The government is already in a soft default and is addicted to low interest rates: Government expenses at $3.87 trillion while receipts enter at $3.29 trillion.
The term default has varying definitions depending on whether you are an individual, a big bank, or the government. For you as an individual, default will occur when you are unable to pay your debts with the income you are generating. You are constrained by your income. As we saw with the housing crisis, when you are unable to pay your mortgage a bank will foreclose on your home. Unable to pay your auto debt? Repossession is the likely next step. Not making those college loan payments? Garnishment of wages is a typical course of action. Yet for the government, they have the ability to print their way out of problems courtesy of our fiat money system. The end result is inflation in the real economy which ultimately impacts families. Banks of course have the ability to restructure debt and circumvent accounting rules to their own convenience. If we applied the same rules of default that individuals follow to the government, we would already be in a soft default. This does not happen but what ultimately occurs is inflation in items that are financed via debt (i.e., housing, student loans, cars, etc).
The oxymoron of the labor force when labor means not working: 92 million Americans are not in the labor force with 12 million of those being added only in the last 4 years.
This week we will be getting the employment numbers. The unemployment rate is expected to stay steady or even drop which is comical given that we have 92 million Americans not working today and another 19 million that are fully unemployed. Those not in the labor force continues to grow beyond the basic changes in demographics. This topic rarely receives any coverage since those not working largely have no funds to back lobbying groups or to put ads out in the media. Yet we can see this dissatisfaction when Americans are asked about their views on the economy. The majority think the economy is doing poorly and this is expected given the underlying numbers. You have young Americans going to college and many are coming out to low wage jobs and hefty student loans. In the last 4 years alone we have added 12 million Americans to the not in the labor force category. This measure is used to calculate the unemployment rate and given this group is not factored in, the unemployment rate looks much better than it truly is. The oxymoron that we have is we have a labor force that is largely not doing labor.
Is going to college worth it? College tuition has increased at a faster rate than housing, energy, food, and medical care costs over the last decade.
For an entire generation it was an easy question to answer. Is college worth it? Absolutely. There was little debate regarding the “worth†of a college education. Of course this question was usually asked during more affordable times and not when $1.2 trillion in student debt was out sloshing about in the economy.  I think most people agree that moving your knowledge forward is a good thing. Learning about a broad range of categories is useful in creating well rounded citizens. Yet is this worth $25,000 per year? $50,000 per year? When costs soar to these levels, you need to examine the question of worth. Families are struggling to get by since the per capita wage is $28,000 in the United States. With families being unable to pay the college bill, students are taking the next logical step. They are taking on massive levels of student debt. With easy access to debt, the cost of a college education has outpaced practically every other sector of our economy.
Working for peanuts: Half of American workers earn less than $28,031 per year and household income now back to levels last seen two decades ago.
Every fall, two pieces of data are released reflecting the earning potential of American families and workers. The low wage economy has certainly taken a toll on how much Americans earn. Social Security data was recently released and shows that 50 percent of the country earns less than $28,031. This is the per capita wage. Given the high cost of living in many metro areas this is barely enough to get by. The assumption is that with the stock market doing so well, workers would also be sharing in the spoils of the recovery. Yet much of the growth in jobs have come in low wage opportunities that usually come with smaller benefits and shrinking paychecks. Adjusting for inflation households are earning what they once did nearly two decades ago. Is this truly an economic recovery? It all depends on how you define a recovery.