How do you save when inflation takes it all away?

[Christof]

I guess this in part depends on whether you are holding shares for dividend yield or capital growth.

Fair enough... Being a small business owner myself it's the more natural choice for me to view stock as owning a share of the company and participating rather than an abstract asset that somehow appreciates value. Hence, my focus is more on dividend yield.

[CorpRaider]

False assumption underlying original question that the current rate of inflation exceeds likely investment returns.  You might argue that certain inflation measures understate inflation.  I would argue however, that most measures don't reflect real-life consumer behavior of switching based on price movements.  Demand for most things including U.S. healthcare is not inelastic.  Start looking into healthcare tourism if you're outraged by inflation in us healthcare, if gas prices are killing you, get rid of the F-350.  Perhaps a subscription to the wsj, economist, or kiplingers is in order.

[Jamesqf]

Does CPI always go up?  It certainly doesn't have to.

It doesn't actually have to, but the experience of history is that it almost always does. Examples of deflation are rare, while inflation caused by increased money supply certainly goes back at least to the Romans, who cleverly started mixing copper & other base metals into their gold coins.

I think the motive should be obvious: whoever controls the money supply gets free money.  Like counterfeiting, except you don't have to do a lot of hard work engraving plates & setting up your own printing plant :-)

But that's why personal CPI is better.  My personal CPI can go down if, for example, I refinance my mortgage at a lower rate and that saving outweighs the increase in corn prices due to bad weather (or whatever).

That's why I think it's useful to distinguish between a CPI and COL (Cost Of Living).  If gas goes up, my personal CPI goes up, but if I replace the guzzler with a hybrid, my personal COL index goes down.

[dragoncar]

Does CPI always go up?  It certainly doesn't have to.

It doesn't actually have to, but the experience of history is that it almost always does. Examples of deflation are rare, while inflation caused by increased money supply certainly goes back at least to the Romans, who cleverly started mixing copper & other base metals into their gold coins.

I think the motive should be obvious: whoever controls the money supply gets free money.  Like counterfeiting, except you don't have to do a lot of hard work engraving plates & setting up your own printing plant :-)

But that's why personal CPI is better.  My personal CPI can go down if, for example, I refinance my mortgage at a lower rate and that saving outweighs the increase in corn prices due to bad weather (or whatever).

That's why I think it's useful to distinguish between a CPI and COL (Cost Of Living).  If gas goes up, my personal CPI goes up, but if I replace the guzzler with a hybrid, my personal COL index goes down.

Yeah CPI is different from COL.  Refinancing could lower both your personal CPI and COL, but moving to another state might only lower your COL (for example, if rents in that new state are rising but still lower than your current housing expense).