Is this country just fucked going forward?

[BipolarFuk]

This is why everyone is screaming for something that may wreck the economy. WEALTH INEQUALITY IS THE WORST IT HAS BEEN IN 100 YEARS. What the fuck do you expect when the ultra rich get richer, the middle class is on the endangered list, and more and more people have to work 80 hours per week just to make fucking ends meet? The greed of a tiny few has fucking wrecked this shithole, not the people who just want "free shit" because working at WalMart and a security guard shift doesn't pay the bills.

America's Wealth Inequality Is At Roaring Twenties Levels

With the 2020 presidential race kicking off and the election of a new crop of radical politicians, U.S. economic inequality and how to address it is one of the most important topics of the day once again. In particular, a statistic that shows that America's wealth inequality is back to Roaring Twenties levels is making the rounds:

It’s not fashionable to wear flapper dresses and do the Charleston, but 1920s-style wealth inequality is definitely back in style.

New research says America’s ultra-rich haven’t held as much of the country’s wealth since the Jazz Age, those freewheeling times before the country’s finances shattered.

“U.S. wealth concentration seems to have returned to levels last seen during the Roaring Twenties,” wrote Gabriel Zucman, an economics professor at the University of California, Berkeley.

Zucman said all the research on the issue also points to large wealth concentrations in China and Russia in recent decades. The same thing is happening in France and the U.K., but at a “more moderate rise,” the paper said.

In 1929 — before Wall Street’s crash unleashed the Great Depression — the top 0.1% richest adults’ share of total household wealth was close to 25%, according to Zucman’s paper, which was distributed by the National Bureau of Economic Research.​

While many left-leaning commentators and politicians have been quick to blame capitalism for this wealth disparity, I want to set the record straight by explaining that much of America's wealth inequality is the byproduct of a household wealth bubble that is the result of Federal Reserve market meddling (see my household wealth bubble report in Forbes to learn more).

U.S. household wealth recently hit a record of 535% of the GDP, while the historic average since 1952 is 384%. As I've explained in my report, when U.S. household wealth reaches an extreme relative to the underlying economy or GDP (as it did in the prior two bubbles), a mean-reversion or a correction is in the cards. The most recent household wealth bubble has benefited the rich over the middle class and the poor because the rich own a disproportionate amount of assets such as stocks and bonds, which have been inflated by the Fed since the Great Recession.

What is the common denominator between U.S. wealth inequality during the Roaring Twenties and now? A massive stock market bubble, which is confirmed by the cyclically-adjusted price-to-earnings ratio (a measure of how expensive the stock market is) in the chart below:

To summarize, America's growing wealth inequality is not the fault of capitalism, but of central bank market intervention, which goes against the very principles of capitalism. What is lost on left-leaning economists and politicians is the fact that America’s wealth inequality is not a permanent situation, but a temporary one because the asset bubbles behind the wealth bubble are going to burst and cause a severe economic crisis. My belief is that we should be more preoccupied by these asset bubbles instead of the temporary inequality created by them.

Instituting socialism, much higher marginal tax rates, and wealth redistribution are not the answer because they ignore the actual cause of the problem. The answer to growing inequality is to strike at the root by working to defuse the dangerous asset bubbles, by reining in or shutting down the Fed, and by shoring up the integrity of the U.S. dollar again by backing it with gold so that it can't be recklessly debased.
________________

So here is some common ground that I think most of us can agree on. The Fed is a problem.

 

[Chocolate Lab]

If you can answer seriously for a second, why do you give a shit about wealth inequality? Why do I care how much Warren Buffett or Bill Gates or Jeff Bezos are worth? How have they wrecked anything for middle class people?

Answer, they haven't. But the Bipos think it's a better situation for me to make 30,000 and they to make 100,000 then for me to 60k and they make hundreds of millions. That makes zero sense. The only explanation is sheer jealousy.

 

[Cotton]

The only explanation is sheer jealousy.

The only explanation is sheer socialism, you mean.

 

[BipolarFuk]

This is the country's most dire problem IMO.
[h=1]The Shrinking Middle Class[/h] Chasing the American dream used to be exhilarating. Now it’s exhausting. How did our vision of prosperity get so out of whack? And how can we fix it?

The vast majority of Americans consider themselves “middle class.” No one can quite agree, though, on what that means. Richard Reeves, along with colleagues at the Brookings Institution, has cataloged no fewer than a dozen economic formulas that seek to define this elastic cohort largely by what people earn each year: household income between X and Y; personal income that’s within some percentage of the national median; distance from the poverty line; and so on. Combine the lot, and the range of who might be considered middle class is extraordinarily expansive—including anyone from a single, part-time bartender scratching by on $13,000 a year to a suburban power couple pulling in $230,000, or 90% of American households in all.

Other economists and social scientists stretch the boundaries of membership in different dimensions, based on degrees of wealth or spending power, professional status or education level, what neighborhood you live in, or even on that very American of conceits, self-determination—which is to say, if you think you’re middle class, you are.

“I sometimes think there are as many definitions of the middle class as there are Americans claiming to be middle class,” says Reeves, a senior fellow at Brookings and director of its Future of the Middle Class Initiative, who quickly throws in one of his favorite noneconomic definitions: “You’re middle class if you have two refrigerators. You have a new one in your kitchen, and you have your old one in the garage or basement, where you keep your beer.”

The U.S. is a middle-class nation—it was founded on middle-class ideals, he continues. And so defining one’s self as middle class is, perhaps counterintuitively, aspirational in some ways. “Americans don’t like the idea of seeing themselves as upper crust, snobs, snooty, aristocrats, upper class, et cetera,” says Reeves, an economist and self-described “recovered Brit” who has written a new book, Dream Hoarders, precisely on that rarefied American upper crust. “People also don’t like to think of themselves as poor, or even as working class. To the extent that the U.S. has a class consciousness, it tends to be around the middle class.”

All of which creates a challenge of measurement. If sizing up the middle class is difficult enough, it’s that much harder to say that circumstances within this group have changed. And yet that is precisely what we’ve devoted the 28 pages in this special report to saying—and showing. Life has gotten harder in recent years for millions of people within the middle class. Put simply: For too many, the American dream has been fading.

Such an assertion may seem to fly in the face of recent economic data and even the long upward slope of history. Between 2013 and 2016, after all, the median income for U.S. families grew 10%, according to the Federal Reserve Board’s oft-cited Survey of Consumer Finances. The unemployment rate, meanwhile, is at its lowest level since 1969—the year of the moon landing—as the private sector has generated some 20 million new jobs since 2010. Wages, too, are at last starting to climb after a long stretch of stagnation. All really good signs, no?

And yet for nearly every rah-rah measure in the economy of late, there is an asterisk: a footnote that suggests that a huge and perhaps growing subset of Americans is being left off the dance floor. Consider the most basic: wages. For non-supervisors, average hourly earnings hit nearly $23 in November—a fact that, according to data from the Pew Research Center, gives today’s workers slightly less purchasing power than those in January 1973, once inflation is factored in ($23.68 in 2018 dollars).

For years, the company CareerBuilder has conducted, via the Harris poll, a large survey of U.S. workers across the business landscape. In 2017, a striking 40% of the nearly 3,500 respondents said they either always or usually live “paycheck to paycheck”—a level that was up four percentage points from the company’s 2013 poll.

Such data is explained in part by recent research by the Federal Reserve Bank of New York, which reveals the $13.5 trillion IOU that American families have kept locked inside their desk drawers. This past September, aggregate household debt balances jumped for the 17th straight quarter, with the debt now more than $800 billion higher than it was at its previous peak in 2008. The loan comparison site LendingTree, drawing on data from the Federal Reserve, reports that as a percentage of disposable income, Americans’ non-housing-related debt is higher than it has been since measurement began a half-century ago. Collectively speaking, our outstanding consumer debt, says the site, is equivalent to more than 26% of our income.

With interest rates low, that burden is still a pinch for many, rather than a gouging bite—but unlike with our skyrocketing federal debt, this cascading obligation is still achingly personal, with reminders coming in the mail month after month. In December, the personal finance site NerdWallet reported that average revolving credit card balances for households with debt—the “You Owe This Amount” figure that carries over from one billing statement to the next—totaled $6,929.

Even those without a credit card overhang, or massive student loan debt, find themselves facing a gauntlet of recurring charges each month. The cost of health insurance and medical care have each risen much faster than paychecks have. Over the past decade, out-of-pocket costs to workers from higher insurance deductibles have climbed eight times as much as wages, notes the Kaiser Family Foundation. More than a quarter of adults did without needed medical care in 2017 because they couldn’t afford it, says the Fed.

Yes, housing costs nationwide have moderated—but, importantly, not in the places where the jobs are. Want to work for a Silicon Valley startup or a biotech firm in Boston? Six in 10 renters making up to $75,000 a year will pay upwards of 30% of their income in rent in San Jose; four in 10 will do so in Boston, according to Harvard’s Joint Center for Housing Studies.

Here—in housing, health care, and the cost of college, too—is where the super-inflation hits hardest for a significant share of the nation today. “And it’s quite hard to find three areas of consumption that define the middle class standard of living more than affording a decent home, or being able to send your kids to college or cover health care costs should any of your family fall sick,” says Reeves of Brookings. This tripartite gap, in particular, may well be what has convinced many younger Americans that they won’t ever reach one critical milestone in the Great American Journey—living better than their parents did. (Only half of the 15- to 26-year-olds in a recent poll by the Associated Press–NORC Center for Public Affairs Research thought they would.)

Harvard economist Raj Chetty has done some of the most acclaimed work on this historic decline. In 2016, Chetty and colleagues showed that fewer than half of those born in the 1980s earned more than their parents had at the same age, adjusting for inflation. By contrast, of those born in 1940, more than 90% had accomplished the feat. “We can see that there has been a collapse of intergenerational mobility,” says Claudia Goldin, a leading economic historian and labor economist at Harvard.

It’s all part of the feeling, for millions of Americans, of falling behind—a feeling made all the more frustrating by the sense that the gap between the middle class and the superrich keeps widening … that the laws of economic gravity no longer seem to apply.

And compounding that is one more nagging concern: that the breakneck speed of technological change now disrupting one industry after another—a revolution of A.I.-infused automation—will uproot the one thing that, according to the folks at Pew, virtually everyone agrees is critical to middle-class membership: a secure job.

Each previous era’s industrial revolution has, of course, raised the same fears. Reeves thinks “a good starting position is to be skeptical about the claim that this time is different.” But the two things worth asking about the current revolution, he says, are: “One, will it be differently quick this time? And two, will it be differently different?”

It’s question No. 1 that makes him a little nervous: Yeah, sure, with every grand sweep of automation, business models change and new positions get created, and there’s a transitional time in between them. “So surely the economy will adjust and new jobs will be created,” he says, “but will those people who are displaced be the ones to get those jobs? And will they get them fast enough? You’re not talking about 20, 30, 40, 50 years of transition between approach A and approach B. You’re talking about two, three years. What it means is people need to reskill, retool at a pace that has never before been witnessed in human history.”

The closest thing to it, says Reeves, would be like a mobilization during war. So be it: Many Americans feel like they’re already in one.

 

[Kbrown]

Wealth disparity is a symptom of economic dysfunction, especially when the cost of necessities is rising. It's not un-conservative to say that.

The difference between the left and right should be in the response to it. Equality of outcome versus equality of opportunity.

 

[L.T. Fan]

Wealth disparity is a symptom of economic dysfunction, especially when the cost of necessities is rising. It's not un-conservative to say that.

The difference between the left and right should be in the response to it. Equality of outcome versus equality of opportunity.

In your opinion what is the proper mix of wealth distrubition in a capitalistic economy from top to bottom?

 

[L.T. Fan]

If you can answer seriously for a second, why do you give a shit about wealth inequality? Why do I care how much Warren Buffett or Bill Gates or Jeff Bezos are worth? How have they wrecked anything for middle class people?

Answer, they haven't. But the Bipos think it's a better situation for me to make 30,000 and they to make 100,000 then for me to 60k and they make hundreds of millions. That makes zero sense. The only explanation is sheer jealousy.

The primary thing BiPo is failing to recognize in his preferred Federal Reserve system scenario is that if it were not for the Fed the US would not be able to appropriate all the welfare and social security funding to take care of the numerous needs in the society. If taxation was the only source for funding that segment of society would be totally screwed. The Fed allows the government to appropriate the funding needed for many programs. Before anyone gets on a tear about debt, most people don’t understand what constitutes the actual deficit and what does and does not have to be repaid.

 

[Kbrown]

In your opinion what is the proper mix of wealth distrubition in a capitalistic economy from top to bottom?

I am not an economist, so I don't have specific numbers. But that is irrelevant.

I do know that if older conservatives want to push more young people to consider socialism, they should by all means continue to push the generic "bootstraps" rhetoric that was much more resonant back when housing was affordable and families could survive from a single income.

We should have traditional gender roles and stronger families, but when it comes to an economy that requires both parents to work to survive, oh well, nothing we can do.

 

[Cowboysrock55]

In your opinion what is the proper mix of wealth distrubition in a capitalistic economy from top to bottom?

There isn't any. People manipulate numbers to make simple minded folks think there is something going on that isn't.

Wealth inequality has to be put in perspective. The top earners don't really matter. The difference between what they earn and what average joe earns doesn't matter. What really matters is what average Joe earns relative to the cost of goods. But taking a look at those numbers and comparing the incomes of the majority of the population verse the current cost of goods doesn't incite people to socialism for example. So instead we point at the person making some much money they couldn't possibly spend it all and think that the solution to everyone's problems is for that person to not have that wealth and to spread it out to everyone else. It's like a child's way of looking at an economy.

Wealth distribution matters, please don't misunderstand me, but the wage gap number is a useless manipulation of numbers.

 

[Kbrown]

There isn't any. People manipulate numbers to make simple minded folks think there is something going on that isn't.

Wealth inequality has to be put in perspective. The top earners don't really matter. The difference between what they earn and what average joe earns doesn't matter. What really matters is what average Joe earns relative to the cost of goods. But taking a look at those numbers and comparing the incomes of the majority of the population verse the current cost of goods doesn't incite people to socialism for example. So instead we point at the person making some much money they couldn't possibly spend it all and think that the solution to everyone's problems is for that person to not have that wealth and to spread it out to everyone else. It's like a child's way of looking at an economy.

Wealth distribution matters, please don't misunderstand me, but the wage gap number is a useless manipulation of numbers.

To be clear, I am not proposing we take wealth from top earners and redistribute it via government fiat. My main problem is with the middle being as low as it is.

I guess my gripe has to do with the presentation of the issue by certain conservatives. Do we think Trump pulls off a seemingly impossible upset if his message to coal-mining families is to stop being jealous of Jeff Bezos?

 

[BipolarFuk]

I am not an economist, so I don't have specific numbers. But that is irrelevant.

I do know that if older conservatives want to push more young people to consider socialism, they should by all means continue to push the generic "bootstraps" rhetoric that was much more resonant back when housing was affordable and families could survive from a single income.

We should have traditional gender roles and stronger families, but when it comes to an economy that requires both parents to work to survive, oh well, nothing we can do.

This is my whole thing. WHY can a normal family of 4 NOT make it on a single income of dad/mom working and one raising the kids? What has changed that now BOTH parents have to work at least 80 hours combined per week and usually more to have a decent living?

People want to bitch and say this and that about kids these days, BUT NO ONE IS RAISING THEM!!. Everyone has to work their fucking lives away. So kids are raised by the internet or some disinterested minimum wage worker.

How is it fixed? I have no fucking idea.

I know what broke it though.....GREED.

 

[L.T. Fan]

I am not an economist, so I don't have specific numbers. But that is irrelevant.

I do know that if older conservatives want to push more young people to consider socialism, they should by all means continue to push the generic "bootstraps" rhetoric that was much more resonant back when housing was affordable and families could survive from a single income.

We should have traditional gender roles and stronger families, but when it comes to an economy that requires both parents to work to survive, oh well, nothing we can do.

Even so with both working the standard of living is so much greater now than 60 or 70 years ago. The entry level home no longer exists and many families didn’t even have an automobile. The communication and recreational systems are matter of fact now when at one time there was no such thing as a family vacation for many and a phone call to a family member was an annual affair and may require a trip to the local telephone office. I could go on but only people like me understand this. I further understand that conceptually the subsequent generations have no way of relating to what I am saying. There is one thing though that people my age does understand and that is the bootstrap analogy. It however is not a realistic to most.

 

[L.T. Fan]

There isn't any. People manipulate numbers to make simple minded folks think there is something going on that isn't.

Wealth inequality has to be put in perspective. The top earners don't really matter. The difference between what they earn and what average joe earns doesn't matter. What really matters is what average Joe earns relative to the cost of goods. But taking a look at those numbers and comparing the incomes of the majority of the population verse the current cost of goods doesn't incite people to socialism for example. So instead we point at the person making some much money they couldn't possibly spend it all and think that the solution to everyone's problems is for that person to not have that wealth and to spread it out to everyone else. It's like a child's way of looking at an economy.

Wealth distribution matters, please don't misunderstand me, but the wage gap number is a useless manipulation of numbers.

I understand that but I wondered if someone had a ratio they think should be a reasonable model.

 

[Chocolate Lab]

This is my whole thing. WHY can a normal family of 4 NOT make it on a single income of dad/mom working and one raising the kids? What has changed that now BOTH parents have to work at least 80 hours combined per week and usually more to have a decent living?

First of all, maybe you shouldn't have four kids if you can't afford them? Does anyone even think about that anymore?

One huge problem is everyone has been sold this dream that they have to have great everything and therefore they charge everything and pay exorbitant interest fees. Well that's funny, no one has ever made me charge anything on my 21% credit cards. But personal responsibility? That's old fashioned I guess.

And guess what, it was never a piece of cake to raise four kids on one income. Like LT said, one reason people might could have done it before is everything was simpler and more basic and therefore less expensive. But it's not the fault of capitalism that people insist on living above their means.

 

[Angrymesscan]

If in your 20’s you’re not an idealist/socialist you’re an asshole, if you’re still one in your mid forties you’re an idiot.

 

[Angrymesscan]

First of all, maybe you shouldn't have four kids if you can't afford them? Does anyone even think about that anymore?

One huge problem is everyone has been sold this dream that they have to have great everything and therefore they charge everything and pay exorbitant interest fees. Well that's funny, no one has ever made me charge anything on my 21% credit cards. But personal responsibility? That's old fashioned I guess.

And guess what, it was never a piece of cake to raise four kids on one income. Like LT said, one reason people might could have done it before is everything was simpler and more basic and therefore less expensive. But it's not the fault of capitalism that people insist on living above their means.

I think a family of four is just two kids, mom and dad are part of the family as well...

 

[Chocolate Lab]

I think a family of four is just two kids, mom and dad are part of the family as well...

You're right, I misread that. I still say you can do it on one income with two kids. Lots of people do it. You may not be able to keep up with the Joneses posting their pimp lives on Facebook, though. That's what I see with so many people. They think they have to have a new SUV, have to have a bigger house than they need, etc. After all, everyone is doing it. But everyone using their credit cards to finance it all, too.

 

[Cowboysrock55]

You're right, I misread that. I still say you can do it on one income with two kids. Lots of people do it. You may not be able to keep up with the Joneses posting their pimp lives on Facebook, though. That's what I see with so many people. They think they have to have a new SUV, have to have a bigger house than they need, etc. After all, everyone is doing it. But everyone using their credit cards to finance it all, too.

That's just it. You can do it. You just might not have the fancy new vehicle, the best name brand clothes, the big house, the savings account with plenty of money in it. I didn't live in the 60's so I can't tell you if back then you could do all that sort of stuff on a single average salary. I don't think people's quality of life is any worse now than it was back then so I'd guess you couldn't afford that stuff on an average salary of one person.

And frankly there is nothing wrong with both parents working. I could see taking a few years off when a child is just born. But once they start preschool why the hell should one parent stay home? I guess my generation just wasn't really raised with the idea that one parent stays home all the time and that only one person in the family should have to work.

 

[NoDak]

That family of 4's phone bill is probably around 400 bucks a month, too. Err'body gotta have the latest smartphone w/ unlimited data.

 

[NoDak]

Just saw a meme on facebook that actually makes sense. It certainly makes you think, and fits right it to the theme of this thread.

It said... "How fucked as a country are we when half the population is truly pissed off that our President was proven NOT to be a traitor?"