The modern day Gilded Age – in 2010 top one percent captured over half of all income gains. From early 2009 the S&P 500 is up 109 percent but home prices are at new lows falling almost 34 percent.
Most Americans derive their net worth from the equity built up in their homes. This has been the case for many decades. As the stock market races upwards to stratospheric highs it is hard for many average Americans to understand why it is that economically they are stuck in the same place. New tax data reveals that Americans are living in a modern day Gilded Age. The massive income inequality has only been exacerbated in the recent grand recession. Many Americans with a per capita annual wage of $25,000 have a hard time saving any sizeable amount of money once the cost of living is extracted from their income. This trend has only continued and IRS tax data reveals that the gap between middle class and wealthy is only getting bigger. This is why even in spite of a stunning stock market run, we have a record 46,000,000 Americans receiving food assistance and working class families are seeing very little growth in their real wages.
Retirees face a perilous financial decade ahead – Over 30 percent of workers have less than $1,000 saved for retirement. Defined-benefit plans down to 20 percent from over 60 percent in 1983.
While financial institutions can rearrange assets and play around with accounting rules modifying reality the progression of age is hitting millions of Americans. There is no pause button when it comes to growing old. Recent surveys are highlighting a very challenging road ahead for retirees. A survey released by the Employee Benefit Research Institute (EBRI) shows a cardinal sin for many Americans. Many have not saved for retirement. There are a variety of reasons why this has happened. Stagnant wages and rising costs to live life have consumed a bigger proportion of disposable income. The defined-benefit plan is also going the way of the dinosaurs. The pension, once a cornerstone of retirement for Americans is now becoming a relic of the past. What happens when you have the biggest cohort of retirees hitting with a nation deeply in debt?
A costly lesson in student debt for young Americans – 34 percent of all student debt saddled to those under the age of 30. 47 percent of student loan borrowers appear to be in deferral or forbearance.
The student loan market has expanded like a financial virus in the last decade. Even during the financial meltdown where credit was being restricted across all sectors of the economy, student debt kept on growing at a feverish pitch. It would be one thing if the quality of education had increased or wages were going up for college graduates but the opposite occurred. The quality of education especially at many of the for-profits is suspect at best and borders on thievery. This is where a massive expansion has occurred thanks to the financialization of our entire economy. Student debt has grown from $97 billion in 1997 to a stunning $870 billion according to conservative Fed reports to inching closer to $1 trillion this year by other measures. Higher education is definitely in a bubble and younger Americans are dealing with the brunt of this new predatory financial epidemic.
Little Known Ways the Federal Reserve Punishes American Savers and Supports Conspicuous Consumption.
The Federal Reserve is one of the most mysterious organizations in the world. What they don’t hold back on however is their intentions for the American saver. They are one of the biggest key players in the financial bailouts yet very little is ever discussed about this organization on national or even cable television. The actions taken by the Fed during the grand financial bailout are subtly punishing American savers. Policy will dictate market action. The Fed is trying to corner American savers so they are left with two options, both risky and problematic in the long-term. The American middle class is slowly sliding into oblivion thanks to the Federal Reserve and their favorable banking bailouts. Our economy is largely driven by massive consumption. Saving money especially in more traditional savings accounts is good for you, but not necessarily the economy. This is the paradox of thrift and the Federal Reserve is determined to punish savers and pave the road to conspicuous and financially dangerous consumption. The Fed agenda is clear and this is what American savers can expect for years to come.