Tag Archives: Incomes

America’s Twisted Pretzel Economy, by David Stockman

Posted on July 21, 2021 | Leave a comment

Debt and central banking have distorted the American economy beyond all resemblance to the world-beater it once was. From David Stockman at davidstockmanscontracorner.com via lewrockwell.com:

June retail sales allegedly rose at a booming +15.6% YoY rate, thereby reminding us once again that just because you can look it up on Bloomberg doesn’t make it true. Actually, inflation-adjusted retail sales have fallen at a –13.5% annual rate since the March peak.

Then again, the March peak was an out-of-this-world aberration that underscores just how bollixed economic life has become as a result of Dr. Fauci and the Virus Patrol shutting down the great engine of the US economy last March-April, followed by a mindless compensatory bacchanalia of spending, borrowing and printing by Washington’s Infernal Inflation Machine.

One result of that madness was a cumulative 60 million layoffs and food lines for miles in many parts of the country, accompanied by the most explosive consumer spending surge ever recorded. In the equivalent of a children’s “which things don’t go together” quiz, that combo ranks in the no-brainer category.

Yet, it did happen. The March 2021 retail spending level was 42.6% above the April 2020 bottom in real terms. More importantly, it also stood 19.1% above the February 2020 level, which, of course, was recorded before the boot heels of Dr. Fauci’s minions came crashing down on the US economy.

Here’s the thing. It happens that this 19.1% pickup in monthly retail sales (excluding restaurants and bars) amounted to nearly $340 billion in constant dollar terms. In the scheme of things that’s one hell of a big number because it represents the entire increase in inflation-adjusted retail sales between February 2003 and February 2020.

That’s right. The tsunami of Washington stimmies and free stuff plus the lockdown of services venues caused a gain in retail sales for goods over the course of just 13 months that was equal to the prior 17 years of real growth.

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Skyrocketing Costs Will Pop All the Bubbles, by Charles Hugh Smith

Posted on December 20, 2019 | 1 comment

The rising costs that never seem to register in the CPI are for the biggest items in many Americans’ budgets, and their incomes keep falling further behind. From Charles Hugh Smith at oftwominds.com:

The reckoning is coming, and everyone who counted on “eternal growth of borrowing” to stave off the reckoning is in for a big surprise.

We’ve used a simple trick to keep the status quo from imploding for the past 11 years: borrow whatever it takes to keep paying the skyrocketing costs for housing, healthcare, college, childcare, government, permanent wars and so on.

The trick has worked because central banks pushed interest rates to zero,lowering the costs of borrowing more as costs continued spiraling higher.

But that trick has been used up. The next step–negative interest rates–has failed to spark the “growth” required to pay for insanely overpriced housing, healthcare, college, childcare, government, etc.

We’ve reached the end of the line on lowering interest rates as a way of borrowing more to keep our heads above water. We’ve reached the point where households and enterprises can’t even afford the principle payments, i.e. no interest at all.

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California’s Housing Nightmare Is Only Getting Worse, by Tyler Durden

Posted on November 9, 2019 | 1 comment

California has only its Democrats to blame for its housing woes. From Tyler Durden at zerohedge.com:

When historians look back on contemporary California, one thing they’ll be bound to make note of is that the state’s developers bet on the wrong model.

Endless, suburban sprawl is coming back to haunt California in ways both major and minor. In densely populated communities across the state, traffic is horrible thanks to underdeveloped public transportation (this is especially true in LA). Most residents have accepted that deadly, devastating wildfires are just part of the deal now – bound to recur endlessly until the state’s population shrinks to the point that it no longer intermingles with the state’s vast swaths of woodland.

But it’s not just the apocalyptic images of fiery doom that have some of the state’s residents rethinking their decision to settle in California. The wildfires have had all kinds of ancillary effects: In parts of the state, PG&E is essentially shutting down large portions of the power grid in disruptive distributed blackouts intended to lower the fire risk.

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Welcome to the USSR: the United States of Suppression and Repression, by Charles Hugh Smith

Posted on October 18, 2019 | Leave a comment

The powers that be have their narrative—propaganda—which is running into widespread cognitive dissonance because it’s a complete misrepresentation of reality. Most of us have to deal with reality every day. From Charles Hugh Smith at oftwominds.com:

We’re all against “fake news,” right? Until your content is deemed “fake news” in a “fake news” indictment without any evidence, trial or recourse.

When propaganda is cleverly engineered, people don’t even recognize it as propaganda: welcome to the USSR, the United States of Suppression and Repression. The propaganda in the U.S. has reached such a high state that the majority of people accept it as “pravda” (truth), even as their limbic system’s BS detector is sensing there is a great disturbance in the Force.

Inflation is a good example. The official (i.e. propaganda) inflation rate is increasingly detached from the real-world declines in the purchasing power of the bottom 80%, yet the jabbering talking heads on TV repeat the “low inflation” story with such conviction that the dissonance between the “official narrative” and the real world must be “our fault”–a classic technique of brainwashing.

To give some examples: healthcare is over 18% of the nation’s GDP, yet it makes up only 8.7% of the Consumer price Index. Hundreds of thousands of families have to declare bankruptcy as a result of crushing healthcare bills, but on the CPI components chart, it’s a tiny little sliver just a bit more than recreation (5.7%).

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Financial Storm Clouds Gather, by Charles Hugh Smith

Posted on September 25, 2019 | Leave a comment

Do what you can to protect yourself from the downpour. From Charles Hugh Smith at oftwominds.com:

The price of this “solution”–the undermining of the financial system–will eventually be paid in full.

The financial storm clouds are gathering, and no, I’m not talking about impeachment or the Fed and repo troubles–I’m talking about much more serious structural issues, issues that cannot possibly be fixed within the existing financial system.

Yes, I’m talking about the cost structure of our society: earned income has stagnated while costs have soared, and households have filled the widening gap with debt they cannot afford to service once the long-delayed recession grabs the economy by the throat.

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America’s Debt Burden Will Fuel The Next Crisis, by Lance Roberts

Posted on August 26, 2019 | 2 comments

The next debt crisis will prove impervious to all the kick-the-can nostrums that were applied in the 2008-2009 crisis. From Lance Roberts at realinvestmentadvice.com:

Just recently, Rex Nutting penned an opinion piece for MarketWatch entitled “Consumer Debt Is Not A Ticking Time Bomb.” His primary point is that low per-capita debt ratios and debt-to-dpi ratios show the consumer is quite healthy and won’t be the primary subject of the next crisis. To wit:

“However, most Americans are better off now than they were 10-years ago, or even a few years ago. The finances of American households are strong. 

But, that’s not what a lot of people think. More than a decade after a massive credit orgy by households brought down the U.S. and global economies, lots of people are convinced that households are still borrowing so much money that it will inevitably crash the economy.

Those critics see a consumer debt bomb growing again. But they are wrong.”

I do agree with Rex on his point that the U.S. consumer won’t be the sole cause of the next crisis. It will be a combination of household and corporate debt combined with underfunded pensions, which will collide in the next crisis.

However, there is a household debt problem which is hidden by the way governmental statistics are calculated.

Indebted To The American Dream

The idea of “maintaining a certain standard of living” has become a foundation in our society today.Americans, in general, have come to believe they are “entitled” to a certain type of house, car, and general lifestyle which includes NOT just the basic necessities of living such as food, running water, and electricity, but also the latest mobile phone, computer, and high-speed internet connection. (Really, what would be the point of living if you didn’t have access to Facebook every two minutes?)

But, like most economic data, you have to dig behind the numbers to reveal the true story.

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Illinois’ lethal combination: Rising property taxes and stagnant incomes, by Ted Dabrowski and John Klingner

Posted on January 21, 2019 | Leave a comment

Illinois property owners are seeing an increasingly large share of their incomes, which are not growing, going to property taxes. From Ted Dabrowski and John Klingner at wirepoints.com:

By: Ted Dabrowski and John Klingner

A lethal combination of rising property taxes and stagnant incomes has forced many Illinoisans to rethink their relationship with their state. More than 1.5 million net residents have already fled the state since 2000 – and you can’t blame others for thinking about joining them.

Property taxes have become punitive in Illinois. We’ve written about how these taxes have destroyed the equity in people’s homes across the state. Many families have done the math, and whether they’re in the struggling south suburbs of Chicago or the affluent North Shore, they’ve decided to leave Illinois behind.

The traditional method for measuring the burden of property taxes is to look at a household’s property tax bill and compare it to a home’s value. Under this method, Illinoisans pay the highest property taxes in the nation. At 2.7 percent, Illinoisans pay far more than residents in neighboring states – twice more than those in Missouri and three times more than residents in Indiana.

That fact is outrageous on its own.

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How Inflation Destroys Civilization, by Nick Giambruno

Posted on August 4, 2018 | 3 comments

Nick Giambruno connects the dots between inflation and the desire for socialism. From Giambruno at internationalman.com:

Yesterday I told you about the unstoppable trend towards more socialism in the US.

I think inflation is the primary factor driving this trend. Americans feel squeezed because the cost of rent, medical insurance, and tuition, as well as other basic living expenses, is rising much faster than their wages.

This creates very real problems for ordinary people. In response, more and more turn to Santa Claus politicians that promise supposed freebies, like a $15 minimum wage or universal basic income.

Why the Cost of Living Has Exploded

This is all a predictable consequence of the US abandoning sound money.

By every measure—including stagnating wages and rising costs—things have been going downhill for the American middle class since the early 1970s.

August 15, 1971, to be exact. This is the date President Nixon killed the last remnants of the gold standard.

Since then, the dollar has been a pure fiat currency. This allows the Fed to print as many dollars as it pleases. And—without the discipline imposed by some form of a gold standard—it does precisely that. The US money supply has exploded 2,106% higher since 1971.

The rejection of sound money is the primary reason inflation has eaten up wage growth since the early 1970s—and the primary reason the cost of living has exploded.

The next chart illustrates this dynamic. It measures US hourly wages priced in gold grams (the number of gold grams the average person’s hourly income could buy).

Measured in gold, wages in the US have fallen over 84% since 1971. That’s an astounding drop.

The next chart measures the federal minimum wage in terms of gold grams. Priced in gold, the minimum wage has fallen 87% since 1968.

Note that the federal minimum wage was $1.60 in 1968. It’s $7.25 today, or 353% higher in dollar terms.

But that $7.25 buys 87% less than $1.60 did back in 1968. That’s the story you won’t hear from the mainstream press.

This is why millennials and millions of others are gravitating toward socialism.

To continue reading: How Inflation Destroys Civilization

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Posted in Business, Collapse, Economics, Economy, Governments, History, Money, Morality, Politics

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Will America’s Prosperity Be Completely Wiped Out By Our Growing Debt? by Michael Snyder

Posted on November 1, 2017 | Leave a comment

On a mark to market basis, if you net out all of America’s assets (many of whose prices are hideously inflated by a debt bubble) against America’s debts (none of whose obligations to repay interest and principle are inflated by one penny), America probably is already in a negative net worth situation. From Michael Snyder at theeconomiccollapseblog.com:

The federal government is now 20.4 trillion dollars in debt, and most Americans don’t seem to care that the economic prosperity that we are enjoying today could be completely destroyed by our exploding national debt.  Over the past decade, the national debt has been growing at a rate of more than 100 million dollars an hour, and this is a debt that all of us owe.  When you break it down, each American citizen’s share of the debt is more than $60,000, and so if you have a family of five your share is more than $300,000.  And when you throw in more than 6 trillion dollars of corporate debt and nearly 13 trillion dollars of consumer debt, it is not inaccurate to say that we are facing a crisis of unprecedented magnitude.

Debt cannot grow much faster than GDP indefinitely.  At some point the bubble bursts, and when it does the pain that the middle class is going to experience is going to be off the charts.  Back in 2015, the middle class in the U.S. became a minority of the population for the first time ever.  Never before in our history has the middle class accounted for less than 50 percent of the population, and all over the country formerly middle class families are under a great deal of stress as they attempt to make ends meet.  The following comes from an absolutely outstanding piece that was just put out by Charles Hugh Smith…

If you talk to young people struggling to make ends meet and raise children, or read articles about retirees who can’t afford to retire, you can’t help but detect the fading scent of prosperity.

It has steadily been lost to stagnation, under-reported inflation and soaring inequality, a substitution of illusion for reality bolstered by the systemic corruption of authentic measures of prosperity and well-being.

In other words, the American-Dream idea that life should get easier and more prosperous as the natural course of progress is still embedded in our collective memory, even though the collective reality has changed.

 

To continue reading: Will America’s Prosperity Be Completely Wiped Out By Our Growing Debt?

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The 10 Richest Counties In America 2017, by Rebecca Lerner

Posted on October 17, 2017 | Leave a comment

Here’s a shock: the top three are bedroom communities of Washington D.C., in northern Virginia, another such community is also in the top 10, and Los Alamos County, NM, wholly dependent on the federal government, also makes the top 10. Who said you can’t get rich working for the government? From Rebecca Lerner at 3.forbes.com:

10. Santa Clara County, CA (Median household income: $102,191)

Santa Clara County is the largest county on the list with 1.89 million residents. It contains San Jose, California’s third-largest city, and the Santa Clara Valley also known as Silicon Valley. The county is the headquarters for some 6500 technology companies, including Cisco Systems, Apple Inc., Google and Facebook.

9. Hunterdon County, NJ (Median household income: $102,797)

Home to commuters of both New York City and Philadelphia, Hunterdon County’s biggest employers at home are Amec Foster Wheeler NorthAmerica, Hunterdon Healthcare and Hunterdon Developmental Center. But though their incomes are impressive, residents of Hunterdon may not feel as rich due to the high costs of living, paying taxes and commuting in New Jersey.

8. Arlington County, VA (Median household income: $104,354)

The wealth in Arlington is coming from the Capitol. Arlington County is home to the Pentagon and many members of the Department of Defense, which employs 24,000 residents. Other major government agency employers include the Department of Homeland Security, Department of Justice and the Department of State.

7. Williamson County, TN (Median household income: $104,367)

The fastest growing county in Tennessee, over half of the 489,250 residents are college educated. The biggest employers in the county are Community Health Systems Inc., United Healthcare and Nissan North America. Williamson County attracts new business with low costs— it has the lowest county tax in the Nashville area, no state income tax and the Nashville area has a 4% lower cost of living than the national average.

To continue reading: The 10 Richest Counties In America 2017

 

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