The Fed has built a financial pyramid based on unsustainable low rates. How the Fed is running out of economic curtains to hide behind when it comes to monetary policy.
The markets are pulling back dramatically because the Fed sneezed. The Fed essentially said they would begin tapering off their experiments in quantitative easing by pulling back their bond purchases from $85 billion a month to $65 billion. That is it. Not a shocking revelation. So why then are the markets plunging on this news? The entire market is being driven by artificial stimulus that is largely helping the top one percent in society. This is a primary reason on how we can have a peak in stocks while we have a peak in food stamp usage all at the same time. A large part of the recovery has been fabricated by giving banks access to trillions of dollars in easy debt via the monetizing machinery while the working public has to grovel for any crumbs that are left over after the banks have their feast. The Fed merely hinting at pulling back is slamming the market because many financial institutions gorging at the trough of low rates are sensing the 135 percent rally in stocks is coming to a close.
Has inflation fueled the two income household trap in the US? How inflation has eroded the purchasing power of the working and middle class.
Inflation in the United States is largely seen as a built in part of our economy. People take it for granted as if this was simply the order of things. Yet our central banking system has inflated our debt based financial system and subsequently, the value of money has eroded. For example, most items that are financed through debt have increased dramatically during a time when household income has reverted to inflation adjusted levels of the 1990s. The cost of inflation is hidden of course from the eyes of the public as to not shock people into action. Playing with interest rates, a car that once cost $20,000 is now going for $30,000 but the monthly payment has remained the same thanks to the Fed’s unrelenting push to lower interest rates. There is a cost to all of this of course. If it were so simple to fix an economy, the Fed would simply send unlimited debit cards to each and every American. Inflation is a threat to the economy from the perspective that it destroys the purchasing power of working and middle class Americans, those with limited access to debt. In our economy, debt provides access to real assets and those with the most access to debt (banks) can lock into the larger share of assets (i.e., banks now buying up thousands of rental properties). Is inflation a main culprit in the two income trap?
The financially forgotten generation: Economically raising the Millennials in a debt strapped financial world. Over half of Millennials have no savings.
Millennials, those roughly 18 to 34 years of age are growing up in the financial shadow of their baby boomer parents. This group of Americans is more diverse in what they perceive to be a good quality life. They prefer to live close to work and shopping, they are not big on suburbs, and many are massively in debt. It seems to go against the grain of what we expect, that a future generation of Americans will have it financially tougher than the current generation but that is the path we are now walking on. Student debt is a large burden for many of the Millennials. Total student debt outstanding is now over $1 trillion and continues to be the fastest growing segment of non-housing related debt. Are Millennials a forgotten generation when it comes to their financial success?
A wing and a prayer retirement plan: Two-thirds of Americans are not saving enough for retirement. Income inequality at record levels in the US.
It is interesting to see what passes for financial journalism in the press. This morning a guest was on one of the major news stations and she was mentioning that Americans need to save $1 million or more to retire comfortably. In the next sentence, she mentioned that two-thirds of Americans don’t even save enough and in this group, about half don’t even save. So think about that. How in the world is this group even going to come close to saving one million dollars for retirement when they are living paycheck to paycheck? 47.7 million Americans are on food stamps and they are talking about saving a million dollar as if this was some kind of easy task to achieve. Is it any wonder then that the vast majority of the country is by default going to rely on Social Security as their main source of retirement income as if the government had a secret touch that turns everything into gold like King Midas? Pensions are becoming a thing of the past now. For most of this country retirement consists of closing your eyes and hoping something will be there when old age hits. Well many are opening their eyes and realizing that not much of a net is now left for retirement.