Gary North’s Tip of the Week – August 20, 2011 Inflation Calculator

I'm travelling this week so I will borrow a Tip of the Week from a man whom I consider a mentor, Dr. Gary North.
* * * * * * * * * *

Gary North's Tip of the Week – August 20, 2011 Inflation
  The U.S. government’s Bureau of Labor statistics offers a
useful too free of charge: the inflation calculator. I use it
constantly. I have for at least five years.

 I have created a short link:


  The BLS calculator factors in changes in consumer prices, as
estimated by the BLS's consumer price index (CPI). You can track
this back to 1913. That was the year before the Federal Reserve
System started operations.

  The Federal Reserve was officially created to guarantee price
stability. Test its performance. Type in 1000 in the beginning
year box. Click CALCULATE. See how much money, after taxes, it
would take to match $1,000 in 1913. (Note: there was no income
tax in 1913.)

  Very few financial journalists use this tool on a regular
basis. How do I know? Because they discuss investment returns
from stocks without factoring in price inflation and income tax
payments. Consider this statement:

"And keep in mind, that 'lost decade' wasn’t so for everyone. If
you put $10,000 into the S&P 500 in 2000, you’d have about the
same amount in 2010," Thoma said. But investors who put in $10,000
 over time in regular monthly installments? “Their money would
have grown to over $14,000 during that timeframe, if you were in
a 65/35 portfolio,” Thoma said.

 Use the calculator. Find out what it takes today to match the
purchasing power of $10,000 in 2000. Mr. Thoma didn't. Neither
did the wide-eyed 20-something who wrote the article.

  If you have a 401(k) or IRA retirement account, pick the year
you opened it. See what the dollar bought then compared to now.

  This will help you find out how well your portfolio has done.

  Next, factor in income taxes owed when you cash it out.

  Next, see what the after-tax annual income your portfolio
would generate today if you were 60 years old and you started
living on the dividends generated.

  How is your portfolio working for you?

  You say you don’t want to know? You say this exercise would
depress you?

 That’s why so few people ever use the BLS calculator.

 Reality hurts.

Gary “4 a.m. to 8 p.m.” North
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That's it for this week!

Visit my site,, for the latest charts on the U.S. dollar, gold's price, and Federal Reserve statistics.

Published in: on August 22, 2011 at 4:12 pm  Leave a Comment  

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