One expert warned that the stubborn inflation continues to cause pain as it weakens consumers’ purchasing power, but its impact may be more profound as the high cost of living disrupts Americans’ golden years plans.
David Phelps in his latest book Inflation: The Silent Retirement Killer noted that decades of uncontrolled government spending combined with Feder actions have made inflation today inevitable and warned investors that they must adjust and prepare for the long term.
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Although Labor Department 's latest consumer price index showed that daily necessities costs rose 8.3% year-on-year in August, Phelps told FOX Business that the actual loss of American wallets could be twice. What's worse, he said, is that inflation persists because there is little power in central bank to control it when federal spending is out of control.
Phelps predicted inflation would soar when he started writing his book last fall, saying as the government continues to print trillions of dollars to extend the suspension of “steroid” unemployment benefits, stimulus payments and long-term student loan payments. But he said the article on inflation is already written on the wall — Covid spending has only accelerated it.
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Phelps said: "Even before the COVID-19 pandemic, our budget deficits and national debts have increased year after year - it's just piled up, piled up, piled up." "The government is about to collapse when it can kick the can on the road."
Nevertheless, never-ending "epidemic" allowances such as student loan relief continue to further fuel inflation, and there is no end to see.
David Phelps expects the U.S. economy to be weak in the next decade or so
Pelps expects the U.S. economy to be weak in the next decade or so, a pattern that relies on the growth of traditional concepts that the economy will always decline.
"People think they will have this reserve that is sufficient from the financial metrics," he said. "So I think the wake-up call is to understand that this is not going to be the same. We are in a completely different era today... They may need more than they think, which is not good."
Now, he said, people need to protect themselves and warn that fixed income streams like annuities will not meet the lifestyle needs of people who rely on them for years to come.
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Phelps firmly believes in investing in tangible assets such as real estate or businesses, which he believes are most likely to keep up with inflation. He has records to prove this.
He is a former dentist whose daughter (now 30) was blind at the age of 12 due to epilepsy, advanced liver failure and leukemia . To take care of her during her health crisis, Phelps sold his clinic and invested the proceeds in real estate so that he could support his family with his passive income.
Phelps' colleagues in the dental industry soon began to ask him how he made a living and he began to advise them. He received a lot of consultations soon after, and he became a formal coach and now runs an investment community called Freedom Founders.
He said the main question for Freedom Founders members when they joined the organization is whether they have enough savings to slow down and retire. But as dentists, they often earn more than the average American.
"It's a problem that I think everyone will have -- no matter what your position in economic ancestry -- everyone will worry about," Phelps said. "Social security won't cover it. So most retirees will have a tough time."
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