When slow and steady change happens in your life, slowly but surely, you don’t really notice the aggregate of the change so much while you adapt to it over the span of time.
This is why when we reflect back on how it used to be (“back in the day”), it often seems so radically different than it is today. When we look back, we see some of the huge changes that have taken place – and we wonder how and why it has changed so much. The thing is, much of the change is disguised in increments, be it good or bad.
One such change has been taking place right under our noses, and I call it,
“The Great Divide”
There is a great divide that has been developing in this country, and although it has always existed to an extent throughout time – it has magnified dramatically since the FED bailouts and new economic policies since 2008.
That is, the divide between the very rich, and the rest of us.
No, not the divide between the rich and the poor, but the divide between the very upper middle class (on up to the very wealthy) – and the rest – including the rapidly disappearing middle class.
No, this (article) has nothing to do with fanning the flames of “class warfare” between the have’s and the have-not’s. There will always be a gap – it’s just the way the spread works… and is logical when you really think about it – along with the typical reasons for it.
HOWEVER,
The reason for this EXAGGERATION of disparity are the present economic policies of the central bankers who have been (and still are) printing (digitally) an unbelievable amount of money every day, every month…
You all know this – it has been well known for years – the expanding money supply, the ballooning debt of our nation and the world’s nations.
When this amount of money is printed, it has to go somewhere.
It doesn’t just sit there! – with no effects.
A-lot of it goes into the financial markets – stocks, bonds, commodities, etc.
It also goes to extravagant luxuries of the rich – multimillion dollar estates, yachts, and any and all other opulence of the wealthy, etc.
The eventual result of all this (money printing) is the ‘price’ of the things where the money flows (e.g. the stock market) goes up (despite the underlying realities of the ‘real’ economy),
And asset classes go up – all while our food, energy, and retail prices creep higher and higher while our government tells us inflation is tame ‘and prices really aren’t getting any higher’ (due to their cloaking and manipulation of the numbers and how they are reported)…
A steady creep. Do you notice it?
The results of higher prices do not affect the wealthy who spend a very small percentage of their income on living expenses.
But for the rest (and the majority of people) who spend a very high percentage of their income on living expenses (rent-mortgage-food-energy-autos-health-insurance-bills-loans-taxes-etc.,) a creeping increase of those costs are consuming the remaining few percent of surplus income (if any) just to stay afloat.
Look at it this way — how much disposable income is left for you at the end of each week or month? 10%? Less?
If you earn, say, $50K a year and your weekly take-home pay is say, $800/wk. ($3500/mo.), how much do you have left over after your rent (mortgage), groceries, utilities, insurances, property taxes, fuel, loans, etc.? Do you have more than $300 or $400 left in your pocket? For most of the middle class, probably not so much…
For most, if their margin is say, 10%, (it’s costing 90% of their income to ‘live’), then ANY increases in these living expenses will have a very big impact on their lives!
On the other hand, for those who are spending a small percentage of their income on living expenses, they hardly are impacted at all by increases in their cost of living.
The thing is, the economic policies of the FED, the federal government, and the central bankers have been steadily widening the gap between the wealthy and the rest (the middle class).
And the disparity has become so great, that it is going to lead to social upheaval.
The reality is that proportionally there are very few of ‘them’ and there are LOTS of the rest. When ‘the rest’ reach their limit, there will be ‘unrest’. Count on it.
The great divide.
The current policies have so twisted economic reality, that it seems absurd that it continues. But it does. Debts at all-time (staggering) highs. Price-to-Earnings ratios (PE) and stock markets at all-time highs. The exuberance of blind faith in a never ending stream of dollars and profits flowing from the spigots. The uber-rich are the recipients of the stream of funny-money while the middle class are the recipients of a steady tightening of their budgets – unable to print their own funny money…
One day historians may look back on the years of ‘today’ and wonder why the vast majority of the people did not see it coming (the collapse). The signs were everywhere. How could they not have seen it or changed their ways?
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About to get worse. FATCA google it.
http://americansabroad.org/issues/fatca/fatca-bad-america-why-it-should-be-repealed/
Title V effective starts July 1st 2014
May be time to pad the portfolio with some inverse ETFS.
We’re looking at the end of empire is what we’re doing. Just as Rome bankrupted itself through imperial conquest, so too the united States has let the military industrial complex and industrial titans bankrupt the People. While Raytheon, Lockheed Martin, General Dynamics, Blackwater, XE and all the others get richer and richer, Joe Six-Pack is getting screwed harder and harder. Real wages have actually dropped as an average over time and most manufacturing jobs have been off-shored or automated in the last forty years, so the middle class, which was the real money cow for the government slowly disappeared. Now, the two dominating groups are the ultra rich and poor/newly poor. Unfortunately, there are now too many takers and not enough producers so the cash cow is drying up. as more and more folks retire and start collecting social security benefits, the worse it will become. At some point we will not be able to stop the runaway train and the balloon will go up.
No matter what The Brotherhood Of Darkness does now, it is over. It is but a matter of time. Govern yourselves accordingly.
File under: History doesn’t repeat itself, but it does rhyme.
The parallels between the reign of Septimius Severus (and the Severine Dynasty) and Obama are striking. What’s next? Extending citizenship to everyone to increase tax receipts?
Many of the “rich” became so in their own lifetime by hard work and the American Dream. I think of my two parents who were working slobs all their life, played by the rules, didn’t go into debt, didn’t get divorced, and saved and invested. They are worth over a million dollars although no one would ever think that by looking at them. They are frugal but always help others in need. The real problem is those in government who have bred generations of welfare recipients, subsidizing single parent families (i.e. teen pregnancy), and programs for everything from stinking art to green energy that the constitution does not empower the feds to be involved in. The fed should only be involved in national defense, interstate commerce and overseas issues and the States should handle the rest. If that were the case our federal budget would be miniscule compared to what it is now and we would be able to handle state governments much better by throwing out the local bums or moving to states with better policies. Put the blame where it belongs with the liberals and progressives who have intentionally been trying to destroy this country in earnest for the past 40 years.
Sgt Bill , at this time the largest employer in the US is the government , to me that is just wrong ! The government has given itself more and more power that actually is unconstitutional but the People have not stopped this infringement on the People , it is when we rise up , like Patriots did at Clive Bundy’s ranch , that we get our point across to the federal government that they have overstepped their bounds of Constitutional checks and balances , I feel that this the only way to let our voices be heard because even the SCOTUS is overstepping their bounds by making law instead of interpreting law , otherwise the only other way to let the government know how we feel is by armed insurrection , I don’t want that to be the way it goes but it might be our only recourse . Be prepared and ready . Keep your powder dry .
And the biggest non-government employer is Manpower Inc.
Patriots at Clive Bundy’s ranch??? Gee, how the definition of a patriot has changed. They appeared to be a group of thugs supporting a racist who hasn’t paid his taxes in years.
There will always be a disparity between the haves and the have nots no matter what econmic or political system you are in. Our system creates the most equal opportunity for all. In our system “most” of the disparity between the classes is a result of choice. That is conscious choice or unconscious choice. If you pick up a six pack at the 7/11 most nights after work, or smoke or have to have a 65″ flat screen or overuse the credit card you are making a choice to remain poor. If you skipped classes and slept through algebra in high school or drank your way through college or prefer to game the unemployment system every summer then you are choosing to remain poor. Our freedoms and livng under a system that embraces capitalism allows us to succeed or to excel or to live in the gutter. It is our choice. Far to many of us don’t understand that and seem to believe that a lack of skills and a poor work ethic should be rewarded as much as becoming a doctor or a lawyer. 90% of Americans will not willingly choose to defer gratification and instead prefer to spend what they earn and in most cases spend more then they earn. Read the stories of those who win the lottery and within a few years declare bankruptcy. Most of us simply do not know how to make the most of the smogasbord of opportunity laid out before us and instead use our freedom to destroy those opportunities. Most of those who do know how to take advantage of the opportunities choose not to because they simply want to have fun and saving for the future isn’t as much fun as buying new cars and taking expensive cruises. Darwin was right and Marx is wrong.
Gone With The Wind, It looks like it’s windy where you are and it sailed right over your head. I read something completely different in this post than you took away from it.
Or maybe it was my comment you didn’t understand.
Darwin? Really?
Sorry, it’s one of my pet peeves.
What is there to “peeve” about Darwin. If I had instead said “survival of the fittest” to explain why the lazy and ignorant don’t succeed would that be OK?
No. Marx and Darwin did not have the same job. One was a scientist the other a social scientist. Darwin was not talking about politics, culture, or economics.
Social Darwinism ain’t Darwinism.
You may have a point somewhere but I’m not getting it. My reference to Darwin was that indeed the fittest survive and that most people who are poor are poor because of their choices. What kind of scientist Darwin was has nothing to do with that point. Our freedom allows the indolent to lay about and fail just as surely as it allows the hard working to prosper. A true case of survival of the fittest. If Darwin had been a priest it wouldn’t change that simple fact. That Darwin was the first to have expressed that simple fact in writing neither makes it more nor less true. And that you have a bias or a blind spot regarding Darwin does not change that simple fact either. I don’t like Obama but if Obama had made the statement about the survival of the fittest I wouldn’t disagree with the obvious truth of it simply because I disliked the person who stated it.
>it allows the hard working to prosper
Ever heard of something called perception bias?
I have heard of perception bias, but it certainly doesn’t apply to the discussion. Have you ever heard of something called rationalization?
Just because you can’t perceive how this applies to the discussion… welll…
Have you ever heard of something called rationalization?
If you adhere to a scientific viewpoint (instead of a belief system), then you need to be able to falsify your statements to disprove confirmation bias.
Have all failures to thrive been people who have not saved, not worked hard, not invested, etc?
Or are you just cherry-picking the successes and the trying to draw the correlation you want to those results?
Given the very small percentage of ‘winners’ I guarantee that there are plenty of people who did all the ‘right’ things and didn’t reap the rewards.
Maybe you’re saying this because you’re hoping it a talisman, and that eventually the good things will befall you? Or, perhaps as justification if you’re one of the winners (“I *deserve* this winning hand!”)?
“Have all failures to thrive been people who have not saved, not worked hard, not invested, etc?”
Of course not but this is true about everything in life. Sometimes there is misfortune and bad luck. Are you telling me that if we raised the minimum wage then no one would go bankrupt ever again? Seriously there will always be sad stories in life I would hope you aren’t advocating that we set our national public policy based on sad stories. The simple fact is MOST people who fail to reach upper middle class or the upper class have chosen consciously or unconsciously to not do the things that will help them succeed. Most of the poor buy booze, cigarettes and drugs of choice but rely on food stamps to feed their family. Are you trying to convince me that is my fault or the fault of the rest of us taxpayers?
“Given the very small percentage of ‘winners’ I guarantee that there are plenty of people who did all the ‘right’ things and didn’t reap the rewards.”
You do understand that if you get to define “winners” then you can always define it such that there is a small percentage of them. I would argue that everyone in the middle class is a “winner”. Many who do not consider themselves to have reached the middle class in this country live better then the middle class does in Europe would you call them “losers”? If you consider the only “winners” to be Koch brothers then of course there is a small percentage of them. As for doing al the right things I can assure you that it works but most people simply cannot manage their money, their lives or their habits so they are fated to do too many of the wrong things. Does this become my fault or society’s fault?
You have fallen prey to the biggest lie of the left. That is since we cannot all be in the 1% (or .1% or .01%) then we should pass laws to take what the 1% have. Or the corollary to that which is no one can become rich without stealing the assets or labor of the poor (Karl Marx again). Most people who “become” rich in a democratic society do so through hard work and applying their skills. I don’t begrudge them their success and I certainly don’t want to put roadblocks in front of success just to satisfy the jealous people who choose not to work hard. We should be reducing barriers to success not erecting them. We should be taxing less not more. We should stop rewarding laziness and failure.
I am indeed one of the “winners”. I was lucky enough to be born in the greatest country on earth; the greatest country in the history of the world. I was lucky enough to be born into a poor family before the government and left wing activist decided to reward laziness and apathy. So I learned early that work was it’s own reward and thrift was the secret to becoming wealthy. Not a billionaire but wealthy in many ways not just money. I do in fact feel sorry for those who piss away the opportunity placed in front of them. They play video games and smoke pot through high school and either fail to go to college or fail out of college. They “work for the man” instead of giving their employer a decent days work for a decent days wages. They fight the system instead of working with it. They drink their sixpack every night instead of improving themselves or their family. What a shame, what a waste. But no worries the left has given them an excuse; it isn’t their fault. It’s the fault of the successful people out there. Elect a left wing ideologue to congress and he will take from the rich and give to the poor. History is full of left wing ideologues who have promised these things and have always instead used their power to oppress. We have one of these people as president and too many in congress. As a result we are in a depression that hasn’t hit bottom yet.
>I would argue that everyone in the middle class is a “winner”.
Which is why the middle class in America has been growing by leaps and bounds.
>Many who do not consider themselves to have reached the middle class
>in this country live better then the middle class does in Europe
Hahahaha! You’re funny. Have you ever even talked to someone from Europe? Granted they have problems, but living well is not one of them for almost every person in their social spectrum. Ask how many homeless people they have, how many bankruptcies, how many without healthcare, etc, etc.
I guess that’s why the Euro and the GBP are worth less than the Dollar, and why every other country in the world is getting rid of Euros and adopting the Dollar as their reserve currency (hint: they’re not).
>> that he created that phrase and it is so apropos to what is going on in America today.
> It perfectly describes those who succeed in life and explains those who do not.
Hey, if this is true, what’re you complaining about? America is right on track! Go Red, White and Blue!!!
Yes I do talk to people from Europe. I lived in Europe for four years and I travel there when I get the chance. It is true that Americans on welfare get more money and benefits and live as well or better then the middle class in Europe.
No America is not “right on track”. But our problems are created by our politicians and those problems are indeed going to cause us all problems. But the disparity between the rich and the poor is NOT the problem and changing that is NOT the cure.
>But the disparity between the rich and the poor
>is NOT the problem and changing that is NOT the cure.
It wasn’t a problem, back in the day. And I wish they’d not changed it.
The disparity used to be decent (say ~1950s), and has gone to compound interest rates thanks to Republicans.
Since it HAS been changed on us (for the benefit of the few), I don’t see why we shouldn’t change it back.
“The disparity used to be decent (say ~1950s), and has gone to compound interest rates thanks to Republicans.”
Two points:
1. Your willingness and eagerness to blame this all on republicans says so much about your motive in this discussion. I don’t know what made Oprah so damned rich but you seem to think it was those nasty Republicans. I don’t know what made Will Smith the richest actor in Hollywood but you think it was the Republicans. I don’t know what made Tiger Woods and Kobe Bryant the richest athletes in the world but your conspiracy theory is the Republicans did it. I assume you also think none of these people deserve their wealth; the bastards. But in spite of all that how does their wealth or the fact that their wealth is SOOOO much greater then the average joe make a difference to the average Joe? Would Joe sixpack be better off suddenly if we took all these wealthy people’s money from them?
2. Your life and my life and everyone’s life is not dpendent nor harmed by how rich someone else is. It is harmed by those, like you, who would throw up roadblocks to success out of jealousy or misnderstanding of both capitalism and freedom. You and I and everyone in America is free to make as much as we want to. We could earn a degree or degrees as our path to wealth or we could invent the next “Apple” computer or simply work hard and save and invest. We are also free to do little or nothing and maybe game the system and rely on government handouts or stealing. But you want to level the playing field by demanding equal outcome in place of equal opportunity. What you want to do is replace freedom with Marxist socialism. I prefer freedom.
OK. I didn’t convey the nature of my peeve, I thought you’d pick up on it.
According to Darwin, the “fittest” don’t get that way because they want to be fit or they try harder to be fit, they get that way by random genetic mutation over vast amounts of time. Darwin’s work does not apply to social science at all.
Social Lamarckism might be a more apt term for what you’re describing.
SO if those who succeed do so because they are the “fittest” it doesn’t matter and no one is allowed to observe that Darwin created that phrase? You don’t have to like Darwin or agree with Darwin to acknowledge that he created that phrase and it is so apropos to what is going on in America today.
Excuse me, are you saying that Darwin created the phrase “survival of the fittest”?
It’s well documented that this is not the case.
You are correct. Herbert Spencer coined the term “survival of the fittest” after reading Darwin’s book “On The Origin Of The Species”. Darwin first used Spencer’s new phrase “survival of the fittest” alongside “natural selection” in the fifth edition of On the Origin of Species, published in 1869, intending it to mean “better designed for an immediate, local environment”. None of this changes the meaning of the phrase as applied to economics and individual successes or failures. It perfectly describes those who succeed in life and explains those who do not.
Great. You can apply the phrase “survival of the fittest” to whatever you want. But know I think you understand the nature of my pet peeve: leave Darwin out of it. And I think you actually learned something in this exchange…have a good Sunday.
Well I for one understood where you were coming from regarding Darwin and just want to say I enjoyed reading what you posted. You are a very wise person.
I have an idea! Since nobody cares enough about the debt being what it is, and since nobody gives a hoot about the number of zeroes after a bunch of numbers (because if they cared then things would be different), then why not petition the government to print even more money, enough to give everybody one hundred thousand dollars? Why not? Nobody gives a $hit anyway about how much debt we have and nobody does anything about it, and the stock market seems to love it, why not MORE? What the heck right? Think of the money spent back into the economy! Who cares that it will add trillions more debt! WhooooHOOOOO!! Just print more! It’s only debt! People are dumb enough to keep on believing in their precious dollar bills and their imaginary value, no matter how much debt is piled high, so just print it off like toilet paper on rolls and give it to the people for free!
That should have been done instead of bailing out the banks for 750 billion plus. The american people would have put it back into the economy because too few would be smart enough to have saved any of it.
This is also related to the concept of Basic Living Stipend.
Of course, this just removes the problem a step down the chain – since the rich own (take the profit from) the businesses. So people buy things, and a portion gets skimmed, and the rest goes to giving people jobs to do it again.
The Government of Australia tried that trick. Handing out free money to every tax payer.
All it did was that many people mainly used the bonus to retire debt.
This didn’t do the banks any good because the general people retiring debt reduced their income stream.
Admittedly the bonuses did pay for a few large screen T.V.s (made in China)
The government borrowed funds from overseas to pay this free for all money.
This post is a great illustration of why people who don’t buy into the current norms need to relocate in an area of like-minded people. Being a stealth survivor surrounded by the brain dead won’t work for any length of time. Good article.
Good article and good comments. Its not if its going to happen its when. Both parties are to blame, they only care about themselves. Vote them all out of office.
>Both parties are to blame, … Vote them all out of office.
So we can get brand new parties(party)… who will be different how?
It’s like regulatory capture. And we’ve set the system up so only the rich, or those who can be bought off by the rich, get into power.
I would suggest that that is the problem, and that perhaps we shouldn’t be hacking at the branches and hoping we’ll kill the tree.
It’s interesting that the author has chosen to point at the financial meltdown, instead of pulling any numbers.
I’d suggest that the problem actually started in the 1980s. When’s the last time that the working class / middle class’s incomes grew?
I attribute this to the rise of Neo-Conservatism.
Of course a big part of this has been the reductions in the top taxrate. Once upon a time, the top taxpayers were paying 90%+ in taxes.
But, why should the people who benefit the most from the way a system is setup pay for the costs of the system?
The more income equality you have in a system, the stronger the democracy and the stronger the social bonds.
However, since we’re talking about the Gini coefficient, we should perhaps look at other countries who’ve dealt with this for a long time. And some of those countries have been around, and kept a system of rich/poor for quite awhile. Since this appears to be what America wants (since they’re not ready to vote for higher taxes on the rich, for increasing the middle-class, and for raising opportunities for the lower-classes) we should figure out if those plans would work for us.
A key one that I’ve looked at, has been Mexico. And I think Mexico only works since they can use the US as a dumping ground for their malcontents, and as an income-stream for their poorest sections of society.
This may work for the US if we can start exploiting Canada. Of course we’re a much bigger hunk of the world economy (currently, but I suspect this will be changing in the not-too-distant future).
My two cents: it’s the end of the Age of Labor. An increasingly larger percentage of people’s labor is simply losing it’s value. Straight up SUPPLY-DEMAND-ALTERNATIVES.
Prior to the seventies, even the average Joe could command a decent wage in manufacturing. Employers had no other choice but to pay the worker a good wage. People did well with little or no special skills or education. Labor had value.
Now, look at the alternatives: cheap labor from very poor countries, and automation/robotics, etc (which will ultimately be the endgame).
A small segment can do well with advanced education, but let’s face it, the entire population is not cut out to get a degree in Engineering or Medicine.
This isn’t going to get better, it’s going to get worse. No tax policy or ‘Buy American’ campaign is going to change it, we’re dealing with an inevitability here.
That is a very insightful observation. The fact that the manufacturing sector is being replaced by robotics and cheap labor (which is also being replaced by robotics).
Most people are aware of this in general, but how many think about the fact that there still are all these people on this planet (whose jobs are being replaced) and what useful alternative jobs can they perform instead?
You are quite correct in saying that not everyone is cut out for higher education. Traditionally these people have worked blue collar jobs, but there are fewer of those jobs available, at the same time our population is growing.
In the mean time more of them are collecting government checks. What happens when the burden becomes so great that something must give?
I guess that’s about when the $hit hits the fan.
I’m sad my link to Marshall Brain’s “Manna” wasn’t considered good enough to include in this discussion.
Of course, *NOW* it shows up again as awaiting moderation (where when I just posted that last one, it had disappeared and wasn’t showing up).
There won’t ever be a better time to think about what skills and values will be worthwhile having after TSHTF or TEOTWAWKI.
The money being printed by the federal reserve is going to the banksters, the hedge fund managers, and the very rich are getting very richer because of it.
Printing more money is hardly helping the middle class but instead is burdening the middle class because they are the one’s who have to pay for it and can least afford it. The grand children of the middle class will be paying for it too, if we make it that long (doubtful).
OTOH, printing money/inflation is to the working man’s advantage (currently) – because he can always refuse to work for lower wages. Granted, with the pressures of automation/outsourcing (addressed in my post awaiting moderation), the fall of unions, etc, this hasn’t been happening since the 1970s.
But in theory, you just start demanding more money for your labor. Food and shelter cost more, so you start moving to higher paying jobs. Or decide that you’re not going to work, since it costs more in gas, deprecation, babysitter fees, etc to go to a job further away than you net after taxes, etc.
Your outflow, if you’ve got a mortgage is fixed (currently, since we’ve not adopted Israel’s hyperinflation contracts). So when there’s more money running around, you agitate for higher wages, and pay off your loan with inflated dollars.
“But in theory, you just start demanding more money for your labor. Food and shelter cost more, so you start moving to higher paying jobs. Or decide that you’re not going to work, since it costs more in gas, deprecation, babysitter fees, etc to go to a job further away than you net after taxes, etc.”
GOOD LUCK WITH THAT.
Perhaps you’ve not looked at the long-term unemployed, and those who’ve abandoned the job market in the US.
If it costs more to go to work than you get out of it, you don’t go (unless you’re stupid).
The disparity between the rich and everyone else is worsened by the policies of our politicians and the federal reserve monetary policies of printing more money for the big players at the casino.
During the bubblicious years from 2000 through 2014, while Wall Street used control fraud and virtually free money provided by the Fed to siphon off hundreds of billions of ill-gotten profits from the economy, the average middle class family saw their income drop and their debt load soar.
This is crony capitalism success at its finest. The oligarchs count on the fact math challenged, iGadget distracted, Facebook focused, public school educated morons will never understand the impact of inflation on their daily lives.
The pliant co-conspirators in the dying legacy media regurgitate nominal government reported income figures which show median household income growing by 30% over the last fourteen years. In reality, the real median household income has FALLEN by 7% since 2000 and 7.5% since its 2008 peak. Again, using a true inflation figure would yield declines exceeding 15%.
(From zerohedge)