Why the Boomers Are Going Broke
POITOU, FRANCE – We were taken aback on Friday by the ferocity of our dear readers’ comments. [Read more in today’s Mailbag.]
What were they so sore about? we wondered.
Son of Satan
Of course, we are frequently wrong about a great number of things. When connecting the dots, we are bound to draw a few stray lines. And we will no doubt be proven wrong in many of our opinions and predictions.
Will The Donald’s trade war pay off for Americans? We don’t think so.
Will the tax cut really boost the U.S. economy and reduce the deficit? There is no sign of it.
Will Mr. Trump really make America great again? The odds, based on what we’ve seen so far, seem very, very slim.
But what do we know? And we’d be happy to be proven wrong.
What was surprising – to us – was that readers did not write to correct us or help us get the lines in the right place.
Instead, they seemed to suggest that we were a son of Satan, sent to destroy all that the good patriots of the United States of America hold most dear.
In other words, the discussion seems to have hit a religious nerve… like setting fire to a cathedral; the faithful fear their most sacred relics will be incinerated.
We have no remedy for this condition, so we will cheerfully ignore it. Besides, cross readers may be right. And those who have a better idea of how the dots connect are invited to send their thoughts by clicking right here.
So, what do we see today?
What we see is an economy staggering under the weight of phony wars and phony finances.
It took more than 200 years for the country to reach its first $1 trillion in debt; now, it adds that much every 12 months. In addition, the Fed increased the base money supply by roughly 400% over the past decade.
What do you get for that kind of money? The feds got the weakest recovery in history… with no real gains in per-hour wages… and GDP growth rates only half those of the 1950s and ‘60s.
In 1821, John Quincy Adams described American foreign policy: “She goes not abroad in search of monsters to destroy…”
Here we are, nearly 200 years later, and U.S. troops are looking for monsters in every godforsaken sh*thole in the world. And where none can be found… they create one.
Jack Ma, co-founder of Chinese mega-company Alibaba, added detail (to CNBC):
But against that bleak picture of an aging, degenerate empire is the more pleasant vision peddled by the mainstream press. Take the Friday jobs report, for example.
Fairy-Tale Wage Growth
Nobody wants to look at Goldilocks too closely. Should they do so, they would discover that those wage gains were a fairy tale.
The inflation rate for the last 12 months was 2.9%… and that’s the official rate. So even with the feds’ statistical legerdemain to disguise the facts, we still see that the typical working stiff is getting poorer.
And if we choose to look more closely still, we see that the situation is worse than we thought.
The “jobs” that the feds report are more and more likely to be part-time gigs or low-paying pick-up work in the health, education, leisure, or hospitality sectors where the average work week is only 26 hours.
Full-time jobs in manufacturing, insurance, real estate, mining, finance, or other good-paying sectors have been slipping catastrophically during the entire 21st century.
Only 5,000 of these “breadwinner” jobs have been added per month, says our colleague and Reagan’s budget chief David Stockman, while the adult population has grown 45 times as fast.
Obviously, none of this can be blamed on Donald J. Trump. These trends began 30 years ago or more.
And where do they lead?
A UN report says that there are 18 million people in the U.S. living in “extreme poverty.”
And here we see what they have done to an entire generation.
The New York Times reports:
The NYT connects the dots, too. Naturally, it sees the problem as a consequence of having too little public policy. It believes government should have made sure old people had enough money for their retirements.
What we see is much different: too much public policy. Too much wasted on wars and too much phony finance.
It was the feds who put the post-1971 fake dollar in place when Nixon cut the dollar’s final connection to gold.
And it was this fake dollar that turned America from the world’s biggest creditor to the world’s biggest debtor… and turned it from having the world’s biggest trade surplus to the world’s biggest trade deficit.
And it was this turnaround that destroyed breadwinner jobs… leaving the baby boomer generation with declining real incomes… part-time jobs… and no surplus to save.
Finally, it was the Fed, with its ultra-low interest rates (the Fed still lends at rates below inflation), that made saving money uncool, unprofitable, and unnecessary.
What are we missing?
How will a trade war (with higher consumer prices) help keep old people from going broke? How will bigger deficits reduce federal debt? How will continuing to spend real resources on phony wars make Americans safer or better off?
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