Wages CRASHING!!!!!!!! Deflation is HERE!!!!!
From the NYTimes:
Companies eager to conserve cash are trimming their contributions to their workers’ 401(k) retirement plans, putting a new strain on America’s tattered safety net at the very moment when many workers are watching their accounts plummet along with the stock market.
When the FedEx Corporation slimmed down its pension plan last year, it softened the blow by offering workers enriched 401(k) contributions to make up for the pension benefits some would lose. But last week, with Americans sending fewer parcels and FedEx’s revenue growth at a standstill, the company said it would suspend all of its contributions for at least a year.
“We will have to work more years and retire with less money,” said Lee Higham, a 44-year-old senior aircraft mechanic at FedEx, who has worked there for 20 years. “That’s what we are up against now.”
FedEx is not the only one. Eastman Kodak, Motorola, General Motors and Resorts International are among the companies that have cut matching contributions to their plans since September, when the credit markets froze and companies began looking urgently for cash. More companies are expected to suspend their matching contributions in 2009, according to Watson Wyatt, a benefits consulting firm.
For workers, the loss of a matching contribution heightens the pain of a retirement account balance shriveling away because of the plunging stocks markets.
Remember, if you have to take more of your salary and apply it to your retirement account to stay even, you are actually earning less.
If you earn less, you can afford less. If you can afford less, demand goes down. Decreasing demand usually leads to decreasing prices. You don't even have to take a course in Alstrynomics to understand this.
Gold DECREASING in price.
Oil DECREASING in price.
Transportation DECREASING in price.
Rents DECREASING in price.
Clothing prices DECREASING.
Toy prices DECREASING.
Electronic prices DECREASING.
I know.... in 1980 Gold's price was an anomoly......but in 2008 it was real. I guess there is a sucka born every generation. Quite frankly I am not sure where the price of gold is going.....but if you are thinking it is a hedge against inflation........you many want to change your thinking about inflation if reality means anything to you.....price inflation that is.........