The Consumer Price Index (CPI) is a measure of the weighted average price changes of consumer goods and services purchased by a typical household during a year: Food - Housing - Apparel - Transportation - Medical Care - Recreation - Education - Communication - Tobacco - Etc.
The CPI has averaged 4% per year for the past 50 years.
The average for 25 years ending in 1985 was 5.25%. The average for the past 25 years has improved to 3%.
We should set a goal to hold inflation to 2% per year. We can move in this direction by adopting my recommendations in the, "Saving Social Security" page to:
- Fix the interest rate earned on the $2.5 Trillion of Federal bonds owned by the Social Security Trust Fund at 5%.
- Fix the annual increase in Social Security benefits at 2%.
- Mandate a balanced Federal budget every year. In down years we will break even. In up years we can pay down the National debt with the surplus.
This should also return the average return on Corporate bonds to about 7% and the average return on Corporate stocks to about 9% per year.
"YES, IT IS THAT EASY"