COLA is the acronym for “cost of living adjustment.” Because the CPI was up by only 1.5%, summer to summer, there will not be much of a Social Security increase this year.
The CPI barely moves these days. This means that the Federal Reserve can counterfeit $1 trillion a year, which it uses to buy federal debt, yet no one complains. Bankers refuse to lend most of this new money to the public, so the rate of M1 money creation is low. This lets the Federal Reserve get away with its policies at no risk to the FED. This guarantees the extension of the so-called QE3 policy through 2014 and well into 2015, as the Federal Reserve has publicly admitted.
Low price inflation holds down expenses for the federal government. Over half a trillion dollars per year of newly created money flows into the bond market. Almost this much subsidizes the mortgage market. This is great for politicians for as long as prices do not rise much. The public is subdued.
If the FED ever stops this increase, there could be a recession, depending on what commercial bankers do with the $2.4 trillion in excess reserves held at the FED.
Any reduction of the FED’s easy money policies would raise interest rates on mortgages. The housing recovery would end. The voters would not like that.
Until then, the present arrangement keeps Washington happy. It’s almost free money. The FED inflates, but prices are close to stable. The COLA stays flat. Social Security recipients learn to live on less. They get almost nothing on their bank savings accounts. They do not get significant increases in Social Security payments. They dip into their savings to make ends meet.
Unlike the U.S. government, they do not have endless inflows of money from the Federal Reserve.
One question, will congress and federal workers be getting a COLA? If so, how much will theirs be? I think it's time we controlled their raises!
It strikes me as odd that when they are computing COLA increases for social security the cost of living has not increased. But when they are computing the COLA for federal employees, those people are suffering under cost increases that are burdensome. Through this whole thing interest rates on savings are held so low that seniors get no relief when they must tap their savings. See my blog at http://cranky-conservative.blogspot.com
How about SS peeps get the same % rate increase as congress, and as offten
Don't want an increase – the increase goes to the state and medicare, not to the SS recipient.
Haven’t our federal politicians (eagerly) assumed responsibility for the economy? If so, they should suffer some cost of living penalty – a COLP. Give retirees a cost of living allowance and deduct an equal amount from our federal legislators and administrators. . . . Seems fair.
That is a great idea. We need raises the same size that the reps get…..or they need raises our size going back 40 years.
A person on SS will see his buying power decrease each year until he dies naturally or starves to death.
Has it never occured to the American People that when the Federal Reserve prints money and buys debt with it, that the printed money has not been earned through productivity.Therefore, it is usless as a medium of fair exchange and will erode the real value of money that has been earned through fair exchange amonst people.