Wednesday, June 17, 2015

COTW: When the People Don't Spend

As much as the financialized plutocrats want not to believe the fact, the US economy is still driven by consumer spending. And their handmaidens over at the Fed are scratching their collective head over why 'Mericans are not spending like they should. This chart shows one reason. The people with the jobs are aging baby-boomers working to make up for their lack of retirement funds (average: $12,000) and who instinctively do not consume as much as other age groups:

The prime age bracket for spending and earning is the 24-54 group. They are still 4 million jobs short of where they were before the Great Financial Panic of 2008. Median household income has become static while inflation rises. The psuedo-recovery is just that--illusory. After six years of 'recovery' the Fed discount rate is still at the emergency level of 0.25%. The Fed cannot afford to increase it because the economy is a giant bubble blown up by its cheap money the plutocrats loan to us at 16% or more. Consumer debt as a percent of personal income is at a historic high of 22%. That represents total consumer debt ten times what it was in 1980. Corporation controllers that only consider the short-term bottom line impact of their actions continue to export jobs to overseas sweatshops with the encouragement of a captured national government which touts global corporatocracy disguised as free trade treaties. Debt has replaced wages and savings. Think Greece is screwed? Our upcoming deflationary collapse will be truly nasty.