MARK KARLIN, EDITOR AT BUZZFLASH AT TRUTHOUT

(Photo: 401K 2012)

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Lost in the coverage of America's tale of two economies (the 1% who have recieved 95 percent of the financial gains since they busted the economy in 2008 -- and the rest of us), is that seniors are especially hard hit by the disparity between so-called savings account interest (currently .01 percent at most banks) and inflation.

Yes, there still is inflation. It is relatively modest, but is still there and has a palpable impact on those on low fixed incomes - such as Social Security. According to a website that covers inflation:

Over the longer period from December 2012 to December 2013, the US inflation rate rose 1.5 percent. That increase compares to the 1.2 percent advance in the 12 months ended November. Inflation in 2012, as another comparison, rose 1.7 percent. Noted specifically by the Labor Department, it is the first time that inflation has been under 2 percent for consecutive years since 1997-98.

Wrapping everything up, core annual inflation in 2013 rose 1.7 percent, which is the same 12-month increase noted in each of the prior three CPI reports. The total in 2012 was 1.9 percent.

Yes, it is true that Social Security recipients received a 1.7 percent increase in 2013 payments. But given that the banks (ostensibly based on the overnight interest charged by the Federal Reserve) are only paying - in general - .01 percent interest on what are falsely called "savings accounts," seniors are losing money.

Furthermore, Social Security recipients were not even given an inflationary adjustment in 2010 and 2011 -- and according to CNNMoney, the spending patterns of seniors are in areas that experience a higher rate of inflation:

But it's not clear that these adjustments really cover the increasing costs faced by retirees, who have different spending habits than the overall population.

For example, seniors spend more on health care than the younger population, and government figures show the cost of medical care rose 2.5% over the past year.

And senior citizens may not benefit as much from falling gas prices. Most don't commute to work, so the 2.4% drop in gas prices over the last year won't much of a savings to them.

In addition, seniors periodically are threatened with Congress and the White House agreeing to a lower yearly adjustment based on an economic formula known as the Chained CPI.

This overall issue of most of America's seniors losing the value of their savings every year (and for most elderly Americans retirement savings don't amount to much) has been brought up before on BuzzFlash at Truthout, but the situation for senior citizens who aren't reaping a fortune from record stock market gains (the 1%) is still as perilous as it has been.

An article on MSNMoney points out:

U.S. Treasury yields are at least 2 percentage points under what they would be otherwise because of the Fed’s low-rate policies and stimulus programs, said William Ford, former Atlanta Fed president who wrote a 2011 paper estimating the impact on savers of monetary easing. That reduces their income by at least $280 billion annually, his analysis shows.

“The costs of low interest rates are being ignored,” Ford said in an interview. “It is killing savers, elderly savers who are living on life savings that have been conservatively invested....”

Americans face a “crisis,” said Alicia Munnell, director of the Center for Retirement Research at Boston College in Chestnut Hill, Massachusetts, and a former research director at the Boston Fed. “Five more years of low interest rates are going to make providing one’s self with an adequate retirement income extremely difficult.”

The financial crunch probably will reduce consumer-spending growth in the next decade and also could hurt career prospects for younger generations, said Steven Ricchiuto, chief economist of Mizuho Securities USA Inc. in New York.

“Simple, it is a drag,” he said. Either they cut spending to boost saving or “they will just be forced to work longer, making it harder for young people to get jobs or move up the ladder.”

The bottom line is this: 1% of seniors are flying high off of record breaking stock market prices and dividends, while 99% are losing ground each year to inflation.

To top it off, the seniors are giving money to banks, in essence, at no interest, for the banks to reloan out at interest rates of 30 percent or so on some credit cards, for example.

It amounts to financially mugging the people who really built America with the sweat of their labor.

The suits with rolexes are flying to private island resorts and stashing money in the Caymans while our nation's seniors are clipping coupons and rationing their change.

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