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Inflationary Stimulus Programs Hurt Poor Americans the Most

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By zakiroff @ Adobe Stock

All these government programs intended to “help” do nothing to make one more self-reliant. The federal government and the Federal Reserve went stimulus-crazy, and as is normally the case, that hurt the least wealthy Americans the most. Inflation is a transfer of wealth to the government and to those with hard assets. James Mackintosh reports in The Wall Street Journal:

Inflation hurt low-income households more. The cost of food, energy and rent rose far more than other items after the start of the pandemic, and made up a bigger share of consumption for the poor. Inflation experienced by the poorest fifth of society was 1.6 percentage points higher than for the richest fifth from March 2020 to June 2023, according to the latest data available from the Bureau of Labor Statistics.

Against that, jobs have been plentiful and wages for low-end jobs have risen faster than for top jobs. Until the past year, low-end wages rose fast enough to more than offset the higher inflation, according to figures from the Atlanta Fed.

But in the past year, wage rises have been similar for all income levels. Inflation by income group isn’t available, but is also likely to be mixed, with energy prices down and rent up faster than other prices.

The combination of higher prices and higher interest rates has been toxic for many low-end consumers—especially the young. The share of borrowers younger than 30 missing three monthly credit-card or auto-loan payments reached the highest last year since the 2008-09 financial crisis, according to New York Fed data. A detailed study the New York Fed did of auto loans showed the steepest rise in borrowers missing payments occurred in low-income regions.

Action Line: None of this is new information. Ron Paul repeatedly warned of the dangers of inflation and stimulus, but America’s politicians refused to listen. When you want to talk about inflation and your retirement, I’m here. In the meantime, click here to subscribe to my free monthly Survive & Thrive letter.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.
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