Online accounts: what happens when you die (8 27 25)

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🤫 Did the Fed Quietly Ditch 2% Inflation Target?

Most headlines about inflation and interest rates are heavily focused on whether Fed chair Jerome Powell will initiate the first cut since Dec. 18, 2024.

Lost in the short-term attention is something that’s potentially a much bigger deal: The Fed edited its long-time policy document.

Here’s a portion of what the Fed deleted: “… the Committee seeks to achieve inflation that averages 2 percent over time...”

According to Bloomberg, “Powell said the Fed has adopted a new framework that removes a reference to the central bank seeking inflation that averages 2% over time and one to it making decisions on employment based on shortfalls from its maximum level.”

Many economists and investors interpret that the Fed abandoned its long-stated goal of 2% inflation.

It’s been more than four years since the United States achieved inflation of 2.0% or less. Our budget deficit and national debt continue to skyrocket, no matter which political party is in charge.

Social Security benefits, Medicare and other federal programs are at risk of becoming extinct without changes. Clark has long held that no matter what those changes are, an increase in the amount we pay in taxes is inevitable.

The short-lived DOGE (U.S. Department of Government Efficiency) program, which attempted to reduce waste and fraud in the federal government, did not change the trajectory of our federal spending.

In addition to Clark’s prediction about taxes, it now seems like part of our strategy is growth. (If you owe $10,000 in credit card debt, it makes a difference whether you make $100,000 or $300,000 a year.)

Inflation hit a low of 2.3% in April but has crept to 2.7% at present, and may climb a bit more as companies pass on the cost of tariffs at an increasing rate. Still, according to prediction markets, it’s very likely that Powell will cut interest rates in September.

If growth is now a key component of our strategy to contend with debt and budget shortfalls, and if 2% inflation is no longer an explicit goal of the Fed, we’re entering a new era.

That reality could include printing a lot more money, welcoming access to cheap capital … and asset prices (stocks, real estate, etc.) continuing to shoot higher at perhaps an even greater rate in the long-term future.

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🎙️ Podcast

A retired couple’s home renovation plans nearly triggered a massive, hidden cost that no one wants to pay: the Income-Related Monthly Adjustment Amount (IRMA). Fiduciary financial advisor Wes Moss breaks down how a simple plan to pay for a renovation could have led to thousands of dollars in extra Medicare premiums and what you can do to avoid a similar fate. Also, Wes dives into the world of AI and financial planning. He explains why AI is a powerful tool for analysis, but warns against using it as a fortune teller. Find out how you can use AI to your advantage while avoiding the dangerous pitfalls of letting it make your big financial decisions for you.

☎️ Need Money Help?

The Team Clark Consumer Action Center is a free helpline that can help you navigate your money questions. Call 636-492-5275. Visit clark.com/cac for more information.

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