualify. Except for if the prices drop, the net worth will drop as well. If you exclude primary residence, it’ll become more difficult.

Additionally, I have problems with including complete 401K in net worth since a huge part of it really belongs to the government…

But! If wages increase at or near inflation, the amount of money saved for retirement should go up as well. That $1.3 million is in today’s dollars, not 40 years from now dollars. In 40 years, it might be worth $4.2 million (1.3 mill/30.5% from your numbers).

Does that make any sense? Am I remotely correct…?

The good part of inflation is the effect on your borrowings. The real value will be eroded over time just as cash in the bank will.

While it is true that salaries and benefits should increase with inflation, I would not expect them to increase as quickly. If they did, that would be a departure from historical experience.

I am glad that my wife and I are on pace to have a million dollars in todays dollars at retirement.