Financial Repression – Screwing All Generations

Cartoon man with screw going through his body - Are We Really Screwed?Several customers were sitting on a crowded bench waiting to pick up their pizza.

The senior gentleman next to me complained about inflation driving up pizza prices. The young man next to him chimed in. He’s a recent college graduate, and started a new job earning $50,000. He lamented, rents are “outrageous, he has a car payment, student loan payments, and credit card debt. So much for a good education, a good job, and financial independence; he can’t afford to move out and live on his own.

I’d been researching living costs for retirees, and how much they needed to save to be able to retire comfortably. After gobbling my pizza, I headed to my desk, realizing the “Financial Repression” I recently wrote about is severely impacting all generations.

Investopedia explains Financial Repression:

Financial repression is a term that describes measures by which governments channel funds from the private sector to themselves as a form of debt reduction. The overall policy actions result in the government being able to borrow at extremely low interest rates, obtaining low-cost funding for government expenditures.

This action also results in savers earning rates less than the rate of inflation and is therefore repressive….”

Irresponsible governments borrow and spend, creating huge debts.

Politicians that are unwilling and/or unable to cut spending and raise taxes to solve the problem, revert to Financial Repression – stealing past, present and future wealth from citizens to fund their spending addiction.

Inflation is the driver of the Financial Repression scheme, channeling generational wealth from citizens to the government.

Start with the young

How well can he live on $50,000?

I researched expenses…

Expenses Chart

Paycheck to paycheckHe’s left with $570/month for food, clothing, rental insurance, gas, credit cards, you name it. If he’s eating out regularly, partying, or dating, he’s living marginally from paycheck to paycheck. His future salary increases must surpass government-induced inflation. He better pay off his credit cards monthly or he will soon be in real financial hole. If he can’t keep up, he’s screwed; going in the wrong direction.

While living rent-free at home, he must save money, and get out of debt as quickly as possible. Consuming his surplus income will prolong the problem indefinitely. Sadly, many young people have never been taught the value of living below their means, no debt and saving for a brighter future.

There’s no point in mentioning contributions to a 401k program, I’d be dismissed as not understanding…

It’s no wonder young people tell me they doubt they will ever be able to afford a home.

On to grandparents….

My original mission was to focus on government-sanctioned Financial Repression, using inflation to destroy the value of savings and retirement projections. How much do you need to just keep up?

I found a Net worth percentile calculator:

Net Worth USA Percentiles – Top 1%, 5%, 10%, and 50% in Net Worth

  • The top 1% of net worth in USA in 2025 = $11,600,000
  • The top 2% of net worth in USA in 2025 = $2,700,000
  • The top 5% of net worth in USA in 2025 = $1,170,000
  • The top 10% of net worth in USA in 2025 = $970,000
  • The top 50% of net worth in USA in 2025 = $585,000

It’s a neat interactive tool; enter your net worth and see where you stand.

Net worth isn’t the same as income-producing savings. Here’s an example:

“In 2023, the average American retiree had about $170,726 in retirement savings, a decrease from $191,659 at the beginning of 2022. This 10% reduction is significantly lower than the recommended $555,000. Only 12% of retirees have achieved or exceeded this recommended savings amount.”

Let’s work with a $500,000 savings target – the nest egg that must last – producing income, coupled with Social Security and other retirement income – to allow retirees to live comfortably for the duration. Retirement savings, added to other assets (home, cars & stuff), will peg this retiree around the top 10% of net worth.

Living off the income, while not touching the principal, is a must if you want to retire without constantly having to worry about money.

If you make it to age 65, on average, men will live 17 more years and women 20. Government-sanctioned inflation affects the math considerably.

Using the government inflation calculator, let’s assume a couple retired 18 years ago.

06132024 Interest Calculator Screenshot

Living costs have increased 55.5% since retirement, and that’s using the government’s phony numbers. To maintain your standard of living, your retirement income must increase by a like amount.

The government radically suppressed interest rates for almost 15 years. While Baby Boomers were taught to expect a 6% return on savings would do the trick, it didn’t happen. Inflation appeared low (until recently), however, negative interest rates significantly repressed earnings – forcing the “average retiree” to dip into savings to pay the bills. Many went back to work and/or downsized. When you dip into your principal or lose investment capital, you reduce future earnings. Yeah, they were screwed!

Special Offer ONLY for Miller On The Money Readers!

As you know, I’ve mentioned Richard Maybury’s Early Warning Report often, and I’ve been a reader for many years. Richard’s world outlook is unique, and his letter provides great education you will not find elsewhere!

For a limited time, he is offering Miller on The Money readers a phenomenal deal.

Click here right now to subscribe for just $99. This saves you $201 OFF the regular subscription price!

You’ll immediately be emailed the current issue and 4 FREE Special Reports.

I encourage you to click here and take advantage of his special offer while you still can.

The beat goes on

Current interest rates are still below real inflation; the Financial Repression drumbeat is getting louder.

Here is a look at current bond offerings:

06132024 Fixed Income Offerings ChartUsing a 5% rate of return, $500,000 would produce $25,000 taxable income – supplementing Social Security and other retirement income.

Yahoo Finance explains, “As of November 2023, the average retired worker collects around $1,845 per month in retirement benefits, and the average spouse receives around $886 per month.”

A married couple earns $32,772 annually (before taxes and skyrocketing Medicare premiums). Add their $25,000 investment income, totaling a pretax income of $57,772. That’s for the 12% who managed to save $500,000.

The “average American retiree” saved $170,000, providing around $8,500 in investment income. Add that to $32,772 for Social Security they gross $41,272 – far worse than the recent college graduate.

Being debt-free, with no mortgage, is probably keeping these retirees afloat. Renters should expect their housing cost to rise much higher than reported inflation for many years.

Reports estimate 37% of retirees have NO retirement savings. I guess they don’t plan on being retired very long!

This site explains:

“A recent AARP poll provides further evidence of the deterioration of American living standards, especially for those approaching retirement age. ….

The Headline of an April 25 Washington Times article…says it all: “More Than 25% of U.S. Adults Over 50 Expect Never to Retire.”

…. ‘Everyday expenses and housing costs, including rent and mortgage payments, are the biggest reasons why people are unable to save for retirement.’

…. (The) AARP…did not delve into who or what was the catalyst for the increase in living costs. Neither has the financial press, which has always been a cheerleader for the Uniparty, been diligent in its duty about the ultimate source for soaring prices.

While the trend of Americans working well into their retirement years has been going on for years, the situation has accelerated under both the Trump and Biden presidencies. In concert with the Federal Reserve, the fiscal policies of the two administrations have been the primary factor for why many Americans cannot retire.”

Don’t expect any politician or political party to be our financial savior.

Illustration of snake oil business manWhile lying to the people, government-sanctioned Financial Repression will continue stealing wealth from all citizens. They have created too much debt and have little choice. Raising taxes and drastically cutting spending is NOT in their political DNA.

All generations are screwed!

Martin Armstrong writes “The Role Of Grandparents Vanishing From Society”:

“Humans were designed to survive well past child-rearing years. Only a few animal species…undergo menopause, and not so coincidentally, these species rely on shared wisdom passed down through the generations for survival. …. Grandparents served an essential role in the family structure.

The nuclear family has always been supported by the extended family. Older generations helped to care for the younger generations, passing down priceless knowledge. Younger generations had the ability to then care for the elderly. Tens of thousands of years of evolutionary biology is no longer the norm due to economics.

Simply put, most grandparents are still working to survive. …. The current cost of living will require most to work far beyond (retirement age) for survival. Social Security will go bust, and hardly anyone outside of government employees will receive a pension. A comfortable retirement is hard to obtain for the average person.

Grandparents Mentoring…. That once essential role of the grandparent is less prominent in modern societies. ….

…. Around 59.7 million Americans lived in multigenerational homes in March 2021, compared to 58.4 million in 2019 before the pandemic.”

The young college graduate living with his parents may soon find his grandparents moving in because they are broke.

Regardless of generation, continuing to work will help all weather the storm. Retirees, find something you enjoy and work as long as your health allows.

If you want financial independence, live below your means, save your money, invest wisely – and you better own some gold to fight never-ending inflation. All generations are screwed, but those who are disciplined and prepared will fare much better than most.

Help keep us online!

I love it when readers thank me for “telling it like it is” for providing content they won’t find in the mainstream media. I’ve been sent to Facebook purgatory a few times – they didn’t approve. Free speech isn’t appreciated in all circles.

When I started Miller On The Money, I vowed to keep our newsletter FREE! I’ve kept my promise – our weekly letter is an expensive hobby.

Donations are our primary source of financial support, and what keeps us going. We don’t peddle your name to anyone. I’ve turned down proposals from advertisers, feeling their offerings were inappropriate for our readers.

Readers pitching in to help offset our cost are much appreciated. It’s strictly voluntary – no pressure – no hassle!

If you want to help, click the DONATE button below.

You do not have to sign up for PayPal to use your credit card.

And thank you all!

On The Lighter Side…

Last week Jo and I had great weather as we drove “from the mountains to the prairies” across the country. While we have made the drive many times, I’m still in awe of this beautiful country. Yes, two seniors, driving three long days is tiring – but I’d encourage everyone to travel and enjoy what this country is all about.

Some readers asked why I am so “anti-government” – having little use for the political class. Subscriber Kirk B. sent along a link to a 3:28 interview with Jared Bernstein, Chairman of the Council of Economic Advisors to President Biden. He was asked a simple question about inflation. His response is beyond absurd.

The reporter concludes with his qualifications:

“Bernstein graduated with a bachelor’s degree in music from Manhattan School of Music…he also earned a Master of Social Work from Hunter College as well as a DSW in social welfare from Columbia University’s school of social work.”

An ‘economist’ without an economics degree….”

While it is easy to point out his total incompetence, it’s the entire political class working together that has brought about the current mess we are all faced with. In a quick 3:28 you will see why our leadership has no clue about solving our nation’s financial problems.

Quote(s) Of The Week…

Financial stability, business success and insurance concept“The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. Deficit spending is simply a scheme for the hidden confiscation of wealth.

Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.” — Alan Greenspan

“I warn you that politicians of both political parties will oppose the restoration of gold, although they may outwardly seemingly favor it. Unless you are willing to surrender your children and your country to galloping inflation, war and slavery, then this cause demands your support. For if human liberty is to survive in America, we must win the battle to restore honest money.” — Congressman Howard Buffett, 1948

And Finally…

Lifelong friend Toots H. shares some senior observations for our enjoyment:

  • My tolerance for idiots is extremely low today. I used to have some immunity built up, but obviously there is a new strain out there.
  • As I watch this generation try and rewrite our history, one thing I’m sure of … it will be misspelled and have no punctuation.
  • Me: Sobbing my heart out, “I can’t see you anymore … I’m not going to let you hurt me again.” Trainer: “It was one sit-up”.
  • Sorry I haven’t gotten anything done today. I’ve been in the Produce Department trying to open this stupid plastic bag.
  • I’m on two diets. I wasn’t getting enough food on one.
  • Apparently RSVPing to a wedding invitation “Maybe next time,” isn’t the correct response.
  • I put my scale in the bathroom corner and that’s where the little liar will stay until it apologizes.

And my favorite:

  • Felt uncomfortable driving into the cemetery. The GPS blurted out “You have reached your final destination.”

Until next time…

Dennis Miller

“Economic independence is the foundation of the only sort of freedom worth a damn.” – H. L. Mencken


Affiliate Link DisclosureThis post contains affiliate links. If you make a purchase after clicking these links, we will earn a commission that goes to help keep Miller on the Money running. Thank you for your support!

Leave a Reply

Your email address will not be published. Required fields are marked *