Wolf Richter: This Economy is Ruined for Many Americans

By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street

Here’s a mystery: Has this “wealth-effect” economy that the Fed so beautifully engineered since the Financial Crisis gotten a lot riskier, scarier, and uglier in some profound ways for lower-income Americans, those making $30,000 or less a year?

One of the questions that Gallup posed was this:

Next, I’m going to read a list of problems facing the country. For each one, please tell me if you personally worry about this problem a great deal, a fair amount, only a little, or not at all? First, how much do you personally worry about –

Then came 13 issues, including “hunger and homelessness.”

Turns out, among Americans making $30,000 or less a year, 67% worry “a great deal” about hunger and homelessness! Food and shelter, two of the most basic human needs. That’s the highest percentage ever in Gallup’s data series on this question going back to 2001.

It’s up from 52% in 2001/2004; up from 56% in 2007/2008; and up from 51% in 2010/2011.

Median annual household income in February was $58,714, according to Sentier Research. On an inflation-adjusted basis, this was about flat with February 2016 and below February 2000. Median income means 50% make more and 50% make less. Other studies have shown that incomes have risen sharply at the upper end of the spectrum, but have fallen at the lower end, with the gap widening. Thus the median might have stagnated, but for many of those below the median, things haven’t turned out so well. And there are a lot of them!

With the prices of stocks, homes, art, classic cars, commercial real estate, and the like inflated to dizzying heights after eight years of radical monetary policies, why would these folks, making $30,000 or less – worry more than ever about such basic and dreadful conditions?

More on that in a moment. There are other elements in this mystery: Even among people making $30,000 to $75,000, a record 47% worry “a great deal” about hunger and homelessness, up from 40% in 2010-2011. And even among high-income Americans, the percentage, though small, has risen (chart by Gallup):

Rising worries about hunger and homelessness can have a number of causes, including media coverage of those topics, or coverage of rising income and wealth inequality in America. In its survey report, Gallup points out that occasionally, when something terrible happens, such as 9/11, it might be “dominating the national consciousness,” and hunger and homelessness recede as primary concerns.

We get that. But Gallup goes on:

Since 2001, worry has been highest among those residing in lower-income households, likely because those with limited financial resources are more at risk of going hungry or becoming homeless. A consistent majority of lower-income adults worried about the problem before 2012, but that has only increased in the past five years.

Lower-income Americans worry about basic problems, in this order:

  1. Hunger/homelessness
  2. Crime/violence
  3. Healthcare
  4. Drug use
  5. Terrorism
  6. Social Security
  7. Economy

At the upper section of the spectrum, at incomes over $75,000, things look different, in that order:

  1. Healthcare
  2. Budget deficit
  3. Economy
  4. Social Security
  5. Environment
  6. Race relations
  7. Hunger/homelessness

Lower-income Americans worry more in general than those with higher incomes. Everything is riskier and tougher for them. But nothing compares to the worries about hunger and homelessness. Gallup:

On average, across the 13 issues, the percentage of lower-income adults who worry a great deal is seven percentage points higher than among middle-income Americans, and 17 points higher than among upper-income Americans.

But differences in concern about hunger and homelessness far exceed those norms. In fact, the 20-point difference in worry about hunger and homelessness between lower-income and middle-income Americans is higher than for any of the other issues. Similarly, the 30-point difference in worry about hunger and homelessness between lower-income and upper-income Americans ties for the highest, along with concern about crime and violence.

In the dazzling glitter and excitement of soaring asset prices that central banks around the world, and particularly the Fed, have tried so hard to engineer, it’s easy to forget that not everyone has those assets, that a lot of people can’t get “rich” just sitting on inflated assets, that they have to work long hours in measly jobs just to stay one paycheck ahead of hunger and homelessness.

These Americans are paying the price for the Fed’s efforts to “heal” the housing market. The Fed has implemented elaborate strategies since 2008, among them: cutting its policy rate to near zero, embarking on QE, and bailing out banks and their richest investors, including Warren Buffett and his financial and insurance empire. In 2011, the Fed began encouraging and enabling Wall Street’s biggest private equity firms and other investors to buy up hundreds of thousands of homes out of foreclosure to push up home prices.

This has led to soaring housing costs that have by far outpaced wage growth, if any. And it made it that much harder for these Americans to stay that one paycheck ahead of hunger and homelessness. There are a lot of them. They’re consumers too. And this could be why the economy, which has been ruined for them, has since then not been able to grow at a reasonable pace.

And so, America becomes “Landlord Land.” Read…  So Who’s Pumping Up this “New Normal” Housing Market?

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65 comments

  1. allan

    “At the upper section of the spectrum, at incomes over $75,000, things look different … 2. Budget deficit”

    Thus dooming those making under $30,000. Or even under $75,000.
    Congratulations to Peter Peterson, Maya MacGuineas and Fred Hiatt for a job well done.
    Your decades of propaganda have made austerity a national obsession.
    Because, just like a household sitting around the kitchen table, government has to tighten its belt*
    and cut its way to greatness.

    * Except for the occasional foreign adventure.

    Reply
    1. cnchal

      Another attaboy must go to the MSM.

      That terrorism is on the list of things for low income people to worry about is an indication of how deeply this corrupt propaganda has been absorbed by them.

      Reply
      1. RickM

        The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.
        – H.L. Mencken

        Reply
    2. jerry

      “* Except for the occasional foreign adventure”

      You must be referring to “protecting democracy” in purely coincidentally resource-rich countries.

      I also love that healthcare comes before budget deficit for the rich, further imperiling any possibility of progress on that front as well. As Chomsky has said, you can’t control people by force anymore so you have to control how they think.

      The information age via the internet may be our one last hope of change. It is somewhat comforting that had only people ages 45 and under voted, Bernie would have won in a landslide.

      Reply
    3. steelhead23

      And the supposed party of the people wants us to lose sleep over Russia, a talisman to conquer Trumps craven “illegal aliens.”

      Reply
      1. flora

        “lose sleep over Russia”

        They have to change the subject from Hillary’s private, unsecured server/email server in her basement when she was SoS to ‘evil Ruskies helped Trump.’ (I’m imaging a prez Hillary with a private unsecured server in the Whitehouse basement. Like those missing Whitewater files that just “turned up” in the Whitehouse basement when Bill was prez. heh.)

        Reply
    4. dtm

      You misread Pete Peterson and Maya MacGuineas. What they say is stop deficit spending, that if we want something (healthcare, defense, infrastructure, tax subsidies for “favored” industries/goals, whatever), then lets pay for it. You can do that in two ways: raise revenues/taxes, or cut spending elsewhere (and hope for some overall GDP and balanced income growth).

      Reply
  2. Anonymous

    I live in a very prosperous part of a relatively poor state, and I see the signs of economic stress everywhere. During the past fifteen years a homeless encampment has formed on some property near a local amusement park. About thirty people live there, mostly in tents. We’ve found people, typically people with substance abuse problems, living in the woods on our property. They are harmless except for littering. I’m collecting malt liquor bottles all the time. They seem to be disproportionately white, despite the fact that we live in the South, and there’s a large African American population nearby.

    The homelessness isn’t unique to the present time: about twenty five years ago we found a family living in their car along the river. They’d been there six months at least, with three kids under fourteen. The deputy who talked to them with us told them, ‘Look, you can head back up the road and solve the problems where you come from, or DSS will take these kids.’ They headed back up the road. The wife had at least some college. It would be hard to get to where they were in a car now. DOT put up a guard rail.

    What’s different today is that the homelessness I see seems mostly male, and very much driven by substance abuse and/or mental illness. Fifty years ago our county was dry. Twenty-five years ago there were still restrictions on alcohol purchase, i.e..Sunday blue laws. Today you can get a drink anywhere.

    Reply
    1. crittermom

      “Today you can get a drink anywhere.”

      You’ve touched on a personal rant of mine–alcohol.

      No, I don’t think it should be illegal to drink, but I’ve always felt marijuana should be legalized over alcohol.
      I see far less idiots/death/abuse/violence from it as compared to alcohol, yet promoting alcohol is huge.

      Drinking while poor is ‘bad’, yet drinking among the rich or those just employed is perfectly ‘acceptable’.

      I haven’t paid for TV in decades but admit to watching some prime time shows on my computer (for free).
      What I’ve noted in almost every show is the amount of drinking that goes on. It’s portrayed as normal and even expected that folks go to a bar after work, court, etc. Doesn’t matter the profession. Apparently, society must unwind after whatever work they do, with alcohol.
      Or socialize using alcohol.
      The media (TV) seems to be heavily promoting it with no conscience.

      I currently live among wealthy retirees, for whom much of their life is centered around alcohol. It seems when you retire, that’s a major pastime for most. Especially while socializing.
      The only difference is that they prefer higher-end liquor.

      There is an opioid epidemic in this country that makes news every day. It’s bad. I get that. I agree.
      Yet alcohol is heavily promoted as the social norm while nobody blinks an eye (until a ‘drunk’ kills people in a car, or while they’re just crossing a street).

      Alcoholism sees no class distinctions. It’s not just among the poor.
      And I believe it’s a much larger epidemic than anyone cares to acknowledge.

      So while some drown their sorrows with it and are heavily chastised for its use, others use it to celebrate their life and feel that’s their entitlement.

      Sorry if I’ve gone a bit off-topic, but I believe it plays a major part in society, no matter the ‘class’ of people.
      The poor use it as an escape from their miserable lives, while those more fortunate use it to celebrate their place in society while making it easier to ignore those less fortunate.

      In either case, it apparently makes it easier to ignore/forget the real problems surrounding us and the perspective of those problems differs, obviously, depending on your status. (Perhaps it’s all working as it’s designed to, by those oligarchs telling us how to live?)

      Reply
      1. Clive

        I’m on vacation and today visited a middle/upper middle class “cultural” hang out, the kind of place people think they can spend a day trip without appearing too declasse.

        In the gift shop I was looking for a birthday card. There was a lot of slightly twee humorous designs — the almost all featured drinking in self-conscious highbrow settings (dinner parties, cruise ships, theatre outings, restaurants) and “funny” drunkenness. We are so inculturalated to it, it’s all so normalised. The damage is huge, but it suits a lot of vested interests to make downing a bottle of wine a day the opium of the people.

        Reply
      2. Plenue

        There’s a small store near where I live. A few years ago I guess it changed owners, because all the signs in the windows changed to advertising booze. Oh, it still sells all the other stuff it sold before, it just doesn’t advertise that it does.

        Reply
    2. crittermom

      Aha! Now citizens, as their income crumbles, can just live in sheds using a communal bathroom and kitchen.
      http://www.denverpost.com/2017/04/03/tiny-home-community-rino-denver-homeless/

      While this seems like a good idea and is certainly a step up for those few to benefit (14 people), providing shelter and healthier conditions, it is still only treating the symptoms, while ignoring the problems of what got them to that situation in the first place.

      I’ve seen more and more articles about ‘tiny houses’ that are popping up throughout the country, including many as permanent homes.
      So the new dreams the majority of citizens are now supposed to work toward is a whopping 100 sq ft tiny home? Is this the ‘new normal’?
      “Tighten your belts. Lower your dreams. Ignore the fact we live in 10,000 sq ft mansions. We deserve it. You don’t.”
      I beg to differ.

      Reply
  3. Eureka Springs

    So everyone worries about.

    Hunger/homelessness
    Social Security
    Healthcare

    And yet, basically all who vote, remain mired in legitimizing the lose/lose duopoly. Practically all of us work, as in our jobs if we have one, against our own interests, and our shopping habits (wal mart etc.), against our own interests as well.

    As Lambert quoted Clive in his coding post yesterday:

    A continuing theme of this series comes from Clive:

    Increasingly, if you want to get and hang on to a middle class job, that job will involve dishonesty or exploitation of others in some way.

    This is in fact true for most anyone in any sort of work. Watching everything from the Russia scare to the acts of the Fed., there is simply no reasoning anymore, if there ever was. Even Unions fight for lower wages and maintaining O’Romney, not care, while pensions are looted ta boot.

    I have no dependents, no debt, not a mortgage, nor a car payment, cut up all credit cards 15 years ago… two jobs, nine days a week. Ninety percent of my clothes are second hand and I don’t even have cable TV, and yet I still cannot figure out how to maintain more than a few grand (in good times) in savings, with no health care or retirement.

    Too bad I don’t like pain killers because if I did I would sure be out there looking for a scrip.

    There should be no such thing as private equity, billionaires, or the fed as we know it!

    Reply
    1. hemeantwell

      Good stuff. Yet from a methodological standpoint Gallup could have done better. The question wording, hinging on “personally,” still fails to discriminate between a condition that the respondent might themselves experience and a condition the respondent is concerned about because someone else might.

      It makes sense to assume that the <30k respondents are more the former and those in higher brackets are more the latter. But there's a big difference between direct and empathic immiseration.

      It's doubly a shame that this is now baked into their question set and the same ambiguity will be reproduced year after year.

      Reply
      1. Katharine

        Thanks! That wording bothered me too. It may be plausible that with lower income people would feel less secure, but there has also been evidence higher-income people show less concern for others, and who’s to say from that kind of questioning whether the response stems from anxiety or empathy?

        Reply
        1. Enquiring Mind

          When the only survey tool they have is a framing hammer, everything starts to look like a nail.

          Reply
      2. Ed Miller

        My first reaction to the wording, especially regarding homelessness, was that interpretation depends on one’s status and income. Lower income people are scared of being homeless themselves. The >75K people largely are concerned about the homeless people impacting or moving into their neighborhood. Their talk may not quite expose the reality.

        Reply
    1. Romancing The Loan

      I saw a great thread taking that article apart on Twitter a couple of days ago, which I realize I now have zero possibility of ever finding again. I guess that’s how Twitter works but it shows the downsides of the medium.

      The first version of the article that I saw then also included suggestions on getting a second job and separately encouraged you to both sell your car and drive for Uber. I guess they were shamed into a quiet rewrite?

      Reply
        1. Romancing The Loan

          Did not know that existed, thanks. Sadly though it doesn’t prioritize “stuff that’s shown up in your feed” (really should!) so the popularity of trashing this terrible article makes the search not so useful.

          Reply
      1. Susan

        Thank you. Indeed it is mind boggling to grasp WTF is in each of these conglomerated funds. They are sold only in terms of ROI, so the person who is all day on farcebook railing on about climate change, social justice or those poor people in South America whose village and people are maimed by copper mining haven’t the foggiest idea that they are funding it. My elder sister was executor of the small trust left to us by our mother (the sale of the family home and car), so she had put it in mutual funds. When I asked her what’s in those funds, she looked at me blankly. I suggested she get the data from the Merrill Lynch dude she said was “so nice.” “It’s just a bunch of letters,” she told me. Yeah – those stock index letters. Needless to say, we divested and found other places for the cash. Fortunately I didn’t have to argue with her about “getting the BEST return” because we both hailed from the same family where usury is seen as sinful. All I had to say was no number of $25 contributions to the big D party is gonna repair the damage these corporations have done to the children in this copper ravaged village in Chile, so just put it in your mattress or in a hole in the backyard.

        Reply
      2. Katharine

        Caveat emptor. People are supposed to do a little research before they buy things, including reading the prospectus and finding information to help them understand it. A cautious person won’t buy what is totally incomprehensible, or what looks too good to be true.

        In justice to Vanguard, from what I’ve seen the information they provide is better than some other companies’ funds. Of course, properly speaking, one shouldn’t say “Vanguard” when it is the individual funds one deals with (and that link you provided showed only seven with investments in prisons). I certainly don’t claim comprehensive knowledge on my limited exposure.

        Reply
      3. UserFriendly

        @Eureka Springs
        Yeah, that was not meant to be anything but a shaming of Business Insider, Visual Capitalist, and Vanguard for the more unrealistic draconian life plan for poor people I’ve ever seen.

        Reply
  4. Anonymous

    The InvestmentZen infographic in the Business Insider article pretty much describes we do. It works. One of our neighbors, who died last year, worked as a janitor, raised vegetables [his wife baked bread] for sale on the side, and invested their savings in the stock market. When he died he left millions–I’m not sure how many millions–to their church.

    Reply
    1. ger

      Well, it has been said often: Poor slobs are just billionaires down on their luck. Just wait until all the
      eight (8) that control half the world’s wealth start dribbling it down to their fellow billionaires in waiting!

      Reply
    2. a different chris

      It worked. “Past returns are not guarantees of future returns”. When did you start this? When do you need to start pulling the money out? You haven’t proven anything yet.. your janitor was born in a very propitious age for that kind of wealth building.

      BTW, I “raise vegetables” and “bake bread” and it don’t mean sh*t as far as “saving millions” goes. Old cars you fix yourself, a small house does help a lot. Is that what you do? Still doesn’t get you to millions.

      Reply
  5. Carolinian

    I’m old enough to remember when my state had a mental institution in the state capital. One of my relatives was there. It was not a nice place but certainly nothing like the famed Bedlam of 18th cent Brit fame.

    Now the mentally ill–if that’s still a politically correct term–are given meds and put out on the street. Some may prefer the freedom to the “cuckoo’s nest” of old and I’ve seen press stories where some even prefer the freedom to homeless shelters which often have a religious missionary agenda.

    Without a doubt it’s a problem that is going to increase given our elite driven politics.

    Reply
    1. human

      Saint Ronnie ™ cut funding to those institutions decades ago. I know of two in my region where the communities have been slow to re-purpose the properties (hundred plus acres each), again due to lack of funding.

      Reply
      1. Colonel Smithers

        In the UK, the properties were developed for housing, e.g. Stone in Buckinghamshire and Haywards Heath in Sussex.

        Reply
      2. Carolinian

        And yet the press suckuppery to Saint R was/is in inverse proportion to their scorn for that other TV star named Trump. They are a fickle beast.

        Reply
        1. Colonel Smithers

          Thank you, Carolinian, and well said.

          In not dissimilar vein, it was said that the UK MSM was a capricious mistress.

          Reply
      3. jay

        State mental institutions were a state expense, not a federal one. State governments closed them in the 70s after “Cuckoo’s Nest” by Kesey gave people the idea that an asylum was a prison rather than a place of safety for the mentally ill. With the advent of psychoactive medications in the 60s and 70s, both the medical profession and the general populace got an unrealistic idea regarding what was achievable in terms of treatment mental illness with those medications. Betweek Kesey and unrealistic claims for the effectiveness of medications, a popular movement to free people from the state mental hospitals dovetailed nicely with state politicians’ desire to free up the money spent on the state hospitals for other uses that might involve rewarding their contributors. Since Rosalynn Carter’s husband left office, the lobby for the mentally ill has been weak and leaderless. Had her husband won re-election, the community mental health centers proposed in the 60s and 70s might have had a chance of getting funded by the Feds, as the State politicians never had any serious intention of funding them.

        Reply
        1. gepay

          I wouldn’t put that much blame on Kesey, if any. Kesey was given LSD by the CIA. closed Many state mental institutions were closed in the early 70s but there was no follow up with the number of needed halfway homes much less continuing treatment. That is when I first noticed the number of homeless becoming a problem. The state mental institutions were where many MK Ultra experiments took place in the 60’s. There, the prisons, and the military. It’s my belief the CIA flooded the country with LSD (it was advertised in a fashion by Newsweek). The anti-war movement was poised to become a permanent and effective political movement. An empire can lose a war but not a generation. Bad drugs were distributed by the CIA to make the music festivals a bummer. (Altamont was another tactic). other tactics were the murder of many effective progressive political reformers (JFK, RFK, MLK, Malcolm X). Dan White was used to murder Moscone (progressive mayor of San Francisco) (and Harvey Milk – first openly homosexual elected politico) so we got Diane Feinstein instead. The main youth movement turned from hippies to yuppies.or maybe it was just different vibrations from the asteroids.

          Reply
    2. Colonel Smithers

      Thank you, Carolinian.

      I remember from when visiting / driving around SC on holiday in September 2011.

      It’s the same in the UK. Many, if not most, institutions were closed in the early and mid-1990s under a programme called “care in the community”. I remember many railway station waiting rooms becoming home to those suffering. There were instances of violence too, including murder. To their eternal credit, the families of the murder victims, e.g. Jane Zito, realised what was going on and campaigned for better care.

      “Care in the community, ” another euphemism that could only have been devised by neo-liberal scum.

      Reply
      1. RUKidding

        When Sainted Savior Ron Reagan cut funding for mental institutions and the “inmates” were booted out onto the streets – in theory I believe they were supposed to be sent to some type of “community housing” that never existed and mostly still does not – one such mentally ill person broke into the house of a son of my family’s friends and murdered him.

        Amidst the tsk-tsking and “thoughts and prayers” sent to the bereaved family, I told my family that THEY were responsible for this murder by voting in this monster. My family didn’t receive that tidbit very well, as you might imagine. The prevailing thought was: why should *I* have to pay for some mentally ill person? Let them eat cake.

        Nothing much has changed, sadly, including the fact that our taxes now go to paying for killing brown people in distant lands, which makes us more, not less, safe from potential acts of terrorism, and we are certainly not experiencing any direct benefit from the taxes that stopped paying for housing and caring for the mentally ill. IOW, if those tax dollars had been spent on infrastructure repair and maintenance over the years, for example, at least we’d SEE something of value for that money. But No. It’s all gone into off-shore accounts of already obscenely wealthy multi-billionaires, who, apparently, never ever have enough.

        Talk about mental illness…

        Reply
      2. Gman

        And now of course the increasing numbers of mentally ill in the UK now end up languishing in the already overstretched prison and healthcare systems, whilst the old mental institutions, many of which were located in desirable, often central urban areas,have been sold off and redeveloped into far more ‘profitable’ things like private swanky apartments, rather than being a hefty burden on the state anymore.

        Gawd bless ya, Mrs T!

        Reply
          1. Gman

            Indeed.

            As you’re no doubt aware it gets worse.

            The UK, like the US, has been experimenting to a lesser extent with privatising (part of) the prison system in order to lessen the ‘dreaded’ burden on the state, and doubtless lining these ‘more efficient’ Trojan horses up as future justification for doing away with (by chronically underfunding) ‘poorly performing and inefficient’ state funded prisons .

            Reply
    3. Katharine

      Since Maryland’s legislative session is just winding up, I was tempted to ask what state doesn’t have a mental institution in the state capital. But seriously, I agree, deinstitutionalizing was handled very badly.

      I don’t know what fraction of the mental illness among homeless people is effect rather than cause or concomitant, but surely at least some could be cured by humane social policy–which, as you say, we are unlikely to see any time soon. Given the small but growing body of evidence that housing people is more cost-effective than not (was Utah first?), it’s too bad so many politicians are so irrational.

      Reply
  6. From Cold Mountain

    I am disabled, functionally homeless for the past 9 months, but have no drug problems and I am intelligent (Network Engineer was my last job). I am accepting the fact that I will be probably be homeless next month since I have no transportation and the only places I can afford are far out in the country.

    So yes, even with a high disability payment I am more than concerned about homelessness, but not really the hunger. I am not really concerned, because I have come to accept it.

    But they will not make me die from despair, that I can guarantee.

    Reply
  7. Grumpy Engineer

    This single sentence simply kills me: “In 2011, the Fed began encouraging and enabling Wall Street’s biggest private equity firms and other investors to buy up hundreds of thousands of homes out of foreclosure to push up home prices.

    Why on earth would we want higher home prices? Is this not the exact opposite of what an affordable housing advocate would actually advocate? No wonder there’s an increasing sense of despair in the air. The “American Dream” is being actively pushed farther away by Washington as part of formal policy.

    Reply
    1. Anon

      …it all depends on “we”. If “we” is bankers/well-to-do/hedge funds, then higher price is good. If “we” is a millennial first-time-buyer, then higher is bad.

      Where you stand on this depends on which side of the table you sit.

      (The greatest number of folks sit on the ‘wrong” side of the table.)

      Reply
    2. jrs

      It’s generational and situational. If you are someone who wants to cash out a house (to downsize or move to a less expensive part of the country) then it’s good. This is more likely to be older people, though of course not all of them and it depends on if property taxes also go up or if taxes are such that they don’t. Also they can use HELOCS and reverse mortagages.

      Meanwhile this may be affecting *rents* at this point, renters who never ever even wanted to be part of the housing game. At any rate rising rents and you can see the results rising homelessness etc.. Housing is NOT AN INEVESTMENT. Housing should not be treated as an investment (and the tax code should disallow it). Shelter is a BASIC NEED.

      Reply
    3. Gman

      Depressing ain’t it?

      Property is ‘worth’, with various considerations, what a bank is prepared to lend against it, and the more they can lend in a rising market the better it is for their profits, their bonuses and in terms of increasing tax revenue for government.

      Bearing in mind that one of the primary functions of nominally private banks, through fractional reserve banking, is to create money for the system by means of debt creation on behalf of the state, then property price inflation is one of the most effective means of doing so – after all we all need a roof over our heads, few can afford to buy it outright thus require debt, we all aspire to owning it and for most it is the biggest, most expensive purchase in our lives.

      Debt drives growth in a debt based system, or at least it used to. If everyone has a roof over their heads, is happy with what they’ve got and aspires to very little else then, so conventional wisdom goes, what is there to strive for?

      Reply
  8. Skip Intro

    Paging Abraham Maslow! Your theory of the hierarchy of needs is being validated by a Gallup poll of the American Precariat here in the twilight of the empire. Your ‘Physiological’ and ‘Safety’ needs occupy the top five of the major worries of a population hanging on to civilization by their grubby fingernails.

    Reply
  9. tongorad

    Why on earth would we want higher home prices?

    With flat wages and pensions a thing of the past, how else are we supposed to get ahead and/or provide for retirement?
    Financialization Uber Alles!

    Reply
  10. Kalen

    Dr. Hudson nailed it by proclaiming that core of the problem of American dream propaganda namely that “even you can get rich by working hard” is a lie, although they kept such a illusion for decades as a part of cold global class war against Soviets after WWII.

    At least 99% of all new income after 2008 was a unearned income i.e. not based on value produced by labor but on new money produced by interest payments on borrowed money, one way or another.

    The American dream is for speculators, conmen or money changers, cronies of the owners of financial system protected by the corrupted government. For working people and their hard “earned income” it is an awful American nightmare since whole weight of inhumane laws and brutality of industrial and monetary policies and most of all labor punitive taxes are purposefully designed against people who work for living, aimed primarily for stealing their hard labor at work and at home.

    Those who deride people who seems to abuse or over-rely or chose to benefit from what’s left of social safety net must understand that it is always a rational economically sound decision, a decision of a person who do not want to be used, abused and discarded in old age by the system while working hard all his/her live ending up with nothing at all but sore body and bitterness.
    That’s the fact.

    As American dream fallacy has been revealed, fallacies of free markets and free trade must be revealed as a propaganda ploys to fool new dreaming American suckers who are born everyday into invisible peonage.

    https://contrarianopinion.wordpress.com/economy-update/

    Reply
  11. sunny129

    ‘it’s easy to forget that not everyone has those assets, that a lot of people can’t get “rich” just sitting on inflated assets, ‘

    fyi

    80-90% of Bonds & Equities are owned by top 10% and vert few by the bottom 90%! Capital is MOBILE, moves any where in the world ROI is competitive. Labor on the other hand is NOT mobile, gets victimized by the global labor wage arbitrage by the Multi-Nationals!

    Rent seeking Economy (FIRE) is growing by the owners of (crony capitalists!)Capital, touting the virtues of ‘free market capitalism’

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  12. kareninca

    We hardly ever discuss crime, but that is second on the list for poor people. It doesn’t even make the list for the better off.

    Crime is a big deal if you are poor. Stories like this never seem to make the MSM: http://beforeitsnews.com/alternative/2017/03/79-year-old-man-fatally-shoots-intruder-video-3495418.html. This guy’s house was broken into 13 times in the past year!! If he hadn’t been armed, these intruders (who were armed) could have killed him (as it was he was shot in the ankle). Obviously the cops had no way to prevent those burglaries, or to prevent the break-in that led to him shooting the intruder.

    I live in a condo complex in a very well off area. In the past six months there were two forced-entry burglaries in the complex; the door was actually broken in in each case. As it happens, no-one was home in either time. If someone had been home, perhaps they would have been shot or raped by the intruder. Cops around here respond instantly (unlike in the Alabama case above, I imagine), but they could do nothing to prevent these forcible break-ins.

    And, before I’m accused of hijacking this thread by discussing something other than food and homelessness, crime is a major reason that poor people don’t have enough good food. I have of many instances where food being grown in poor areas was stolen. I even read of one case where a guy spent months making compost in a poor area, and someone showed up with a big truck and stole the compost. Crime is also a major reason that being homeless is so scary.

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  13. slotowner

    The number of people who earn under $30,000 who worry about hunger & homelessness has gone up significantly.
    Back in the late 90’s few were worrying about it. They should have been.
    After the dot.com crash but before the housing bubble popped, few were worrying about it. They should have been.
    People who worry about things actually take steps to try to prevent them from happening. People were way to comfortable that they were ok & someone would protect them if things went wrong. They’ve found out that things were not so rosy, & that the promises to protect were overstated.

    The increase in worry is not bad. It’s people getting realistic. Even if they are proposing views that I disagree with I’d rather have people involved than blindly walking into the slaughterhouse.

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