Middle class - worse off than the numbers show

[Attic]

What i'm seeing doesn't indicate it's the folks inability to reign in frivolous spending that is the crux of the problem. Definitely a problem, but I don't think that's a place to put the sights on.

Consider what the folks who operate the levers of the economy are doing, and how they think. Our monetary policy is absurd, the operators thinking is massively flawed and they rigidly adhere to models that are entirely self serving. So while the country suffers economically and socially, the policy nonetheless remains infallible according to these Ivory Tower dimwits. What do they suffer anyways, especially if they condition their numbers and models to say whatever they want to see.

Indulge a recent piece that picks apart keynsian nonsense being used to steer the US economy.

Today there are 102 million adults not holding jobs, for example, but only 43 million of these are retired on OASI (social security) and just 11 million are counted as officially unemployed. At the same time, there are upwards of 40 million part-time job holders, which self-evidently represent additional unutilized potential labor hours. So there are upwards of 100 million adults in America who represent a massive but latent labor supply that makes a mockery of the silly “U-3″ unemployment ratio that the Eccles Building theologians insist on counting down to the decimal points.

Stated differently, the BLS recently revealed that the private business sector of the US economy generated 194 billion labor hours in 2013—the exact same number as way back in 1998 and notwithstanding the massive growth of the adult population in the interim. Indeed, as recently as 2000, there were only 75 million adults (16-years and over) not holding jobs. Yet of the 27 million gain since then, only 7 million entered the OASI rolls. This means that during a 14 years period in which there was no growth of aggregate labor hours in the business economy, 20 million more adults ended up in the safety net, in mom and dad’s basement or on the streets.

These realities are not a mystery, and they do reflect a dangerous fiscal and social policy breakdown. But they are also thumping proof that monetary policy has exactly nothing to do with employment conditions and job creation. During the last 15 years, the Fed engaged in massive and nearly continuous Keynesian stimulus maneuvers, expanding it balance sheet 8X from $500 billion to $4.3 trillion. Yet millions of employable adults and billions of available labor hours have been flushed out of the private economy, while measured hours worked have been absolutely frozen.

Considering the worked hours staying unchanged from 1998 until now, consider how much more economic output has been measured by official GDP numbers, yet the median income doesn't budge (declines according to many accounts).


On topic of inflation, a killer of low wage earners and low income families and increasingly a killer of middle class real earnings power:

Accordingly, when Bernanke previously, and Yellen now, appear before the Congress or press and piously intone about their full employment “mandate” being a license for perpetual money printing they are simply indulging in a self-serving lie.

The same foibles pertain to the 2% inflation target. Its not in the law; and until the last two decades, price stability was thought to mean an average of zero inflation over time. Certainly William McChesney Martin and most of the first generation of modern Fed policy-makers believed that. Even today, Paul Volcker properly asks why is 2% inflation forever so virtuous when it means that the purchasing power of the dollar will be cut in half every 30 years.

And that doesn’t even consider the total manipulation of the BLS inflation measures that happened beginning a decade after Humphrey-Hawkins was enacted. These manipulations include arbitrary hedonic adjustments for “quality”; continuous reweighting of the price basket based on substituting cheaper chicken for more expensive beef; the use of geometric means to eliminate items with extreme increases; and of course, the foolishness of excluding food and energy from the price index used to make Fed policy—-the so-called PCE deflator. Rational policy in a $17 trillion economy caught in vast global cross-currents cannot be made based on trends shorter than one year. So on a running one-year basis there is no distortion due to food and energy price spasms, and these items are the foundation of every household budget.

Thus, the 2% inflation target is just more monetary Thomas Aquinas. And this is especially the case with respect to the lame proposition that the inflation target is being missed from below. As shown in the graph, there has never been a sustained period since the 1990s in which there was a shortfall of inflation from below. The entire notion of inflation targeting, in fact, is just self-serving Keynesian nonsense that provides yet another excuse to keep the printing presses going at full tilt.

Full Article

I don't think it should be a mystery why median incomes are being destroyed and wealth inequality has worsened while indulging keynsian madmen all the tools and $$$ they want (they always want more, but stimulus since 2000 has been massive and the more thing is a consistent excuse as to why they always fail). Our current monetary policy is a deceitful ploy to serve the few at the expense of the many. What have the many got for being subjected to these madmen? You have to peel back some layers of bullshit, but the real picture isn't that hard to see.

 

[IGBT]

the liberals don't want a manufacturing base in the US thus the economy suffers. Your obama has said numerous times in his campaign that he want's to de-industrialize the US and "skyrocket" the price of electricity and energy. Elections Have Consequences.

 

[OverVolt]

Its going to be a struggle for survival to be honest, it already is. The boomers will get screwed in retirement as bad as student loans and the job market are screwing generation Y.

Generation X is the only generation that is oblivious and I think they will get caught with lots of frivolous "wants" on credit next time there is a business cycle.

 

[OverVolt]

If everyone tightens their belt to save/invest more, whose gonna actually buy shit to make those investments payoff. We need better income distribution, otherwise only a few can invest and everybody can't afford shit. Taxes shouldn't be used to achieve this, but it's the only thing at governments disposal, folks left to their own accord would pick the bones of the underprivelaged and poor.

The economy is 70% consumer driven and its Ben broken (yes pun) for awhile. QE tells us that. We'll know more when it ends, but so far during QEs time wealth inequality has exploded and that's bad for the economy.

The economy is one massive skim operation to the top, everything about the economy and markets reveals this.

Consider how much government spending is actually private sector (crony capitalist kind) profit and ask if more government spending is an answer or a curse.

Younger people typically spend more money but the economy is like screw wage growth we need stockmarket growth so all the oldtarded boomers can retire.

Honestly I don't even bother I just have a laugh at this shit. It'll blow over.

But this...this is funny

http://www.theonion.com/articles/nations-lower-class-at-least-grateful-it-not-part,28999/

 

[OverVolt]

Complaining about free trade or globalization is akin to complaining about automation or technology eliminating jobs. They are all inevitable because under capitalism, humanity is strongly incented to minimize costs and maximum profits.

What the U.S. faces uniquely is that your system of taxation does less to smooth out the extremes of your young and poor than any other Western country. That's in some ways a good thing - it makes it the country to move to if you want to make it really big - but there's a negative to it as well. I think it makes a lot more sense to try to address the problem with more progressive taxation than to try to ignore the reality of globalization.

http://www.theonion.com/video/more-american-workers-outsourcing-own-jobs-oversea,14329/

Lets just go with your plan until the only thing that is still American about our companies is where they are listed on the stock exchange

 

[realibrad]

the liberals don't want a manufacturing base in the US thus the economy suffers. Your obama has said numerous times in his campaign that he want's to de-industrialize the US and "skyrocket" the price of electricity and energy. Elections Have Consequences.

There is no way to get the old manufacturing jobs back though. The ones that remain in the US now are highly technical. The manufacturing jobs in foreign countries only exist because the cost of labor is so low there. In the us, it would cost about 30k a year to have a robot do a manufacturing job, and thats well below a middle class job, and even below many low income jobs. The taxes for a robot are not the same, and the overall expense of robots is much less than a person.

So no, we will never get those jobs back, as they are lost to time. What we need to do is keep innovating and creating jobs. Trying to keep jobs is a race to the bottom income wise.