Tuesday, January 25, 2011

Inflation: The Incredible Shrinking Dollar

Guess what? Your pocket has been picked. I don?t mean your wallet, or even its contents. What I am referring to is the buying power of the money it contains. The consumer price index (CPI) tells the story. As you know, it measures the change in prices of a fixed basket of goods and services that the typical household supposedly purchases every month. The recent trend of the CPI does not reveal much to worry about. In 2010, consumer prices rose a relatively benign 1.5%. However, there is more to this story. For one thing, prices in the month of December alone rose a whopping 0.5%. That was the biggest monthly rise since June 2009.And the fact that most of the rise was traceable to an 8.5% jump in energy should not ameliorate our concerns, since we all use energy just like we all consume food. Besides food and energy, other items in the consumer?s basket went up as well, including health care, apparel and airline fares. Few items fell. Longer term, the buck?s buying power has been shrinking for years ? indeed, for decades.   More Here..

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