The American Dream-On!

Thou Art Damn Right Laurie“Methinks, thou dost protest too much” from the famous Shakespeare play, Hamlet. Yes, others state it differently but I’m sure you get the meaning. Put another way, (seen here before): “the louder he talked of his honesty the faster I counted my spoons”. The quotes came to mind while reading an item posted at Zero Hedge by Raul Meijer, asking the $64,000 question. “The Only Mystery is Why Everyone Persists in Talking about a Recovery”.

It’s about time someone asked what millions of Americans have been asking for years, yet, all they get is more SPIN! The author goes on to ask another intriguing question, “How did the capacity for critical thinking disappear from the field of economics? And from journalism?” The author could have stopped at the word “disappear”.

The question posed above is timely because too many people blindly accept what is fed to the public via TV or internet or an alternate medium, without asking any questions. We have surrendered to the least line of resistance instead of thinking, reading, or simply being observant. Turn on CNBC, Bloomberg, NPR or any other regurgitation site to hear the incessant RAH-RAH about the “recovery” that has escaped the majority of Americans. How many times has it been said that consumers will have extra money to put into the economy due to falling gas prices? More times than anyone can count. Yet retail sales have FALLEN for the last three months! We hear you Shakespeare.

Let’s look at jobs and wages in this “recovery”. Manufacturing jobs have been in decline for 2 decades which leaves consumer and service sector jobs as the primary areas of employment. Wages have been in decline due to the ever growing skills gap in America. Millions have been forced into part time jobs or no job at all. There are 92 million Americans not working and the BLS does not count them in the labor force. How else could the BLS arrive at a 5.5% unemployment rate. Does anyone seriously believe that 92 million people do not want to work at all? We’re supposed to accept that “it’s demographics” as if all 92 million were retirees, and there were no new entrants into the job market over the last 6 years, etc.? Really?

Next we should examine the drop in oil prices because the consequences are not as positive as once thought. If you know anything about Supply and Demand from Economics 101, we have too much supply and not enough demand. Not long ago the mantra was that we need to develop alternative sources of energy because the world would run out of oil, or because the US must not depend on OPEC for oil, etc. Along came fracking and now there is an excess of oil as well as diminishing demand, with nasty consequences. Jobs are being lost at the rigs, the fracking sites and all the areas tied to the oil business. That spills over into the rest of the economy and the ripple effect is far from over. High paying jobs are disappearing and are not likely to be replaced; at least not until the economy erodes further and a true recovery gets underway.

Consumer demand is being destroyed by personal debt. A variety of studies have been conducted on how Americans will handle the next economic crisis and the conclusions are not encouraging. Presently we have over 60% of Americans living paycheck to paycheck and 24% have more credit card debt than emergency savings. Adults under age 35 have a negative savings rate of 2%. According to government stats, the “average” household has $10-15,000 in credit card debt, $155,000 in mortgage debt, and $32,000 in student debt.

While on the subject of student loan debt, it is said that the Millenials have racked up a trillion in loans which explains why they can’t buy a home and are forced to either live at home (35% roughly) or pay rent that goes nowhere but up.

Molested by Uncle SamNow for the kicker–and it’s a doozy! The current administration is asking for ways to “forgive ALL student debt” which actually means only one thing–they want to find a way to “share” the debt with everyone! After all, it’s not fair for students to be burdened by the debt they racked up to get educated. Uncle Sam will most assuredly dig deeper into your wallet!

A little known study done by Bank of America concluded that home ownership is far lower than what we are told. The reason is because whenever the stats don’t fit the “agenda” they find a way to “adjust” the data. The same was done to the unemployment rate several decades ago and the CPI more recently.

Bank of America calculated that the real US Homeownership rate has never been lower! Yet, last week the Fed stated that the net worth in America is at record levels. What was not said is that for the last 6 years the Fed has inflated the wealth of the top 10% while the bottom 80% has struggled to get by. This explains of course why all the surveys state that the public thinks we are still in a recession. In fact the working class has lost 40% of their net worth since 2007.

One last item worth noting, especially if you participate in a pension plan. There exists a government agency in charge of backstopping private-sector pension plans, (PBGC). Last week they admitted that they can’t fully guarantee 51% of insolvent pension plans. The statement from Pensions and Investments was that more than half of multi-employer plan participants will have their benefits reduced if their plans become insolvent and rely on the government guarantees in the future. This warning applies to future insolvencies versus current plans. The study conducted in 2013 gave the program about 5 years before it’s out of money.

This recap of news events of late is a small sample of what is taking place that will dramatically affect our financial future. I have said, many times over, that money allows choices. The few examples cited here should be a wake up call that we must take control of our future and not get sucked into the sugar coated false narrative of the government. The 80% that have been left behind don’t need convincing that the country is in trouble. This can change but only if people do what MUST be done.

Exercise discipline, increase your savings and invest for your future. BuySellIQ has uncomplicated the process and RobinHood.com has eliminated the costs of buying and selling. All that remains is your commitment to do what’s necessary for a more secure financial future.

Join the conversation