Debt, Debt, Debt: 90% of Americans Experience Income Decline As Wealth Gets Sucked Back Into Top .1% -- Debt Explodes As We Try to Make Ends Meet
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The cuts in taxes for the mega-wealthy have led to record wealth inequality and resulted in a huge national deficit. Meanwhile, to make up for the deficit created in part by tax giveaways to one-tenth of one percent of the population, Democrats and Republicans are committed to making draconian budget cuts to vital social services, which target the poor, middle class, elderly and sick, while handing out billions more in corporate welfare annually. (Inequality = Debt = Austerity)
Just as the government has done, to make up for tax revenue lost to the mega-wealthy, Americans have made up for the decline in income by taking on large amounts of debt as well. (Inequality = Debt)
In a severely unequal society, massive debt will always be created, thus forming a vicious cycle of increasing inequality and increasing debt, until the fragmentation of society reaches a breaking point when those in debt cannot afford to pay back their debts without starving to death. (Inequality = Debt = Austerity = Civil Unrest)
The Indebted Citizen
As for statistics on Americans being buried in financial debt: As mentioned before, from 1990 – 2010 costs of living have increased 67%, while wages have stagnated and declined. As the national debt has reached a record $14.6 trillion, total personal debt is now over $16 trillion . Consumer debt is $2.5 trillion. Credit card debt is $805 billion and student debt now exceeds $1 trillion .
Obviously, the more severe your debts are, the more you have to cut back in spending and the less money you have to buy new items. (Debt = Austerity)
Meanwhile, a perfect storm circles overhead as society breaks down and falls into an economic death spiral – health care, food and gas costs are skyrocketing, while income and home values are plummeting. (Inflation + Deflation = Stagflation)
Given these conditions, it is not surprising that over 250 million Americans, another record-breaking number, are currently living paycheck-to-paycheck struggling to make ends meet.
The following charts, from Adviser Perspectives, show the increase in costs of living since 2000:
As you can see, the price of basic necessities are consistently increasing; only clothing (apparel) has declined. The second chart highlights the crucial skyrocketing cost of energy:
The third chart highlights the pernicious skyrocketing cost of education:
The cost of education essentially buries young people in debt they will spend a significant portion of their lives attempting to get out of. Given the increasing costs of living, and the decreasing ability to make an expected income from such an expensive level of education, this young demographic will most likely live an entire life locked into spiraling levels of debt.
When reporting on inflation, the Bureau of Labor Statistics has twice, since 1980, revised its methodology to mask the severity of inflation, similar to how it masks the severity of unemployment. In its Consumer Price Index (CPI), which measures inflation, it has heavily discounted the measurement weight of energy, food and education – three of the most significant costs for most American households.
To understand the significance of its revised methodology, current “official” CPI is at a 3.6 percent annual rate. However, if calculated the way it was before former Federal Reserve Chairman Alan Greenspan altered it in 1980, it would be 11.1 percent , three times worse than officially stated.
So while the government and the Federal Reserve claim that inflation is low, a t 3.6 percent over the past year, food prices have increased 39 percent and US gas prices have increased 34 percent over the same time frame.