Circling The Drain. The death of the American family and its middle class; now two incomes be damned. (Part 2 of 2)

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The second part of the blog entry entitled: How to fix the economy: throw your wife back in the kitchen, barefoot and pregnant is optional



This is the most complicated aspect of working mothers in the workforce and the part that would be considered third-rail politically; the economic impact. I feel to date, this might be the most important topic I have talked about on this blog because it affects all of us on so many levels. I would like to think after reading this you would agree.

The confusing aspect of this, as mentioned in Part 1, is not intertwined in the complexity of the argument. On the contrary, it lies in the simplicity of it; yet it’s not even in the discussion of what ails our economy?

When it comes to children being cared for outside of the home, its hard to find clear cut data that points out positively home is better, thus I’m sure someone could call it subjective. Now it's common sense having one parent home works better but I like to deal in absolutes rather than conjecture. What is totally objective is the impact of working parents (and to a degree women in general) on the economy. This all can be traced back to two words: supply and demand.

Obviously, with any prospering nation, the population has been on the incline since its inception. Thus, there have always been more than enough people looking to work. If we compare our population today (315 Million) to 1960 (180 Million) we can see a 75% increase in population in 53 years. In 1960, there were 69 Million Americans employed. Today, there are 155 million Americans employed. That’s a 125% increase in Americans working today from 1960. If we include real unemployment numbers in one of the worst economic recovery’s in history (said to be about 22 million more Americans) that 125% climbs over 150%.

Adjusted for population and time, we have seen the true workforce expand more than 25% in 53 years. Even with the staggering unemployment, we are seeing 49% of our population in the workforce compared to just 38% in 1960. As we know, women entering the workforce deserve the spotlight here, but with all these added workers, are we getting our money worth?

From almost every statistical standpoint the answer is simple. No. And it doesn’t end there. First, this is what the employment history looks like men versus women over the last 60 years.









As we can see, women have almost doubled their numbers, while men in the workforce have fallen about fifteen percent since 1960. With the influx of all these new workers over time, it’s only natural to expect that a “rising tide lifts all boats” scenario would exist but that just doesn’t seem to be the case. Despite the fact that the US has more billionaires than anywhere else on the globe, despite the fact that the average net worth of the newly elected 113th Congress is 966k; the average American family has been stuck in neutral for 40+ years.

Nothing paints this picture more vividly than what has happened and will continue to happen to the middle class. Like the time you left the bath running too long, low-interest rates/created new money has been filling up the economy. By the time you do notice and go to shut the faucet off, you find the handle is stripped (as there is no end in sight to new money with record low-interest rates). And no matter what you do, we cannot keep up with rising costs (inflation via new money).

You work and work and work some more. Your spouse goes to work; your youngest kids are off to daycare while your teenager competes with those without a high school diploma for jobs. Debt, credit, 2nd job... it doesn’t matter; whatever it takes, you will use any bucket you can find. You throw every bucket you can into that tub to keep it from spilling over, to keep from falling under that median. To keep that American dream still afloat. The fear of being poor is a great motivator. But to no avail.

As we can see below the median income has been relatively unchanged for Americans over the last 40+ years. In fact, today, real household income is LESS than it was in 2000, adjusted for that inflation. Meanwhile, the median income for males in this country is LESS today than it was in 1973. Does this sound like a 'dream' or progress? Women have gained roughly 80% in median income in this span but it's still substantially less than men (there goes that richer sex theory).










The destruction of the middle class is taking place before our very eyes. We have more people getting rich but substantially more getting poorer. I suppose this is “better for everyone” too? And this lunacy isn’t just limited to Time Magazine either. All media seems to be nothing but a mouthpiece for this propaganda. As I said yesterday, we know it’s not better for kids and more specifically the family and as we can clearly see here it’s been no blessing for the overwhelming majority of Americans economies either.









Let’s re-cap. We work long hours. We are flooding the job markets over the last 50 years with record number job seekers, turning upside down our outlook on work and family in our culture in the process. All of this just to keep a foot in the middle class or otherwise known as: ‘living the American dream’. But inflation (read theft) through loose (read suicidal) monetary policy and cost of living has not just made this 'dream' impossible but in turn nothing short of a nightmare.

If this sobering fact of our economy wasn’t enough, we also have the reality that nationally; this situation is even worse. In fact, this is how the banksters and those at the top of the pyramid power structure want it. After all, all this work and no gain by the masses have to go somewhere, right?

It wasn’t until 1982 that we as a nation reached a national debt over 1 Trillion (1,142,034,000,000.00). That took 191 years to reach that numerical milestone. Thirty years later, we have surpassed the 16 trillion dollar ceiling. As I have pointed out before, interest rates are at record lows to finance this gargantuan debt, thus we don’t necessarily have to feel the direct pain associated with such outlandish debt. But that doesn’t indicate there isn’t damage. The public debt side of the national debt has risen 140% since 2007, from 5.1 trillion to 11.9 trillion today. 140% in just six years.








And for all this debt, we know GDP has grown, but really has it?






As we can see, our growth,  like our economy, both micro and macro is nothing but an illusion. A dirty trick, made possible by the complacent yet complicit public. So eager, to be dictated by emotion, so much so that sound logic is actually discouraged and looked down upon. Have you seen the savings rates at your local bank? Check out a CD. You’d make a better investment buying scratch off lottery tickets than let your savings be ravaged by the fractional reserve banking system who rely on ‘kick the can down the road’ politicians who spend more time whoring for re-election than legislating. Or you know… what they were elected for in the first place.


You think it's bad, now? Wait until the FED start's raising rates again (if that's even possible).

This isn’t about women staying home and men working. The reality of men staying home while a woman works is not something that is concerning. What is concerning to me and should be to you is the reality of the American family. How one income is no longer able to support a family (regardless of the sex) and how we have been conditioned to accept this as the norm! As we can see, we are just barely staying afloat with two incomes, in the meantime causing major damage to the fabric of the family structure. What happens 30 years from now?

We are seeing our wealth being vaporized at the expense of our families and our way of life. This leads to only one thing. As “we” Americans continue to be duped, dumped-on and mislead, don’t expect things to change. We are paving our inevitable road that leads into a cul-de-sac of serfdom. I think George Carlin said it best in his last HBO stand-up before his death:


"The reason they call it the American Dream is because you have to be asleep to believe it."


So, wake up America, the wolves are already at the door.

Thou not lead us to temptation

When I was working on my last entry concerning FEMA and Ron Paul, I started to get into a bit of a tirade concerning the debt. This, in this writers opinion, is the United States greatest threat, not some foreign enemy. With most people showing no interest or regard for it, its up to those of us who do hold these truths to be evident, to keep putting that word out there... and that word is debt (specifically insurmountable debt) is slavery and nothing more then a transfer of wealth; from the many to the few. 

In this article I want to tackle two situations that I see problematic and the key cogs to insurmountable debt. First, there is the federal government and our elected "leaders" role in this failure to be reasponsible. Secondly, is the Federal Reserve and its banks, that have been culpable in allowing (through the manipulation of interest rates) this economy to take a path that will see it fall off a cliff. What the recoil will be from QE 2,3,4,5,6,7 bailouts and stimulus remains to be seen, but there can be only one thing we know for sure. 

 (Sodahead.com)

That is, we are accumulating debt. And vast amounts of it. The implication of compound interest makes these actions basically treasonous by our elected leaders and criminal by the FED. How can Congress and the executive branch both complicity push the cost of running the government so far out of the realm of practicality? How is it legal for the FED to lend huge sums at what amounts to no interest to those banks that were all considered "too big to fail" who then take that liquidity and invest in T-Bills that will actually yield a 2-3% interest? These practices destroy existing savings and the incentive to save; thus creating only one desired effect - consumption. 

Because, without people borrowing and spending the whole thing blows up. Money = debt, debt = money.  The biggest problem is that the American population are over saturated in debt thus why the sub-prime in housing was needed. Like its population, the US government, is over saturated as well. They, unlike you and I, have no limits and that defies logic. Lets look at the executive's role.

The Interest payment is the only debt payment required by the Constitution that must be accounted for in the budget each year to be paid.

With that said, every President hopeful on the Republican side and President Obama have all released a budget or a proposed budget.

Not one of them have a plan to balance the budget next year, neither will any one of them do so in four years either (with the exception of Ron Paul). We will without a doubt have continuous mounting deficits that will probably be in the 1-2 Trillion mark annually regardless of who is in office (with the exception of Ron Paul). Starting to notice a trend here?

We have seen Obama’s appetite for destruction already regarding deficit spending; so let’s take a peek at the eventual Republican nominee’s (Mitt Romney) insanity.

Mitt Romney wants to increase defense spending by putting 100k more troops on the ground and rebuild parts of the Navy and Air Force. He would not have left Iraq, appears to have an itch to scratch in Iran and will not leave Afghanistan until its won (the forever war) or at least until his generals say to leave??? His budget has the wealthiest Americans (who pay the most income taxes) getting a significant tax cut on top of the existing tax cuts that are already in place.

Romney has no plans to offset the lost revenue that will surly happen when these cuts take place, nor does he have any plans to make any significant cuts in existing outlays to recoup the ramped up defense spending. This defines logic. Mitt Romney's plans are contrary to anything sane in regards to the federal government living within its means. He’s fiscal policy’s will be train-wreck like.

That however, is not how Romney sees it. He thinks if he cuts taxes the gains in receipts will pay for this increase in spending. The problem with that is that the FED doesn’t think the economy is going to grow by all that much… and they control the money supply. This leads us into the second part of the equation: the insurmountable tag team.

 The FED’s long term forecast is a relatively weak one going forward with long term GDP growth outlook being in the 2.3 to 2.6 percent ranges. The FED has also said it will not look to raise interest rates until, at the earliest, 2014. Here you have the economy just barley keeping its head above water for the foreseeable future, the FED continuing its non-stop intravenous liquidity therapy into bank’s reserves creating a soon to be inflation tsunami all the while our elected representatives continue to show no regard for the situation.

I want to take a look at two charts that really speak volumes for what is going on and what we will being seeing soon enough in our own backyards. Lets start at 2006, when the FED stopped tracking M3. As you can see below, when Shadowstats picked up the tab of tracking M3, the growth in money supply was steadily rising until early 2008. As the recession came, the Fed lowered interest rates to avoid the fire of deflation but banks weren’t loaning, so the money supply dropped with it.  

(shadowstats.com)

A curious situation started occurring by the middle of 2010. M3 started to rise and its rising still as of now. Meanwhile, Interest rates from 2009 on have stayed basically at zero and as we’ve already heard from the FED, they will remain that way for years. This does not bode well for the dollar or anything equity wise going forward in my opinion. If the economy continues its "recovery” like so many in the media says it is, the eventual outcome will be a pretty substantial increase in inflation. This would, by default, put relatively the majority of commodities into buy, buy and buy more mode. Most specifically gold and silver.

Equally alarming will be the federal governments penchant for debt as we have also seen, they will not live within our means, thus piling more debt on to the insurmountable existing amount. What happens when the FED has to raise interest rates? If we are seeing 450 Billion interest payments already (Intragovernmental and Public) imagine what will happen to those when interest rates go up? They could look something like this:

Just for a little perspective. In 1988, the national Debt was 2.6 Trillion. The interest payment on that in the budget was 214 Billion. The interest payment in 2011 was 450 Billion, roughly double. The principal, as we know, was 14+ Trillion.

The US government will not cut spending and we will continue to finance the welfare/warfare system. What happens in 10 years from now will be interesting thou. Can the FED really raise rates, without completely tanking the economy? And if they did, what would happen to the interest payment on the debt outstanding (besides sky rocketing into the trillion dollar mark). If the FED does not raise rates out of the fear of deflation, isn’t massive inflation the only alternative?

George Carlin said it best:

When you're born you get a ticket to the freak show. When you're born in America, you get a front row seat.

Get 'ya Popcorn ready!