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Self Directed IRA Inflation Reality Check

We’ve discussed the fact the government uses completely misleading and bogus numbers for their economic metrics (e.g. unemployment, inflation, etc.). We have specifically commented on how the inflation figures that the White and the Fed tout are not representative of reality and what people feel or experience on a daily basis.

Because of the critical nature that inflation plays in Fed and government policy and the impact that it has on our economic environment, we wanted to give you  little more due diligence on the CPI and inflation. Before we go into too much detail we need to give credit where credit is due. Much of the information that we gathered was from If you are not familiar with their work or their newsletter, we encourage you to check them out. Now, on with our discussion..

The Consumer Price index (CPI)

This is the generally recognized number that the government uses to tell us what things cost. The government clearly does some manipulation of the figures. One key item that they leave in is your housing cost. Since a large percentage of Americans own their home (65%), and since the home owner has no option of not paying their house payment, and that payments does not usually fluctuate much, if any, and it is a large percent of the monthly outlay, it tends to mask price movements of daily items (food, gas, entertainment, etc.). So, the folks at HS Dent have removed this value from the CPI.

One of the other interesting things the people at HS Dent have done is to take consumer spending and break it down by the age demographic. This type of break down helps deal with life style difference between the different age groups.

The findings

  • Finding 1 – The rises in tuition costs have increased by 114% since 2000. That hits people under 25 the hardest and stays with them for many years.
  • Finding 2 – Energy costs are up more than 110%. This impacts all demographics.
  • Finding 3 – Medical care costs are up 67% since 2000. This clearly impacts people 55 and older the most.
  • Finding 4 – When you compare the BLS’s numbers for these same categories over the same period, with their methodology, you find that the age related inflation rates are about 35% versus the HS Dent method which shows something like 37-42%. That is a major disconnect!

The importance of showing these age related inflation rates

What this analysis shows is that different consumers expenditures impact age groups differently. Depending on the group and the nature of the next government stimulus program you will see differing results and impacts which effects how people live and feel about the economy. What these values show is that the government QE programs and fiscal irresponsibility is really hitting the young and the old very hard. These two groups have very little economic resources to mitigate these inflationary impacts.

So, the likely outcome is that as a result of politics, you will see more programs targeting the middle age groups. More pressure will likely be placed on buffering the young and old at the expense of the more economically vibrant producers in the middle. So, rather than let the markets do their part, get government spending and programs under control, lets take more from the producers and successful people.

What does this mean for my self directed IRA portfolio?

For one, its clear that the government will not get out the business of telling us what to do. Secondly, its clear that due to a complete lack of political will on the part of career politicians, they will engage in more government programs designed to redistribute wealth in the most ignorant, politically motivated manner. This will likely lead to, more government, more government spending and more printing of money.

Ultimately , we are talking about a stagnant economy, with weak growth and high inflation. Its not a matter of if, but when. So, its best to be prepared by holding precious metals and real estate in your self directed IRA.


The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self directed IRA account.