A closer look at the cost of living between 2000 and 2015: Looking at tuition at USC and the typical priced US home.
We keep hearing that the Fed is tepid about raising interest rates because there is no sign of inflation. In fact, they assume that wages are keeping up for most families and that is not true. Inflation is running rampant. You don’t need giant price increases to disrupt lifestyles when many of the new jobs are being added in the low wage service sector. Numbers mean little without actual case examples. So today we are going to look at tuition at a big private university and the cost of buying a home. These are big ticket items and many people need a college degree to even have a remote chance of not falling into the low wage hamster wheel. But choosing a school and managing costs is like navigating through a landmine field. This is why total outstanding college debt is now at $1.36 trillion and growing. While nominal wages have gone up since 2000 all of the gains have been stripped by the rising cost of items. People try to keep up by going into debt to finance these purchases. This is why inflation is a slow dollar killer. Let us look at this in practice.
Social Security supports 1 out of every 5 Americans: Most retirees heavily depend on Social Security for their retirement income.
It is great that people overall are living longer but adding years to your life can get costly. Retirement can be a long time. For some, retirement can last as long as their working career. With a pension people didn’t have to worry about longevity as if this was a bad thing. Yet pensions are rare in our current low wage environment. Social Security has become the backbone of income for millions of retirees. Numbers can be daunting but as I dug deep into the Social Security figures, we now have more than 64 million Americans receiving some form of Social Security. In other words, 1 out of 5 Americans is receiving funds from a system that heavily relies on those actually working. The challenge is now emerging where many young Americans are being pushed into low wage jobs while older Americans scrimp by on their monthly benefit payment. Things work until they don’t and math eventually catches up.
7 million college debtors have yet to make a single student loan payment in last year. The college debt bubble grows.
The student debt problem continues to spiral out of control as millions of young Americans enter the workforce only to be greeted by low paying jobs and the monthly bill for their college experience. For the most part studies show that college graduates do better than non-college graduates. Yet these studies fail to take into account the soaring cost of college today. These studies also mix in top performing schools with paper mill operations. There was a recent analysis showing that there are now 7 million college debtors who haven’t made a college payment in the last year. This is a staggering 17 percent of federally held student debt while many others are inching closer to the 360-day delinquency window. In other words, many people are simply not paying back their college debt. The amount of student debt is staggering coming in at over $1.36 trillion. The student debt bubble is symptomatic of the way our financial system is now operating and that is debt is piled upon debt and strung out over years to be paid back in hopes that inflation will pass the bill to future generations. The bill is getting harder to pass.
The casino of Wall Street enters official correction territory: S&P 500 has increased on the back of a massively expanding Fed balance sheet.
The casino effect of Wall Street is being played out in full. The Fed balance sheet recently stopped growing at an astounding $4.5 trillion. This is the first time in nearly three years that the balance sheet has slowed down in large part for the oncoming rate hikes that seem to never materialize. The market is largely funded by a few and wealth concentration has increased over the last decade into fewer hands. You need a buyer if you want to sell so many large investors are unloading inflated stocks, real estate, and bonds onto unsuspecting dupes. In China, a large part of the public jumped into the market and many only have an elementary school education. Today many are getting an education on the casino nature of the stock markets. In the US a large part of the bull market has come from the Fed expanding its balance sheet to ungodly proportions. The Fed balance sheet since the financial crisis has grown from $800 billion (mostly Treasuries) to $4.5 trillion of QE junk and asset swaps that are still lingering. The public realizes this is one giant charade and that is why they are revolting in the political arena.