Inflation punishes savers when it creates negative interest rates, as I pointed out, but not when real interest rates remain positive.
I wouldn’t invest in CD’s or bonds or money market funds now because real interest rates are negative. Indeed my pension funds are in the same sorts of investments you advocate — equities (including overseas), real estate and precious metals.
I think we are basically in agreement that inflation is harmful, and I’m not sure why you keep writing at such length to object to my very narrow point that inflation erodes savings only when it creates negative real interest rates, which it does not always do as the period 1982-9 shows.
I wouldn’t invest in CD’s or bonds or money market funds now because real interest rates are negative. Indeed my pension funds are in the same sorts of investments you advocate — equities (including overseas), real estate and precious metals.
I think we are basically in agreement that inflation is harmful, and I’m not sure why you keep writing at such length to object to my very narrow point that inflation erodes savings only when it creates negative real interest rates, which it does not always do as the period 1982-9 shows.]
***********************************************************
Well, bless your heart, I respond to you, because you keep posting to me. Also, I knew a lot of elderly people who remembered the stock market crash and great depression, who socked their savings away in bank cds, treasury bonds, and savings accounts(so called safe accounts). They suffered huge losses of buying power during the period of great inflation.
The narrow point you make does not exist in situations of runaway inflation trending higher and higher in double digits for such savers, and that is what my post was about.
When inflation levels out and trends downward, then it is possible for such investors to avoid a loss of purchasing power, but this is due to the lag between decreases in inflation and interest rate reductions. For example, if you purchased a 10 yr treasury or cd at around 14% at the peak in 1980 you were ahead during the period when inflation was trending down, but you would have been hurting had the prices continued to rise to 15%,20% etc.
The period of inflation that I am talking about began in the 1970s and peaked in 1980 at a little less than 15% inflation and prime at 22%.
You keep posting about a period of time beginning in 1980. Well guess what? That was NOT a period of increasing inflation, it was the beginning of decreases in inflation, and does not even pertain to the period of time and phenomena (rapidly rising inflation) that I was speaking of.
Don't reply back unless you want me to respond.