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.

Many Americans are not buying the recent stock market rally.  This is being reflected in multiple polls showing negative attitudes towards the economy and Wall Street.  Wall Street is so disconnected from the average American that they fail to see the 27 million unemployed and underemployed Americans that now have a harder time believing the gospel of financial engineering prosperity.  Americans have a reason to be dubious regarding the recovery because jobs are the main push for most Americans.  A recent study shows that over 70 percent of Americans derive their monthly income from an actual W-2 job.  In other words, working is the prime mover and source of their income.  Yet the financial elite have very little understanding of this concept.  Why?  42 percent of financial wealth is controlled by the top 1 percent.  We would need to go back to the Great Depression to see such lopsided data.

Many Americans are still struggling at the depths of this recession.  We have 37 million Americans on food stamps and many wait until midnight of the last day of the month so checks can clear to buy food at Wal-Mart.  Do you think these people are starring at the stock market?  The overall data is much worse:

financial-wealth-united-states
Source:  William Domhoff

If we break the data down further we will find that 93 percent of all financial wealth is controlled by the top 10 percent of the country.  That is why these people are cheering their one cent share increase while layoffs keep on improving the bottom line.  But what bottom line are we talking about here?  The Wall Street crowd would like you to believe that all is now good that the stock market has rallied 60+ percent.  Of course they are happy because they control most of this wealth.  Yet the typical American still has negative views on the economy because they actually have to work to earn a living:

gallup-economics

The above daily poll asks Americans about their view on the health of the economy.  Only 13 percent believe the economy is good or excellent.  Funny how that correlates with the top 10 percent who control 93 percent of wealth.  Many Americans were sold the illusion of the bubble.  They were sold on the idea that their homes were worth so much more than they really were.  And many used this phony wealth effect to go out and spend beyond their means.  They started spending as if they were part of this elite 10 percent crowd.  But once the tide rolled out, it was clear they were not.  And the horribly built bailouts demonstrate who is controlling our political system.  This was not the rule of a capitalist system but a corporate run government.

Just think about the bailouts and which companies were saved.  We ended up bailing out the worst performing and troubled companies thus keeping alive companies that should have completely failed.  Did we bail out Google?  Proctor and Gamble?  Of course not.  These companies actually produce something that people want.  Banks and especially the Wall Street kind merely keep that 42 percent happy by making sure their stock values stay high so they can keep on making money while the average Americans is sold up the river.

Yet many were brought into the easy money fold by going into massive amounts of debt.  And who has most of the debt?  That is right, the average American:

debt

The bottom 90 percent have been saddled with 73 percent of all debt.  In other words much of their so-called wealth is connected to debt.  Debt is slavery for many especially with egregious credit card companies taking people out with absurd credit card tricks and scams.  Yet the corporate propaganda machine is strong and mighty.  Have you ever received an inheritance?  A large one?  Probably not because only 1.6% of all Americans receive an inheritance larger than $100,000.  If this is the case, why in the world do politicians worry so much about the tax impacts of this?  Because they want to keep the corporatocracy alive and well so their spawn can get a piece of their pie.  They give the illusion to average Americans that if you only work hard enough you too can join this elusive club of cronies.  The data shows otherwise.

But if we start looking at investment assets, the true wealth in the country, we start realizing why Wall Street is all giddy about the recent stock market government induced rally:

stock-markets

Of investment assets 90 percent of Americans own 12.2 percent.  The rest goes to the top 10 percent.  Welcome to the new serfdom.  The bailouts that went out to the filthy rich were more about protecting their tiny corner of the world than actually making the economy better.  That is why it is interesting to see companies fire people and Wall Street cheer for the increase in earnings per share.  Good for the few at the expense of the many.  Yet the propaganda out of Wall Street and our government is what is good for Wall Street is good for you.  Just like that 1.6% inheritance issue, the vast majority of Americans won’t deal with that and their primary concern is simply a job.  A job that has provided stagnant wages for a decade while the ultra wealth get richer and richer in a phony form of corporate socialism.

If you break down the data you realize that most Americans don’t have time to speculate in stock markets:

incomedistribution

Only 34% of U.S. households make more than $65,000 per year.  What is that after taxes?  Let us use a state like California for example:

income

Now if we breakdown this data further you will realize that most of the money is consumed by cost of living necessities, not Wall Street speculation.  Just to show this example let us look at a family budget for someone in California making $100,000:

family-budget-100k

Notice after running the budget we are in the hole for $1,000?  That is because of many costs that typical families have.  We can debate the merits of where they are spending money but the point is this; are these people really making beaucoup money from the stock market?  They are putting away $12,000 a year into their 401k.  As we have now found out, 8 percent a year is never guaranteed in the stock market although the corporate powers would like you to believe that so they can have other suckers to unload stocks onto.

“Yet the median household income in the U.S. is $50,000 and not $100,000.  They have even less to invest.”

They are more concerned on working to have a paycheck to pay for necessities.  They are more concerned about paying their house off by the time they retire and hopefully, have a little bit of retirement funds coming in.  The sad fact is most Americans rely on Social Security when they retire.  All those ads of unlimited golf and daily trips to Tahiti are propaganda of how Wall Street lives and they want to sell you the sizzle, and clearly not the steak.  They live their lives paper pushing and sucking the life out of the productive part of our economy.  The average American should now realize this since this financial crisis was primarily caused by them.  They are now on a massive campaign to blame Americans for this.  This is hypocrisy to the next level.  Many Americans have paid for their mistake by losing their home through foreclosure.  We have 300,000 foreclosure filings a month.  Many have taken a hit to their overall stock portfolio (if they have one).  Yet the corporate cronies have protected their horrible economy crushing debts at the taxpayer expense.  Unlike you, many hold bonds on the companies and not common stock like many Americans.  Bondholders have been protected at all costs during this crisis.  Goldman Sachs through AIG received 100 cents on the dollar for their horrible bets.  The banks have unlimited back stops thanks to taxpayers.  This is how the top 1 percent rule the new feudal state.

Welcome to the 2010 serfdom.  Time to wake up and restructure the system.  Many people are starting to wake up to this massive scam.

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59 Comments on this post

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  1. Mr. Bubbles said:

    I agree that wealth is unbalanced but consider this: These companies are publicly traded. You, me or anyone can buy stocks. It may have been just as tempting for the rich to over leverage themselves on real-estate but many didn’t. This hints at the root cause of the financial strife for most. Lack of investing knowledge and lack of self discipline in saving. Hardly the fault of most since our entire society is based on the consumption mentality. Hell, they don’t even teach us how to do our taxes in school. We are not learning what we need to learn in school. Period.

    December 27th, 2009 at 11:25 am
  2. bmolloy124 said:

    Yes, but don’t you see, to complain about the elegance of a system where private individuals can profit at the expense of others, means you’re a “socialist.” Profit, no matter how outrageous, and at what expense to middle-America (make that America itself, minus the upper 2%) is “American.” Just ask Michael Medved or Rush Limbaugh! Any demand for equity or even a level playing field for the majority to compete or maybe just subsist, is communist.

    Didn’t our forefathers fight, mentally and physically and in so many other ways, so that any one of us could own stuff we want, period.? A house or a castle or a house and four castles and another house and another castle, by goodness? If I cannot own a house, or maybe even a little island in the Pacific so far unnamed…or put the mortgage for my house and island in an off-shore account where the slings and arrows of outrageous taxes can’t find me… what am I, but a lesser patriot, a fraud, who would let altruism, that destroyer of all that is competitive and forthright, overwhelm my personal freedom(s)? What next? Pay taxes!!?!!

    The “Market” is indifferent (albeit a tad rigged, but who’s counting?).
    You and I are emotional…we’re animals with advanced brains. We THINK and we FEEL. This is not good for a robust market economy as anyone can tell. It causes….mmmm….
    community (oh, maybe you think being a social animal is just fine—look at your domesticated dogs, and their ancestral fellows in the wild. Sure they worked together in teams and packs, giving and taking in a hierarchy that benefitted the species, but don’t let’s forget that’s just a ploy to stay alive! Underneath, it’s each dog wants the other dog’s cake and will eat him/her too!– Ayn Rand wouldn’t be fooled!)…
    This human failing towards community..contingency, it causes analysis. Uncomfortable and anti-American questions come floating up —“How come the C.E.O. of the bank that stole my retirement is retiring with a bonus that exceeds in one year what I and everyone I know –alive or dead–could hope to make in one lifetime? This, as is obvious, is a most unpatriotic and, perhaps even “sour grapes” question for an AMERICAN to ask, or even consider.!

    Don’t go there, oh ye American. Instead, rely on your patriot elders, your Glenn Becks and Sean Hannity’s who, as they rake in millions from commercial sponsorship, the epitomy of our free democratic republic, continue with great passion, passion so overwhelming it decries question, substance, fact as you know it, and education (that final suppressor of free reign no matter what),
    to live and breathe safe and secure in your house on your street, which though it may not be Wall Street, is, well, err..there….for now..

    December 28th, 2009 at 1:45 am
  3. steve bourg said:

    You’ve made one mistake that FDR wanted you to make, the ‘hiding’ of the real FICA tax. Empoyer portion should be counted also, and 401(k) contribution doesn’t reduce it. So 100,000 gross pay is really 107650 gross pay, with 15,300 going to FICA. Wages are lower due to the ‘er portion. Maybe not 1 to 1 correspondence, but just about.

    December 28th, 2009 at 5:40 am
  4. Drackrabbit said:

    Looks like you people want some feedback. Well you have a lot of balls pretending your not the crust of this. Interesting you would use the word serfdom. Not really used in America. So my first guess would be that this has something to do with England. For a people that we supposedly have independence from. You sure do show up a lot.

    So we appreciate your floating all of the commercial buildings. Love Sears. I just want to tell you how I appreciate your keeping companies around like oh J.C. Penny, Sears, Macys (oh no don’t close Macy’s. Gap. These stores haven’t been solvent for years. You keep pouring bad money after bad into them. I hope they suck you under. Though they probably won’t.

    So you could call us serfs true. But we could call you really financially half witted. Propping up things so it all looks so good. I love watching you chase your tails. Your kind of like the Levite in the bible I guess. You know all about people. But you lack a lot of sense. So keep you little money sucking Disneyland open. We are just so clueless.

    December 28th, 2009 at 6:31 am
  5. DownriverDem said:

    And of course all the righties will blame Obama even though our economic down turn really started with the Republicans in the 1980s. No one will even bother to state the facts.

    December 28th, 2009 at 7:47 am
  6. dimmu whorgir said:

    Just shows, $100k ISN’T RICH people! It’s the old $20k of your Dad’s time.

    Working down that list, it’s easy to trim off $1000.

    December 29th, 2009 at 2:18 pm
  7. Ellenor Rice said:

    I think the budget is off a bit. $500 for groceries? I don’t think so. Try $750 to $900 and that’s not eating steak either. $500 for entertainment? Not at my house! We’re lucky if it’s $40 for the month. Vacation? I wish!

    Still, the author has a point. Cost of living keeps going up and paychecks don’t.

    December 29th, 2009 at 3:17 pm
  8. mmmmm said:

    and “they” have if figured enough to have themselves protected enough that they can taunt you to “stop” it……..

    December 30th, 2009 at 10:01 am
  9. econamike said:

    I’ve been wondering about “WHY” the stock market is going up…

    It’s not the “small investors” contributing to their 401Ks…

    …and I don’t even think it’s the top 5% who own(ed) 75% of those stocks.

    I think the stock market rise is “Bailout” money being used to “prop things up”.

    The “little guy” lost his shirt in the market and now the “big boys” have to battle it out amongst themselves. It’s a game of chicken and the last one out loses. By the time this battle is over, the top 5% will be whittled down to a “top 1%” and “the bottom 80%” will grow to become “the bottom 95%”.

    Since ex-Goldman employees are “running” many of the government programs, they will be the first ones “out” leaving the others scrambling for the exits. The biggest loser? The U.S. taxpayer and all that “stimulus” money.

    December 30th, 2009 at 10:12 am
  10. Jason said:

    I feel lucky. 2 jobs, 85K a year. No wife or kids. My only debt is a reasonable mortgage payment. Now if I can find a single girl with $ and no baggage I will be set.

    Jason the Fed

    December 30th, 2009 at 11:38 am
  11. Jim said:

    It’s nice to see some are awake and some are waking up. Part of the enslavement scam was the so called enmancipation of women. Most find that after voluntarily accepting working careers they are now unable to opt out. They are enslaved to the same point of men, no choise because it now takes two bread winners to feed and house a family. This makes way for the perversion of our children under the guise of education, with cradle to the grave care by institutions. Paid for by the enslaved, to enrich the few.

    December 31st, 2009 at 2:25 am
  12. radii said:

    globalisation and offshoring of jobs really started in the early 80s – the white collar jobs were cut first (aerospace, defense, etc.) and then the blue collar jobs … it is all these international trade agreements: NAFTA CAFTA WTO etc etc – these are extragovernmental and yet our “sovereign” USA is bound by them and they are directly responsible for destroying the middle class, grossly enriching the top 1%, and have pit “Third World” workers directly in competition with 1st worlders … it is a travesty conservatives of earlier eras would have never tolerated (Teddy Roosevelt would’ve taken us to war before signing on to such a giveaway of America’s wealth and jobs!) … idiot Republicans and tea-baggers still don’t see – after 25+ years! – how their fealty to to their corrupt Party and “conservative” ideas has led them by the nose to a globalised corporate monster state with no borders

    January 3rd, 2010 at 4:08 pm
  13. reverent1 said:

    An interesting article, thou I doubt the mindless cattle or herds will notice. This is nothing new, it’s been done before, it worked before and it will keep on working as it is.

    Do you intend for me and others to whine about it ? What good will it do ? The only real solution is to turn away from our lifestyle of sin and let our neighbor’s take notice. You do not need all of what is in that chart. Just as Rome was defeated not by military force but by non-compliance. That’s not to say I wish for you to not comply with this or that.. but comply with God and let everything else happen in stride. Set a greater example by serving god rather than your slave masters.

    January 3rd, 2010 at 9:54 pm
  14. Steve said:

    Just like poor kids play sports thinking they are going to make it to the Major Leagues, the middle class thinks it is going to get rich one day. That’s why they buy into huge tax reductions that yield them a small amount and why they believe the “death tax” is something they should worry about. The rich and their minions in the GOP have snookered them into believing this. Meanwhile the poor get poorer and the middle class makes less now than they did 20 years ago. Sad.

    January 3rd, 2010 at 10:04 pm
  15. Nancy said:

    I noticed that the monthly salary of someone earning $65,000 a year is $5416.67. That is more than what I earned in 2009 teaching three college classes as an adjunct instructor. Not per class–all three classes combined. After 13 years teaching experience and a master’s degree.

    I have another job also, but still–adjunct instructors should make more money than that, right? And, of course, no benefits. And, best case scenario, teaching 12 classes per year (all we are allowed to teach, “to maintain quality instruction.”

    January 4th, 2010 at 7:04 am
  16. Pacific Trident said:

    Paying 36% of monthly take home on just mortgage? Rent. Downsize. Move out of the neightbourhood to a cheaper area.
    $300/month for gasoline? Take the bus.
    Work lunch? Brown bag it.
    Dog/cat/hamster? get rid of it.
    $60/month for haircuts? Supercuts.
    Cable? Get a library card.

    Hmm thats about $2000 in savings there (half the mortgage by renting smaller, cut out half the gas, cut out property taxes b’cos of renting, cut out haircuts, cable, pets) and u still give to charity and entertain yourself as well as eat like you did before.

    What we have here is a complete inability to budget. However blaming rich people seems rational. Not. See what rich people do is not live above their means and invest their savings. Its there in black and white in this article.

    What poor people do is consume beyond their means and get stuck in the trap of debt. And its not a conspiracy, its simply nature. Dick Cheney does not roam the ghetto in the dark of night forcing people to leverage up at gun-point. There is no excuse for not being able to do simple math. I make 10, if I spend 11, and then do the same next month, well tuff nuggins on me.

    January 4th, 2010 at 3:12 pm
  17. Scarlette said:

    Pacific Trident is right.

    Too many poseurs and Salahi-types in this country.

    http://www.washingtonpost.com/wp-dyn/content/article/2009/12/22/AR2009122203520.html?sid=ST2009122203901

    January 7th, 2010 at 2:56 pm
  18. Tristan said:

    I think the first commentator, Mr. Bubbles, got it right: The root of the problem is lack of education. Hell, I went through Honors classes in HS, and completed 4 years of college, and I STILL didn’t know how to balance a checkbook, or how compound interest works. No wonder I easily got suckered into credit card debt.

    So here’s the interesting question: How come we aint taught these things? Shouldn’t basic finances be a high priority standard, along with the Three Rs?

    January 7th, 2010 at 2:58 pm
  19. JoeTaxpayer said:

    You make an interesting argument, I’m just struggling to understand what you propose as a solution.
    The $100K income family paying off a $350K mortgage? That’s out of balance right there.

    Here’s my take. Take 1000 people graduating from school, all starting with no assets, but no debt, and a $100K income (for example). In ten years time, the disparity of wealth will look just like the distribution you showed above. Some will rent and save. Some will buy a house larger than they could ever afford. Some will buy an appropriate sized house, and some of those will even pay it off in those ten years.

    That budget needs to be cut so they live on $80,000 (which 99% of the world lives on less) and save 20% so they never take on high interest debt.

    interesting article.
    Joe

    January 9th, 2010 at 3:43 pm
  20. RichDadWisdom.com said:

    80/20 rule applies everywhere… except for this case, it is 99/1 rule.. just hope that we can be in the 1%!!!

    January 15th, 2010 at 7:34 pm
  21. LVTfan (google it!) said:

    There is a way out of this Gordian knot. Look into the ideas of Henry George. He saw the mechanism by which we enrich a particular class of folks through permitting them to reap what we all sow. We’re very nice that way, mostly because we don’t know any better.

    And even our college-educated economics majors haven’t been exposed to the part of economics which is NOT dismal. I commend George’s ideas to your attention. If you’re looking for the solution.

    January 18th, 2010 at 6:12 pm
  22. Gran Tobal said:

    Great article. Certainly worth mentioning that people took out more mortgage than the could afford but this was by design. Goldman regulators at every level created and imploded this bubble. Once you understand that, the timing couldn’t be more suspect. The guys who repealed Glas Stegel came back in to manage the bailout. Yeah, I’m annoyed by the folks who bought into the scam at the end when there was no due diligence from the lenders but I’m equally annoyed by people who don’t get the rest of the picture. My boss got out from under a $775K mortgage, barely. She runs around saying that it’s all the fault of people who bought more house than they could afford. Completely asinine.

    January 26th, 2010 at 2:31 pm
  23. kelly@TearingUpHouses said:

    anyone has the ability to invest and make good decisions.

    it’s as simple as that.

    i started with nothing and i’m glad that i didn’t read this article when i did. good information to know, but not to live by.

    kelly

    January 27th, 2010 at 2:32 pm
  24. EM-Interf said:

    Wow, some interesting comments on this data. I really do not think it is so simple to completely blame the poor (i.e. bottom 80% of pop.), nor to completely blame the rich (i.e. top 20%). However, these trends and numbers do indicate there is a possible unfair advantage or special information or special access that is not equally available to all for whatever reason.

    The good thing for individuals and as a group is to continue with the questions and further analyze the alarming numbers.

    I think to simply accept such disparities in wealth (i.e. status quo) would be a huge mistake. Likewise, it is a mistake to blame persons for doing “legitimate and ethical” wealth building.

    Since I am a USA citizen and believer of democracy, I have a certain bias for the middle class. And, I really have great disgust for the societies and overall class considerations that thrive in places like China, Mexico, England, Japan, and India. I really think the way they focus on class, and heaping burdens on the poor and uneducated as highly unethical and borderline criminal.

    January 28th, 2010 at 6:30 pm
  25. edwar jacobs said:

    Effectively, there is a glut of capital that is bounded in useless investments that is hurting everyone including those who are holding these investments. Another way of viewing this is to see it as a case of massive greed combined with even greater stupidity. There is nothing that can be done about greed. It will always be present. At times, people do wise up. The question is whether it will be in time enough to head off the impending disaster that is being nourished by the present constipated flow of capital and brainpower. Investments in a country are only as good as the population of that country. If the U.S. is evolving toward a nation of backward peasants, then U.S. investments are evolving toward becoming useless paper. If the capital being held in limbo is not freed up to create new industries to meet the threats of diminishing energy sources and climate change, then there is the risk of not having enough fuel from oil and gas to make a transition to renewable sources of energy. Another testimony to today’s stupidity is seen in those who are whistling in the graveyard by ignoring the signs of climate change such as disapearing polar ice caps, warming waters and changes in climate patterns. It should be noted that every trillion dollars freed up for jobs could pay two million people a salary of $50,000 a year for ten years. The upper one percent of the U.S. population has 35% of the nation’s wealth which is around 44 trillion dollars. This means that the upper one percent is worth around 15 trillion dollars. Only a portion of the capital bound up in the upper one percent, alone, could really set the nation on a favorable path and the lives of those in the upper one percent would not miss a beat.

    March 18th, 2010 at 1:24 pm
  26. Clinton Hamner said:

    Although I agree with the statement but comments keep referring to the right wing or republicans as the money hungry 1% (false). The truth is the top 1% is mostly Liberal /Left Wing / Democrats(George Soros / Bill Gates / Oprah Winfrey’s). They fudge the income truth by using using individuals making less then 15,000.00 (not working really making $0) which gives a bogus median value to a lower level.

    April 15th, 2010 at 10:59 am
  27. KaD said:

    As someone said; there are no jobs Americans won’t do, just wages the companies don’t want to pay, health care they don’t want to provide and benefits they don’t like to pay for.

    April 19th, 2010 at 6:10 pm
  28. Stephen Borte said:

    This is all Obama’s fault. The Democrats always support the rich at the expense of the little guy like Glenn Beck who only made $50 million last year or Sarah Palin who has made $12 million since ditching her government job. There are wealthy individuals who care about other people, but there are unfortunately more wealthy people that want to conserve their wealth by any means possible. America is not based on a premise that the rich whould get richer and the poor poorer, but rather on equal opportunity for all. Tax breaks for the rich under Reagan and Bush have made the rich richer and the poor poorer with a shrinking middle class.

    April 23rd, 2010 at 9:04 am
  29. Desertrat said:

    Great article! I found his while searching for a Distribution of Wealth table. I agree with pretty much everything you have pointed out and hope that someday there will be a solution. We are missing a middle class in this country, yet many of us feel like we are middle class because we are not in poverty.

    As far as simple solutions suggested by a commenter, $300 in gas is not really unheard of for 1 person let alone 2. Taking the Bus is not really an option because it would add about 4+ hours to my work day and there are also safety issues. Living closer to work is not an option because it is too expensive, moving out of the area I’m in would mean living in a very high crime area also far from work (I’m already in a cheaper area but that’s what mortgages go for in California)! Brown Bagging my lunch? When would I have time if I have to spend an extra 4 hours a day riding the buss? Sometimes things are easier said than done.

    As far as lack of education, this could stem from the way education is funded. It would be a good place to start though.

    This article is right on the money Thanks for posting it!

    April 23rd, 2010 at 3:39 pm
  30. dextred1 said:

    It is funny that everyone on here blames republicans. You can always tell the ideologues because the forget things like Jimmy (the peanut farmer) Carter. Do I really need to rehash this to show you that this is really a problem of social programs, bad fed policy and entailment culture? We are the problem; we want more shit for government benefits and services. We could go back over the last 100 yrs and clearly see the true problem is the expansion of social programs, the Federal Reserve and fighting wars without paying for them. This includes all big government dems and repubs. The wars have only cost a little over 700 billion give or take from what I have read. The military budget is what 600 billion if we are in war or not every year. The FED creates most of these problems by allowing the government to overspend on social programs and wars, creating almost unlimited amounts of money, and exporting dollars for real tangible goods.

    Free trade is not the problem. If we allow capital to flow to new business that produces more wealth and uses capital more efficiently the impact of exporting a few jobs would not be that large. BY the way we did create what 35-40 million jobs over the last 30 yrs. The problem is a massive government bureaucracy that imposes too many rules and regulations, high property tax rates locally and the 2nd highest corporate tax rate in the world. Most companies only save about 10% shipping goods here from foreign production. So if we lower base production costs we could easily bring back production. You could see this in 2007-2008 when oil prices spiked and production started coming home in response to it. The difference is not that big and could be rectified fairly easy.

    May 18th, 2010 at 5:59 am
  31. Joe in JT said:

    $500 bucks for entertainment? How much does a prono movie and a jar of vasoline cost now a days?

    August 1st, 2010 at 5:14 pm
  32. We Buy Houses said:

    I like the expense breakdown you listed here. One thing that strikes me is how much of the monthly income is spent on debt service. You didn’t list any credit cards, so the debt service in the above example is the following:

    $2098/month for the mortgage
    $525/month for the car payment

    Of the mortgage payment, around $1700 to $1750 goes to interest in the first years of the loan. Most people refinance every few years, so they typically pay this proportion of their house payment to interest for a good part of their lives. Of the car payment, maybe half goes to interest? Between the two, $2000/month or so is going to interest, which is enriching the bankers. Considering how many people in America have mortgages, car loans, credit cards, consumer loans, etc., is it any wonder that banks always occupy the tallest towers in every major city? With our borrowing habits, we are enriching the banking class and making ourselves slaves to them. For most Americans, a good number of the hours of our day are being spent servicing our debts and enriching the big banks. We have indeed, as a culture, become serfs and the bankers our lords.

    August 4th, 2010 at 5:00 pm
  33. milogracie said:

    you are right. America is a scam. Move to Europe. Or Canada, or Australia. They have less extreme / cruel societies there.

    September 12th, 2010 at 5:12 pm
  34. Deserwest said:

    Stuid Radii, it was Jimmy Carter who signed NAFTA into law.

    September 17th, 2010 at 11:52 am
  35. Deserwest said:

    We heard about the riots in Greece and France over social benefits and austerity measures. So much for your idiotic notion that European society is less extreme. Grow up.

    September 17th, 2010 at 11:55 am
  36. Victor said:

    Milogracie- I spend two consecutive summers a few years ago traveling all over Western and Eastern Europe. First, the Western Europeans didn’t hate us, contrary to how the media portrays it (enabled by self-hating Americans). Additionally, a lot of the anti-American bias that is reported is fomented by their media as well, as evidenced by conversations there, and also with Europeans tourists who came here and saw that Flyover America was pretty darn friendly to them (they thought it would be something akin to torches and pitchforks).

    Second, I found people complaining about high taxes. A lot of them even gaming the system- like the girl in Sweden taking a government unemployment check while she worked under the table for cash, both she and her employer stealing from the society they loved so much. That was one person I happened to meet at random. How many more are doing this? The Eastern Europeans? They loved us. We didn’t feel the need to pretend to be Canadian at all. Interestingly, one guy in Sweden told us that the people there that did “hate” America were their country’s version of rednecks- closed minded and non-traveled. He even said he used to think that way as a youth until he actually worked along side Americans in Bosnia.

    October 27th, 2010 at 2:57 pm
  37. paul goodman said:

    the rich, and I mean rich, you know, yaugts, world traveling, gawdy bidding at auctions, (like a Harry Houdini poster selling for $40,000), the over all pigs of riches, (movie stars, athletes, Disney ceo, etc.) and any all all that flaunt their stinking big incomes make me sick. I made $1,340.00 in 13 months of combat in soutn east asia, 1969. That puts people like the late michael jackson, paris hilton as well as many over paid athletes on my shit list. I guess deep down, I’m a socialist.

    November 14th, 2010 at 4:57 pm
  38. Edizzle said:

    the 401k fees in most plans that people are stuck in don’t help, either.

    December 29th, 2010 at 12:37 am
  39. The Optomistic Cynic said:

    Great post as usual. I love how you think and the time and attention you put into your blog. Thanks for taking the time because I am too busy earning a living and socking away what I can.

    “Time to wake up and restructure the system. ” How? if the top 1% run the corporatacracy, then the government is in the pockets of the people that control reform. Any concrete ideas on how to change the system if the watchdogs are corrupt?

    Sadly, the U.S. is corrupt but less corrupt than many other countries. In a Darwinian sense, it’s still survival of the fittest. But in this case the fittest are those that are stronger and more powerful and of course, smarter about money. Surfs don’t change the system. Dictators, revolutionaries and militia tend to change systems. But not necessarily for the better. The economy ebbs and flows. Middle class people are waking up by feeling the pain of our collective economic choices. How they use that new found awareness is up to each individual.

    One way to survive is not to act like the rich but to understand how they think and act and adapt accordingly. Having a job makes you a surf. Starting a business (even a small one person business) gives you more control of your wealth, health insurance options, time and taxes. But it takes hard work, smarts and dedication. Few have that. Easier to work for someone else and whine about your lot in life.

    Any solution that beings with the government is no solution at all. Even if it’s a call to change the government. Look throughout history and tell me if there is any case where the changing the government actually made things better. Change has to begin with each of us. I’ve done my part, paid off my debt, saving money and providing work for others. I rent and have no intention to own. Don’t play the stock market at all. Try to advise others when I can. Read your blog and refer others to it. Keep up the good work!

    January 1st, 2011 at 8:54 am
  40. Bisky said:

    To B Malloy

    The constitution does not guarantee profit, it promotes freedom and free markets which is the answer and something we have not seen in about 100 years. Freedom cannot be blamed since we don’t have a free market system. The wall street gang is evil but is enabled by big unconstitutional government. The last thing we need is for them to save us. Investment firms would not be taking ridiculous risks with credit default swaps if they did not expect bailouts. Goldman Sachs should have gone bankrupt and remaining assets liquidated. Leeman brothers went bankrupt and the sky didn’t fall.
    Ultimately all blame stops at the unconstitutional Federal Reserve which has the power to fix interest rates and print money out of thin air. They set interest rates artificially low sending the wrong signals to the free market causing irresponsible borrowing. They print money and fund government programs like Freddy and Fanny Mae which encouraged people who did not qualify for home loans to take them on. They did not help the poor because they are now broke and homeless. Blame placed on the Wall Street gang is definitely appropriate, but they were enabled by government interventionism and would have been greatly restricted with the toughest regulation you can impose on a company, the free market. This article is correct in many aspects, as long as blame is not ultimately placed on a free market that does not exist. The inflation tax, caused by the Fed, is the ultimate way money is siphoned from the poor and middle class and given to the rich. Those who receive the pre inflation counterfeit money make out well, and as it circulates inflation robs the purchasing power of the poor. And the private central bank given government powers don’t think they should account for who they pay their counterfeit money too. The ultimate answer is to legalize the constitution, taking the corrupting levers of central power away from the federal government, and abandonging fiat money which history shows always collapses quickly, for sound commodity based money that has fueled successful civilizations for thousands of years. There is hope. Congressman Ron Paul and Senator Rand Paul are about to introduce legislation simultaneously in both houses in January to audit the private Federal Reserve casting light on their secret bailout of Wall Street, corporations, and foreign banks and companies. Contact your representatives when this happens.

    January 1st, 2011 at 2:46 pm
  41. alex said:

    1. Government doesn’t enable big business unless it has been co-opted by big business. The biggest threat to the free market is the free market. Left completely unregulated, the natural order of it will be to accumulate massive wealth and power in the hands of a very few. They will use their power to destroy all competition. In essence, a completely unregulated market will result in oligopolies and monopolies, which is the antithesis of the free market. The biggest threat to main street and mom and pop businesses is the mega corporation and ultra rich.

    2. The biggest threat to good democratic governance is the accumulation of power in the hands of a few. For example, the church, the mega corporation, the super rich and the unions. In our country, the church and the unions have some power over government. For example, in education. But, in general, it is the mega corporation and super rich that have enormous privilege to shape government. For example, they can meet personally with elected officials whenever they want. They can fund “grassroots” groups to get their message out. In essence, they have more voting power than the average person purely because they have massive wealth ($100 million +).

    3. The question is how to PROTECT the free market and government against the threat of the accumulation of power in the hands of a few. The natural law of the free market does NOT control for this. Not only is the unregulated free market the biggest threat to small and medium sized business, but a completely deregulated market also means child labor is legal, no maternity leave, chemical dumping into rivers and lakes becomes legal, all drugs by pharmaceutical companies are allowed without any testing, food companies can put whatever they want in our food and the only right an employee has is to go to another mega-corporation or to try and start their own. Of course, they will have to contend with the mega-corporation competition and once in awhile they will succeed but the vast majority will struggle.

    4. Megacorporations and the super-rich have NOTHING in common with small and medium business owners or with the average wealthy person (someone making under $5 million/year). They use the rhetoric of the free market and the everyday American’s longing for freedom to inspire fear and get people to fight for free markets. In reality, the free markets that people fight for produce the very opposite because unprotected, it helps accumulate wealth and power in the hands of the few.

    5. The Megacorp and super rich do NOT want a free market. They want it as a stepping stone to accumulate their wealth and power, which results in the end of the free market and democracy.

    Examples:

    – $75+ billion per year in corporate welfare
    – Bailout of Savings and Loan
    – Junk bond debacle
    – Bailout of auto industry
    – Recent bank debacle and bailout
    – Real estate bubble connected to bank debacle, which is still there. (Look at how many homes are not being foreclosed. Banks have stopped b/c if they continue, they will have to put a true market value to their assets and their balance sheet will prove them insolvent.)
    – Military industrial complex which is public money used to fund private corporations. Thus, the wars in Iraq and Afghanistan took tax dollars and gave them to a few people. They also generated enormous fear and we now have the largest military budget in US history
    – 1970s began a new business philosophy. Downsize, eliminate jobs, send them overseas, get people to work more for less money AND increase CEO and executive salaries regardless of performance. Yes, poorly performing CEOs and executives still make tons of money, this is an example of free market evolving into a not so free market, but rather a very expensive one.

    6. We need strong free market protection as follows: no corporate welfare, anti-trust laws, too big to fail laws (no company can be allowed to be so big that its failure threatens the democracy, that is not something the constitution protects), criminal prosecution of fraud (if you are a CEO and you steal, you do hard time, no club fed; if your corporation allows a faulty oil well that kills 10 workers and destroys habitats, you go to jail for life or get the death penalty and your corporation, since it is a person, must pay even if it goes bankrupt). There should be fair taxation that incentives people to invest but also puts an equal burden and doesn’t overly suppress consumption, which is needed for people to invest in the first place. A sales tax is bad because it would create a high sales tax and suppress consumption by middle income and low income people, which are essential purchasers in our economy. It puts an unequal burden of the government on the everyday American.

    7. We need to protect equal access to political decision making and to good education. A poor person should have a school that is just as good as the rich person’s. It should be based on effort not bloodline.

    Ps: work harder!! your CEO and his private equity investor need a new private jet, a 3rd villa in europe, a 5th sports car, and, most importantly, massive funds for bribing every politician

    January 8th, 2011 at 9:58 am
  42. alex said:

    One last thing, and here is the ironic kicker. We need a separation of wealth from political decision making so we can have a real political discussion and enact laws that protect the free market from oligopolies and protect the state from corporations that get too big and use the tax payers as their free insurance policy and their free financial investment tool. But, since our political system is corrupt and there aren’t enough free politicians who would vote for such legislation, we have no choice but to give the mega corporations want they want. Give them all the power save one thing, pass an amendment making bailouts of any private business illegal.

    Then, we wait until the next financial catastrophe and the first true market correction since the big depression. Only when the economy collapses and we have massive unemployment and unrest will there be the political will in the everyday person to protect the democracy and pass laws that separate mega wealth and state, just like we have a separation of church and state.

    January 8th, 2011 at 10:34 am
  43. Steve said:

    @Alex – Free-markets will not exist until govt is eliminated. They have not existed since the civil war. Monopolies would not exist without the state. ~Ayn Rand.
    Why is the most violent criminal in history not in prison? It is because it owns the prisons. It also owns the schools which brainwash the citizens with ideas of statism. It owns the media too.

    January 22nd, 2011 at 12:55 am
  44. World Citizen 2011 said:

    The Optomistic Cynic said:
    “Any solution that beings with the government is no solution at all. Even if it’s a call to change the government. Look throughout history and tell me if there is any case where the changing the government actually made things better. Change has to begin with each of us. I’ve done my part, paid off my debt, saving money and providing work for others. I rent and have no intention to own. Don’t play the stock market at all. Try to advise others when I can. Read your blog and refer others to it. Keep up the good work!”

    I fully agree your view. As an ordinary people in the society we have two ways to use our power: 1. Political power in the election day and 2. Money power on sharing your earnings in the daily life.
    The reason why I don’t want to own a car, house and credit card is very simple: “I don’t want to share my incomes with corporates, banks and real-estate parasites. In this way I will also have more money to enjoy my life.

    February 10th, 2011 at 6:31 am
  45. Cerebral1 said:

    Most Americans have NO IDEA how much money the rich have. They think that it’s normal to make $ 50,000 – because everyone else is.
    In America – idiots envy the rich – thinking that they too are going to be the ones to make it into the top 1%. Fools.
    There’s a reason it’s called the “American DREAM” stupid !!!
    It’s a fantasy.
    For most Americans it’s more like the “American Nightmare.”

    February 23rd, 2011 at 8:37 pm
  46. MJ said:

    What we have here is nothing new, now that the times are tough for the people who have had their pockets picked, there is another way to get money meant for “the people”. The rich , who have the wealth, will just build commercial prisons and then they can put all the poor people, who don’t have money for them to take, in jail and receive tax money to make sure that the “bad” people have a place to be punished. Now to cut the logjam in court, they pay a couple of judges to speed up justice by putting more people behind bars in the lest amount of time. Now we know that we being the public will be able to purchase the stock that will be offered , now this is the kicker, we will never be able to buy enough of it to make or even generate any speakable income. So this is our system of Democracy in America

    March 1st, 2011 at 8:27 am
  47. web page designer said:

    The 27 million unemployed and underemployed Americans is reflected here in Canada; though not by as many in number (our population isn’t as high either), but I’m betting the percentages are nearly equal.

    Canadian politicians would have us believe the market is getting better here too.

    Huh!

    How can it be getting better with so many of us having been forced out of the workplace since 2009. Many are either on drastically reduced pensions or unemployment insurance …or worse, welfare!

    The many good paying manufacturing jobs that made money for many companies here in Canada, have since moved OUT of Canada too. Where were OUR politicians while this was going on?

    How come Canadian and American politicians allowed North American based businesses to simply pull up stakes with money earned in the US and Canada; allowing them to take those profits from North America …and then ‘adding insult to injury’ by allowing those same companies tax deductions for having opened manufacturing facilities elsewhere!

    Whatever happens to America WILL spill over and affect the Canadian economy. Restructuring the system should be a priority for BOTH Canada and the United States. When will this start? I wonder.

    Thanks for letting ME rant,
    Trish

    March 25th, 2011 at 10:20 am
  48. Duhmass said:

    Most people don’t realize that the budget that they want you to have and the plans that you follow, are still controlled. No matter what you do. Its called inflation the only way to stop inflation is to boycott individual products (preferably a company that was based in America and moved overseas for “cheap labor” screwing many Americans out of their jobs) forcing them to drop price. The competitors will follow due to everyone buying the product at low price. Someone needs to come up with a website that would allow Americans to unite and take back a few of our dollars from the greedy pigs. Providing information on which company’s to deflate first. UNITE SONS AND DAUGHTERS OF AMERICA RISE UP AND TAKE OUR COUNTRY AND FREEDOM BACK.

    April 17th, 2011 at 7:36 pm
  49. Scott G. said:

    I worked out this budget and came up with a $700 surplus from not spending hundreds of dollars on “gifts”, vacations, land line phone, tv, and all the other useless tripe. If you work forty hours a week you should be spending time with your family instead of staring at an idiot box anyway. Children don’t need cell phones and money to have fun, they want a family and friends. Just because the new Ipad 99 is out for $900 doesn’t mean you need it.

    September 20th, 2011 at 9:40 am
  50. Antithug said:

    For the commenter that could not fathom how this deeply flawed system can be fixed… I implore you to look at America’s founding documents… it is spelled out explicitly. If we don’t like our “leaders” and feel our system has been corrupted it is our right, nay, our duty as Americans to CHANGE the system. We could start where our founding fathers started… Reconstitute the Union!!! Just because a system has been polluted doesn’t mean you must scrap the whole thing… we merely need to examine what has been done in our history. What has worked will be apparent, as will what has not served the common interest. Use what works and repair or replace what does not. Literally end our government & start over. Brick by brick is how you build a government. The same method is used to rebuild one. If wealthy people try to flee out of fear, appropriate their money into a new nationalize (not privatized) economy. Fuck em. Don’t let the smoke & mirrors fool you. It IS easy to fix. Politicians & financiers wish to make it seem like only THEY know what is best. That is survivalism. They are trying to protect their onterests with the illusion. Not yours, mine or any other common person’s.

    October 1st, 2011 at 11:49 pm
  51. eagles fan said:

    Interesting article…what part do people play in making their own decesions?

    I live like I don’t have a pension waiting for me at the end. I pay off my credit cards, I put money into my 401K and I pay down my house. I live a modest life;however, I have traveled abroad with the family then retreat to our modest life style. I can do it others can too.

    Last comment I have is this, if the stock market is running up does that mean the economy is doing well or does it just mean the stock market is up? My company does business all over this world but is based in the US so if profits are up it doesn’t mean the US business is doing well….

    October 26th, 2011 at 12:41 pm
  52. Bill said:

    13.9% of the 1% is a part of the financial services industry.

    October 26th, 2011 at 4:48 pm
  53. Carlos Sotolongo said:

    To Mr. Bubbles,
    I disagree that anyone can buy stocks and bonds. Not a matter of not being allowed to buy but rather most people can’t afford to. The reason schools( I am a teacher) don’t emphasize finances and the reality of who really controls the governments of the world, is so that those top ten percenters can continue to sell the Dream and make more money. I teach my students to question what they are told is the truth compared to what the realities of life shows us. There is war, hunger, homeless, unemployment, people without healthcare, huge student loans for students without a guarantee of a job etc. The Harvards, Yales of the world are dependent on the Top 10% so they too sell the false dream. I am for peaceful revolution of the way our societies work, but if those in power don’t learn to share so that we can all live with dignity, there will be violence. We need to decide if we want peace or war. How much money is a human life worth to us? We’ll soon see. Peace2u

    January 14th, 2012 at 11:32 pm
  54. Andrew said:

    1) Wealth distribution in this country really hasn’t changed much since they started keeping records in 1922.

    2) A lot of the changes in that “percent of wealth controlled by the top one percent” figure appear to be driven by demographics.

    3) I have a difficult time accepting the fact that China has a more even distribution of wealth than the United States. Anyone who has ever been to China would concur; as the country is basically run by feudal landlords.

    January 15th, 2012 at 11:21 pm
  55. george said:

    A $350k mortgage for a three person family?

    January 20th, 2012 at 7:22 am
  56. cateagle said:

    If politicians and everyone else were asked to pay their share of the national debt do you think they would spend money frugally ( like with common sense) Spend what you need to spend and if there is left over money put some aside.

    October 6th, 2012 at 12:14 pm
  57. cateagle said:

    I believe we should all live within our means… There was a time when we only bought luxuries if we could afford them.. Ditch the credit card and decide what is important… Credit should only be used for home purchase and a car if you need it. If you can’t afford it don’t buy it…. Of course I am over 70… That is how we were brought up and it worked .. We will die without debt. ( except for the national debt that- money spent by politicians.) and I cannot sleep at night knowing that I may die owing my share of the national debt…

    October 6th, 2012 at 12:20 pm
  58. Kmarxlookalike said:

    (originally posted – November 8th, 2012 at 12:49 am but failed to appear for some reason).

    @Andrew

    On your point one(1): I do not know where you are getting your evidence but what I have seen suggests you are wrong. Wealth ditribution has changed significantly. Below is a quote from Vanity Fair article (“Of the 1%, by the 1%, for the 1%” by ByJoseph E. Stiglitz).

    “….The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent….” (http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105 )

    On your point 2: who cares if it was due to Demographic factors? Even if it was its a moot point.

    Point 3 is your opinion vs another – a little research would clear up that issue. I am more concerned with what we need to do here to fix the inequality of opportunity and the rampent rise of corpratocracy.

    To the author I salute you for taking the time and effort to put together such a clear and evidenced essay. Thankyou.

    November 10th, 2012 at 2:50 pm
  59. JOHN JAY said:

    THIS CONCENTRATION OF WEALTH PROVES THAT TRICKLE DOWN ECONOMICS IS A TOTAL FAILURE. NOT ONE DIME HAS TRICKLED DOWN FROM THE BILLIONAIRES AND MILLIONAIRES. THIS TYPE OF CONCENTRATION OF WEALTH BY THE GREEDY, WHILE DEPRIVING THE NEEDY, IS WHAT LED TO THE RUSSIAN REVOLUTION IN 1917. MAYBE THAT IS WHAT WE NEED; ANOTHER REVOLUTION. THE BOLSHEVIKS DEALT A BIG BLOW TO THE GREED OF THOSE WHO CONTROLLED THE WEALTH, IN 1917; THEY SENT MOST OF THEM TO SIBERIA OR EXPELLED THEM FROM THE COUNTRY.

    January 21st, 2014 at 11:46 am

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