Today I want to share a disturbing article from ZeroHedge on the middle class. The article highlights the work of economic historian David Hackett Fischer and looks at the cycle of economic growth, population growth, and supply growth.
The conclusion is that as real wages have been flat for generations (inflation adjusted), that the middle class powerhouse of the US economy is simply out of gas. There is no way the middle class today can support themselves, their kids, and their elders, as well as all the bureaucrats in Washington. Something has to give. What is that going to be?
I’ll wager a guess that it’s some of all of these:
- Higher Taxes
- Lower Benefits
- Printing More Money
- More Inflation
- More Volatility
So what’s your move? Are you depending on the Government to fund the majority of your retirement? Think again. Are you hitting retirement without out much of a surplus of income, living close to the bone based on today’s tax rate assumptions? Plan for increases. Take control of your own life. There are strategies that can insulate you, and position you to profit, from all these threats.
Here are some excerpts of the excellent article.
According to the Census figures, the median annual income for a male full-time, year-round worker in 2010 — $47,715 — was virtually unchanged, in 2010 dollars, from its level in 1973, when it was $49,065.
Overall, median household income adjusted for inflation declined by 2.3 percent in 2010 from the previous year, to $49,445. That was 7 percent less than the peak of $53,252 in 1999.
We can see this steady decline in wages in this chart:
And this shows more about the ages of income-earners who are impacted:
Notice that the only age bracket with rising incomes is the 65 and over cohort; everyone younger than 65 has seen their income slashed. And this is assuming “official” inflation is accurate; if it understates real inflation (loss of purchasing power), then the income declines are actually much more severe than charted here.
The Federal government is supporting its dependents and its crony-capitalist Elites with borrowed money: $1.5 trillion every year, fully 40% of the Federal budget. It is in effect filling the gap between exploding costs and declining income, just like the middle class did until they ran out of collateral to leverage.
The dwindling middle class, now at best perhaps 25% of the workforce, has been reduced to tax donkeys supporting those above and below who are dependent on Federal largesse.
Fisher found that this cycle ends in transformational political upheaval. No wonder; even as the class paying most of the taxes shrinks and is pressured by higher costs, the class of dependents expands as the economy deteriorates and the super-wealthy Power Elites continue to control the levers of Central State power.
See the original article here