Writing on the Wall
Writing on the Wall Author MN Gordon for Economic Prism
One of the more disagreeable discrepancies of American life in the 21st century is the world according to Washington’s economic bureaus and the world as it actually is. In short, things don’t add up. What’s more, the propaganda’s so far off the mark it’s downright insulting.
The Bureau of Labor Statistics (BLS) reports an unemployment rate of just 3.7 percent. The BLS also reports price inflation, as measured by the consumer price index (CPI), of 1.8 percent. Yet big city streets are lined with tents and panhandlers grumble “that’s all” when you spare them a dollar.
In addition, good people, of sound mind and honest intentions, are racking up debt like never before. Mortgage debt recently topped $9.4 trillion. If you didn’t know, this eclipses the 2008 high of $9.3 trillion that was notched at the precise moment the credit market melted down.
Total American household debt, which includes mortgages and student loans, is about $14 trillion – roughly $1 trillion higher than in 2008. Credit card debt, which is over $1 trillion, is also above the 2008 peak. To be clear, these debt levels are not signs of economic strength; rather, they’re signs of impending disaster. Moreover, they’re signs that American workers have been given a raw deal.
How is it that the economy’s been growing for a full decade straight, but the average worker’s seen no meaningful increase in their income? Have workers really been sprinting in place this entire time? How did they end up in this ridiculous situation?
You can no more ignore these discrepancies and signs of impending disaster than you can ignore a gathering of pyromaniacs in the alley behind your residence. Most nights their penchants will be restrained to barrel fires. But come the next full moon they’ll let out a communal howl and burn down the city block.
On surface, it takes a downright pathological character to go into hock at the rate achieved by U.S. consumers, U.S. corporations, and the U.S. Treasury. Only mental defectives, Scientologists, and university economics professors can justify it with a clear conscience. Nonetheless, these debt loads are a symptom of the compulsive effort to hold onto an economic golden age that’s slipping and sliding away.
Indeed, the golden age of American prosperity was fun while it lasted. From the close of World War II into the 1970s, the rising tide of wealth lifted all boats. Since then, the appearance of prosperity has been preserved through the massive accumulation of debt…which was made possible with the Federal Reserve’s fake money and fake interest rates.
Unfortunately, when debt runs up to these extreme levels bankruptcies follow. In the State of New York, for instance, bankruptcy filings have risen steadily over the last three years; from 30,112 in 2016 to 34,711 in 2018. As you can see, the game over button – via bankruptcy – is the only way out when debt loads become this overwhelming.
Naturally, American consumers have taken their spendthrift ways from a Congress with zero fiscal discipline. The U.S. deficit through the first 10 months of fiscal year 2019 already exceeds last year’s deficit. In July alone, the U.S. Treasury added $119.7 billion in new debt.