When it costs more to be poor – Fed and government shifting inflation onto rent, medical care, and food. QE3 to widen the gap between the poor and the wealthy.
Inflation has been picking up since the recession ended in 2009. The problem with the CPI increasing year over year with no rise in household incomes is that the standard of living for most Americans erodes every year that incomes do not keep up. Household incomes are back to levels last seen in the mid-1990s [...]
How the Fed bluffs the financial system – Labor force participation back to levels last seen over three decades ago. Fed policy aims at pushing US dollar lower.
The US is facing a long trend of aging Americans entering into retirement or what can be viewed as life post-work. The vision of sitting on the sand in some resort villa is largely a dream. Nearly half of American when they leave this world go out broke like a country western song. Today as [...]
Deleveraging from one bubble to another – $6.2 trillion in mortgage debt was added between 2000 and 2008. Since the peak in 2008 $1.3 trillion in US household debt is gone but another bubble is brewing hidden under the rubble of the busted housing market.
There is some interesting data on the deleveraging that is occurring with the American household. Since the peak in Q3 of 2008, US households have lowered their outstanding debt by $1.3 trillion. It is important to understand how this deleveraging is occurring. First of all, Americans are largely paying down existing debts much faster and [...]
The tax consequences of a shrinking middle class – Nearly half of Americans do not pay income taxes because they earn too little or are flat out on Social Security.
Recently the topic of taxes has been put on center stage again. Aside from the political bickering the data shows us an even more disturbing trend. The middle class is demonstrably shrinking at a time that the government is spending money it doesn’t have while the Fed is digitally printing money to save its allied [...]
100 million credit card accounts are gone since 2008 – Credit card balances decline by 22 percent since their 2008 peak.
Credit cards have been used as a lifeline and a way to live beyond one’s means in the United States for many years. Yet the current environment of deleveraging is hitting credit cards hard. The outstanding balance on credit card debt has reached a level last seen over a decade ago. This is positive since [...]
QE3 into infinity and stagflation – Federal Reserve now purchasing over 50 percent of MBS and planning on buying $40 billion per month into infinity.
The Federal Reserve is playing with financial fire here. The last employment report was terribly weak and no amount of spinning can make it good. The drop was largely based on hundreds of thousands of Americans dropping out of the labor force. Is that really a positive sign? Last week we received data from the [...]
Federal Reserve slaps on financial rocket boosters but who will benefit? Half of Americans spend more than they make and household incomes fall back to levels last seen in 1995.
The Federal Reserve announced the sequel to the sequel on Thursday with Quantitative Easing 3. After all, if something didn’t work the first time might as well rinse and repeat. The markets are rallying yet what has come from the QEI, QEII, TALF, TARP, and all of those other backdoor bailouts? What has resulted is [...]
Economic duplicity with low wage capitalism – Nearly half of those that lost their job between 2009 and 2011 are working in a lower wage position. The hard financial reset button.
All jobs are not created equal. It is unfortunate that last month the drop in the unemployment rate was largely driven by hundreds of thousands of Americans simply dropping out of the labor force. Not exactly a way to build the middle class but to many it gives the false impression that things are getting [...]
The swan song of stagflation – Gas prices up over 100 percent from 2005 and incomes are stagnant. Ignoring a $16 trillion debt headline and repackaging food to hide stagnant incomes.
If you look around your daily life you realize that your purchasing power is losing value. For a few decades now the middle class in the United States has demonstrably shrunken like clever food packaging. Over the last forty years we have lost 10 percent of our middle class. Most have fallen into the lower [...]
Student debt crisis enters a tipping point – Delinquent student debt now reaching record levels as defaults spike. Paying more and earning less.
The great deleveraging event continues to unwind while one sector of debt continues to grow by leaps and bounds. While other forms of debt have fallen by $1.6 trillion since the peak of the debt bubble mania, student loan debt has increased by a stunning $303 billion since the third quarter of 2008. What is [...]