“US is healing... if the Fed doesn't screw it up”, the buzz line is in the news all over, and the question arises, is there anything left to screw up, that the media is still hoping them not to screw it up. Absurd statement but that is the truth.
Fed Chairman Ben Bernanke, God of the Modern World, one statement on an issue and markets all around the globe react. His stances in recent times, which is challengeable and the same shall form the crux of this article, being that ‘quantitative easing shall have to continue until sometime now’. Obviously, after making a withdrawal statement in June, the reasons for reversal had to be issued, and that was, the dual mandate needs to be met, unemployment and inflation, was this not known before?
Both the mandates mentioned for continuing easing for a probable better present but surely an unfit future are vague and in the air. Unemployment is not high, its skyrocket and inflation is not low, it is already over the roof so, what mandates are we talking of?
Our god says, inflation in the United States needs to be higher. This seems to be an event of purposely hurting the middle class, which has been the game since Globalization in 1980’s. The official inflation rate in the United States is sitting at about 1% and yes, if that is what actually exists, then what Bernanke insists that such a low rate of inflation is not good for the economy certainly makes sense. However, what will never be admitted is that the official inflation rate is a counterfeit. The way inflation is calculated in America has changed more than 20 times since 1980’s. If we calculate the way inflation was calculated back in 1980, it would be a stunning 8%. However, carefree people, who have many other things to worry about, do not happen to notice and the claim that inflation is "too low" sustains.
Many of them know that inflation is out of control and that, they are spending a lot more on things they buy on a regular basis than they used to. For example, when Obama entered the House, price of a gallon of gasoline was $1.84 and today the price has nearly doubled. This is the case with gasoline and therefore we can imagine the impact on other commodities, as this carries a direct influence on almost everything that we buy.
That might look like a one of example and therefore let us consider some others. Electricity bills have risen faster than the rate of inflation claimed for five years in a row, and as USA Today mentions, water bills have tripled over the past decade.
Low inflation, excuse me?
Take another example, health insurance. In the era of post crisis, health insurance premiums have risen at an average of between 8 and 9%.
Where is this low inflation found? Consider college tuition fees. Since the 1980’s, cost of tuition fees in the States has risen by 498%.
The above might sound some big-ticket items and therefore let’s consider the supermarket. Individuals who shop for groceries on a regular basis actually would know this.
Benny Johnson in The Blaze details out how the prices of many of the things that are bought on regular basis have soared between 2002 and 2012. Eggs: 73%, Coffee: 90%, Milk: 26%, White Bread: 39%, Spaghetti: 44%, Orange Juice: 46%, Red Delicious Apples: 43%, Beer: 25%, Wine: 60%, Margarine: 143%, Turkey: 56%, Ground Beef: 61%
Moreover, we are talking that inflation is low.
Let’s now have a quick look at a graphical representation of what has the policies led out by god of modern world done to the prices of commodities.
Considering the whole of inflation, paychecks are not rising at the pace that inflation is, not even near to that rate. In fact, the household income in the States has fallen for four years in a row. Therefore, the cost of living just keeps rising and in consequence, the middle class inflow has not shifted or has shifted downward.
The only and only big reason for this is the quality of jobs. Only 47% of adults in US have a full-time job and 53% of the workers make less than $30,000 per annum.
What is god thinking; is he planning to increase the paychecks of workers, in order to make up for the "inflation tax" that shall be and is being imposed?
Apparently, the number of individuals losing their jobs is starting to move upward again and is getting close to 400,000 mark. Since the act of globalization, the American middle class is shrinking each passing day and Ben seems clueless.
Attempting to find a job today has been an incredibly frustrating experience. Most of the jobs across pay very little, and the intense competition for just about any job that is open kills the whole sense of availability. Things were surely not this in the past.
For example, in current economic environment, when McDonalds conducted a hiring event, the same resulted in a million job application and only a small percentage were actually hired. An apparent observation in recent years has been an explosion in the number of "temp workers”. To surprise, this phenomenon has also been observed at large companies and sadly, those that work in the "temp industry" often happen to work in deplorable conditions for little pay. This is one of the elemental reasons, why the middle class is shrinking.
It is impossible to support a family on this job pay, but to no surprise, the economy is producing only of this instead of the high quality full-time jobs.
Some additional signs, which indicate that quality of jobs, are declivitous:
- Even though the economy has created nearly 200 thousand jobs in June, the number of full-time jobs has actually decreased.
- There are approximately 3 million “temp workers” a new all-time high.
- One out of 10 jobs are now filled through a temp agency.
- 76% of the population is living on paycheck to paycheck.
- One out of 4 workers, has a job that pays $10 or less an hour.
- America actually has a higher percentage of workers doing low wage work compared to any other industrialized nation.
- Currently only 24.6% of jobs available in the States qualify as "good jobs".
There was a time when just about any adult who was willing to work hard could go out and find a good paying job and which would support a good middle class lifestyle. Nevertheless, those days seem to have gone forever. As the number of good jobs decrease, the number of people who can take care of family without government assistance continues to explode.
In addition, thanks to the governments for creating the environment, which is incredibly, toxic for small businesses, and which could have acted as a breadwinner. In fact, today the percentage of self-employed workers is at an all-time record low.
Taking all this into circumstance too, America unfortunately continues to outsource thousands if not millions of good jobs overseas, and government continues to pursue laws, which is making the business environment virulent.
The answer God would give us for every economic problem as always shall involve printing of money. Gratefully, the trillion dollars of money that has been squirrelled away at the Fed remains there until today. Nevertheless, the day is not far when this money will be loosed up in the economy, and that will create stultifying inflation. Regrettably, Ben does not seem to be concerned about the muckle of currency that is positioned at Fed. The happy moments for him are that his reckless printing has helped the stock market to new highs.
Fixing of this system, which is so mingled, shall not be an easy task. US ship is in the middle of the ocean, and its motor system has been damaged. The next wave of collapse is rapidly approaching, and this one is going to be a lot more painful than ever.
God of modern times should enjoy his little period of euphoria left because when this bubble bursts and as all false financial bubbles eventually do, the foolishness of Bernanke will be glaringly apparent to everyone.
No comments:
Post a Comment