Inflation Looks to Be Inevitable Next Year
A commentary on recent events by National Gold Group’s Michael Carr – December 11, 2012
The Federal Reserve has been creating trillions of dollars while the federal government has been spending trillions of dollars more than it has. It seems as if all this money creation should have led to higher inflation but for the past few years official inflation gauges have shown relatively mild inflation. Most consumers would disagree with the official rate of inflation because food and gas prices have been steadily rising, along with rent, insurance costs and taxes. Government economists have long assumed that price hikes were temporary but that assumption may give way in 2013.
Healthcare and perhaps more importantly health insurance is not free. Given the time to study the rules, insurers have found ways to pass costs on to consumers. For example, immediately after the new healthcare law was enacted, children up to the age of 26 became entitled to coverage under their parents’ plans. News stories quoted 25-year olds celebrating their free healthcare. Now, that coverage is available from some insurers only with an additional premium payment.
Healthcare devices will now be taxed to pay for healthcare and, surprisingly to the mainstream media, manufacturers are planning to pass those costs on to customers. It also seems to come as a surprise that devices include things like eyeglasses and rubber exam gloves in addition to the implantable surgical devices most believed would be taxed.
Fast food companies and other low wage industries are studying how to pass costs of mandated coverage to customers. The answer seems to be higher prices, everything from a few cents more for a pizza to higher vet bills for cats and dogs since veterinarians need exam gloves.
Inflation pressures have been building in the economy and the catalyst for runaway inflation may be healthcare mandates which unleash unintended consequences. Gold, for now unimpacted by the new costs, could become more and more valuable as price hikes hit consumers and inflation rises.
The above commentary is for informational purposes only and is not a solicitation by National Gold Group or Michael Carr. It is the commentator’s opinion only and not intended for investment recommendations, and does not necessarily reflect the views of National Gold Group. Any references to outside sources are believed accurate. Past performance is not a guarantee of future results. All commodities involve risk. Investors should consult their financial advisor before making any investment decisions.