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Economic Reality: Bottom 50% of Americans No Longer Matter
The Fed likes to brag about the “We saved the world” recovery. However, the unfortunate truth of the matter is a record Half of American Families Live Paycheck to Paycheck. Does it Matter? Let’s investigate. Unprepared for Nearly Anything
Deleveraging? Where? A Fed study shows U.S. Households Will Soon Have as Much Debt as They had in 2008.
Paycheck to Paycheck “Good Job” Excuse me for asking but if half the nation lives paycheck to paycheck, is that really indicative of doing a good job at managing debt. And as for “low delinquencies”, I remind you of my April 26 article Subprime Credit Card Losses Bite Capital One: Income Down 20%, Charge-Offs Up 30%. Nonetheless, I remind you of an important perception. We Saved the World
Two Reasons Not to Worry
The real crux of the matter is point number two. The Fed does not give a damn about the bottom half of the economy even though it spouts continual lies about “income inequality. The Bottom 50% Do Not Matter
That money rolls in guaranteed, month after month! That 50% cannot afford a house is irrelevant as long as suckers keep paying $500,000 to two-bedroom shacks in LA. The game is to keep asset prices up so that the top 50% keep spending. The bottom 50% are taken care of by government (taxpayer) subsidies noted above. Here’s the real deal: Fed Expects a Second Quarter Rebound, Higher Equity Prices. Repeat Performance The Fed needs to keep asset prices elevated even though it’s pretty clear concerns are mounting over bubbles. Can the Fed save the world again? Previously, the bottom third did not matter. Then the bottom 40% did not matter. Now the bottom 50% do not matter. That statement is a bit over the top. By how much I don’t know. But the trend is clear, as is the fly in the ointment. Brexit was the first warning shot. Trump was the second. As soon as the bottom 65% don’t matter, those 65% may vote to take matters into their own hands. Mike “Mish” Shedlock
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