Feb 8 2013

The relentless punishment of the American saver. Fed policy has encouraged spendthrift attitude and yield seeking behavior from Americans.

The Federal Reserve has actively pursued a policy that punishes American savers.  The drive to push interest rates lower has inflated both the stock market and housing market once again.  Yet little of this gain has trickled down into household income for Americans.  The primary reason for this is that most Americans do not derive a significant portion of their wealth from stocks. In fact, a large portion of Americans are living paycheck to paycheck so if the Fed was really interested in boosting wages, they would have looked at income first instead of making it easier for banks to borrow money.  Since 2008 savings rates at banks have been below one percent.  In many banks, they have hovered slightly above 0 percent.  Unfortunately the slow eroding power of inflation has eaten away at the purchasing power of Americans.  For many, the choice has been to simply spend income as it comes in or try to chase yields in other markets.  Ultimately the prudent saver has been punished.

Read More

Feb 4 2013

The United States of Debt Addiction: Our reliance on debt has created an entire economy fortified in the fires of moral hazard and fiscally dangerous leverage.

16 point 7 trillion dollars.  That is our current national debt.  12 point 8 trillion dollars.  That is the amount households carry in mortgage and consumer debt.  We are now addicted to debt to lubricate the wheels of our financial system.  There is nothing wrong with debt per se, but it is safe to say that too much debt relative to how much revenue is being produced is a sign of economic problems.  At the core of our current financial mess is how we use debt as a parachute for any problem.  We’ve been masking the shrinking of the middle class by allowing households to take on too much debt for a couple of decades.  The results were not positive.  Too this degree, we have now created a massive moral hazard economy where savings are punished into oblivion.  There is very little incentive to put your money in a bank account yielding zero percent interest when real inflation is eating away at your money like a hungry wolf.  So what do people do?  Well many simply cannot save and therefore choose to go into debt to finance cars, housing, and education with very little down.  Where does this debt addiction lead us?

Read More

Feb 2 2013

Young riding out recession by going into debt for college: Millennial unemployment jumps by two percent.

As the animal spirits of the economy rage wild, there are still difficult challenges ahead for younger Americans.  While the stock market is up highlighting corporate euphoria, many companies are doing this with 4 million fewer workers.  So the economic recovery is not evenly distributed and they rarely are.  Yet younger Americans are still facing tough challenges ahead.  One major trend has to do with many people going back to college.  While education is positive, the costs are becoming incredibly high and many simply cannot afford it.  This is why total student debt outstanding is now over $1 trillion.  Why is this so important?  Well for one, we are seeing data showing that recent graduates, those in the last decade, are not yielding solid gains from their ventures into college.  With 4,000 colleges in the US, many are subpar and many are designed as vehicles to extract student loans.  How is this economy treating younger Americans?

Read More

Jan 31 2013

Are we reaching a tipping point in the stock market? 4 million fewer jobs from peak but corporate profits at record levels. Consumer confidence dips yet stocks keep moving up.

As the Dow flirted with 14,000 and the S&P 500 hit 1,500 the typical American is losing their confidence and also reflects a stock market that diverges from the interests of the Americans worker.  Given that many of the S&P 500 companies earn a sizable portion of their profits abroad, it is hard to see a direct correlation to the health of the American worker.  In fact, the middle class continues to face a difficult future.  It was interesting to see consumer confidence fall while stock prices move up.  But what we do see is a growing class of Americans stuck in poverty.  The startling high number of Americans on food stamps does not seem to be inching lower (we are over 47 million).  Yet corporate profits are at record levels.  Goldman Sachs for example earned $2.8 billion in the fourth quarter of 2012.  How is it feasible that stocks continue to move higher while real wealth gains to working and middle class Americans seem stagnant?

Read More

TAGS:
Jan 29 2013

Inflation unchained: US dollar down 23 percent from 2000, Tuition up 72 percent, and home values up 44 percent. Incomes adjusting for inflation are back to 1990s levels.

It is hard to believe that people in the US are still denying the obvious impact of inflation.  The slow erosion of purchasing power has occurred for many decades now.  What people tend to forget in a completely fiat based system is that the Fed can print as much money as it likes.  And they have in digital format but also monetizing debt via mortgage backed security purchases.  When the crisis hit in 2007 debt was being destroyed via foreclosures and bankruptcies.  Debt in a fiat system is money.  That is why the Federal Reserve injected trillions back into the system to revive it.  Yet this money did not trickle down to most people.  However, today, we are seeing where debt is present prices will soar.  Just look at student debt and housing prices again.  How is it that college costs and housing prices are moving back up a nice pace when actual household wages are stagnant?  Because inflation is hitting the system and more debt is accessible to these sectors.

Read More

Jan 26 2013

Can you live in California on a $60,000 a year household income? Living the middle class lifestyle in California on $60,000 a year.

Can you live comfortably in California making $60,000 a year?  It really depends on what you define as comfortably.  We should note that the median household income in the US is $50,000 and in California it isn’t much higher.  California gets a notorious rap of being an expensive state but this is if the entire focus is on coastal regions.  There are many areas where homes are actually affordable given current interest rates.  Yet many people struggle to get by.  You have many households pulling in $100,000 or more a year and they speak as if it were an act of poverty.  Yet they choose to live in areas like San Francisco and spend up to their income levels.  It is very feasible to live in California on $60,000 a year but not how many would expect.  People are feeling the withdrawals of our debt based addiction and California is a prime example of this.

Read More

Jan 24 2013

What does Detroit say about the working class in the US? City has lost over 25 percent of its population since 2000. People take scrap metal from old buildings to export to China.

One of the biggest examples of the US eroding its working class is through the example of Detroit.  The city of Detroit has lost a stunning 25 percent of its population between 2000 and 2010.  Poverty is rampant with 3 out of 5 kids living below the poverty line.  It is a startling revelation of what can happen to what was the fifth biggest city in the United States and now is merely a shell of itself.  There is a documentary, Detropia which grimly shows dilapidated buildings while many tear out scrap metal to sell on the open market.  You also hear from citizens trying to make sense of what is occurring.  What is stunning is the population of Detroit is now back to levels last seen in the first half of the 1900s.  A town built around big US automakers reflects what a country can look like when it loses a big part of its manufacturing base in pursuit of low wage capitalism.  The rust belt gives us a clearer perspective as to why we have 47 million Americans on food stamps while the stock market inches closer to record levels.

Read More

Page 30 of 122« First...1020...2829303132...405060...Last »




Enter your email address to receive updates from My Budget 360:

100% Private & Spam Free.



Popular – All Time

  • 1. How much does the Average American Make? Breaking Down the U.S. Household Income Numbers.

  • 2. Top 1 Percent Control 42 Percent of Financial Wealth in the U.S. – How Average Americans are Lured into Debt Servitude by Promises of Mega Wealth.

  • 3. Is college worth the money and debt? The cost of college has increased by 11x since 1980 while inflation overall has increased by 3x. Diluting education with for-profits. and saddling millions with debt.

  • 4. The Perfect $46,000 Budget: Learning to Live in California for Under $50,000.

  • 5. Family Budget: How to go Broke on $100,000 a year. Why the Middle Class has a hard time Living in Expensive Urban Areas.

  • 6. Lining up at Midnight at Wal-Mart to buy Food is part of the new Recovery. Banks offering Mattress Interest Rates. The Invisible Recovery Outside of Wall Street.

  • 7. You Cannot Afford a $350,000 Home with a $75,000 Household Income!

  • 8. Crisis of generations – younger Americans moving back home in large numbers. Student loan default rates surging largely due to for-profit college expansion.

  • 9. The next massive debt bubble to crush the economy – 10 charts examining the upcoming implosion of the student loan market. $1 trillion in student loans and defaults sharply increasing.

  • 10. Welcome to the new model of retirement. No retirement. In 1983 over 60 percent of American workers had some kind of defined-benefit plan. Today less than 20 percent have access to a plan and the majority of retired Americans largely rely on Social Security as their de facto retirement plan.
  • Categories