Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Asset Deflation and Price Inflation

lorddarley wrote on Jul 05 09:

The frustrating thing about economists, is that when they discuss "inflation", they are not talking about the stuff I want.

What do I want? The costs are through the roof, and climbing faster than any official index.

1. A secure retirement. Even middle class retirement (if you take a a 4% payout and save a little for inflation) requires $2.5 million of liquid assets, plus social security. God know what it will cost in a few more years.

2. Good health insurance. With "free" Medicare, the costs for Part B and med-ex supplement are about $6,000 per year, a staggering increase, and going up. If married, double that.

3. Affordability to stay in my community. State and local taxes are already too high, and escalating. And the reserves to pay civil service pensions are much too low. These costs are only going up, because politicians spent money instead of putting it aside for the future (which is almost here). A recent University of Chicago study says that the non-federal governments would have to have at least 3 trillion extra dollars just to fund pensions earned to date, not counting future service benefits or post-retirement health promises to public workers. That means quadrupling current levels of non-federal public debt.

It's very clear that a major downward adjustment will have to be made in expectations of the US middle class. The deflation of their "assets" and the failure to save, at personal and government levels, has triggered an impossible inflation in cost of what they expected to have. The big question is whether the world economy can prosper without the US.

Oh, as for deflation. Absolutely. The things we own are going down in value. The things we need, are going up. The world has changed for the US.