Oct 11 2012

Standard of living, meet falling US dollar – how a falling US dollar benefits banks at the expense of working Americans.

There is certainly a cost to a falling US dollar.  Many Americans are living the consequences of this multi-decade long trend.  The Federal Reserve has only added fuel to this trend but many families are now realizing that there does come a cost to unrelenting debt based solutions to fiscal problems.  Shopping at the local grocery store I’ve noticed that some items have doubled in the last few years.  Fueling up is also more expensive.  The issue with living on a low dollar policy is that eventually, you end up in a low wage capitalist system.  The easy money slowly inflates away especially on global items.  We are seeing this in the US in various arenas especially with higher education.  The end result is that the standard of living for the vast majority of Americans has fallen dramatically in the last few decades.

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Oct 9 2012

The sound of rumbling from the student debt bubble – Jump in consumer credit last month came mostly from student debt growth. For two decades student debt expanded at a rate above 17 percent per year.

The flashing alert signs permeating from the higher education bubble should give people pause to the next flavor of the day bubble.  This month information was released regarding consumer credit growth.  Most of the headlines took this as positive economic news but digging deeper into the data we realize that the bulk of the growth came courtesy of exploding student debt.  Even with the encyclopedia amount of data showing how horribly run many for-profit colleges are run, the government continues to back these risky endeavors while saddling young Americans with unrelenting levels of debt.  It doesn’t take a rocket scientist to see the predatory nature of these operations just like it was easy to see subprime loans were going to end badly.  So why continue to allow this to go on?  Why is the system so adamant on continuing to pour layer upon layer of student debt syrup onto the younger segment of our nation that is already struggling in the employment market?

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Oct 6 2012

The tipping point for global debt – total global needs to grow to $213 trillion by 2020 just to sustain current growth.

Every so often markets forget that too much debt is a bad thing.  We are already seeing inflation in many items and the standard of living being pushed lower for many Americans thanks to policies that crush the US dollar and allow the Fed to expand its balance sheet without congressional approval.  There are consequences to all these actions.  We are also quickly approaching the debt ceiling, again.  Does anyone think that $16 trillion will ever be paid off?  Total global debt is at a silly number no matter how you slice it.  The problem is you get a diminishing level of return and you can see this in places like the Euro-zone that is bailing out banks and countries left and right.  Then you have economies like China were they are having internal bubbles in real estate because hot money is flowing too quickly.  Is there a tipping point for global debt?

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Oct 3 2012

Who controls the wealth in the US? Western countries expand balance sheets at the expense of their younger population.

If the debates reflected the true interest of what Americans have on their mind the entire debate would revolve around the slow erosion of the US middle class.  Yet this is something that will only be a footnote and for any discussions that do come up the specifics will be lacking.  The reality is we do have a middle class crisis in the US.  Americans are being fleeced through inflation on daily goods and we have an incredible 46+ million Americans on food stamps, a record percentage of our population.  Yet the stock market slowly inches up to a near record high.  How is it then that most Americans because of this recession lost 30 to 40 percent of their wealth?  Part of this has to do with how wealth in the US is structured.  The reality is we are making it tougher for mobility to occur thanks to the massive higher education bubble.

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