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Americans have no savings and with very good reason: housing, education, and health care have seen extraordinary inflation while wages are stagnant.

It has now become a daily ritual in which story after story of broke Americans plaster the web.  Yet somehow on the mainstream press, very little is discussed about this topic.  Americans are largely broke because inflation is vey real.  Housing, education, and health care costs have soared out of control while wages have remained stagnant.  The way Americans continue to pay for these items is by going into loan shark levels of debt.  There used to be a pretense that “we” actually cared about having a middle class but that is now thrown out the window.  At this point, we are in a full on sprint towards low wage capitalism.  Many people live on a paycheck to paycheck diet and are berated about saving more for retirement.  The reality is, the new retirement model is working until you die.

In the land of no savings

Sunday morning, I wake up and take a stroll through the neighborhood.  “Did you hear about Bitcoin?  Wild right?”  I’m asked by a stranger at the park.  “Sure seems wild.  You own any?”  To which I get the following response, “I wish I had some money to even invest!”  I think we live in a world where most Americans are merely spectators to the wild gyrations of the market.  They hear about investments too late or mistake speculation with actual investing.

Most Americans impact their standard of living with their income from work.  And most of the income gains since 1980 have now gone to the top 1 percent:

income growth

This is the new world we live in.  Even to compete for a home, what was once the bedrock of a middle class lifestyle, is now seen as out of reach for many Americans.  And of course people are still buying homes but they are going into wild levels of debt to do so.  You have banks offering 5 and 10 percent down payment loans because people simply cannot save enough to buy a property.  So what happens when that next recession hits and you have no buffer of safety?

1 out of 3 Americans has no savings for retirement:


We have done a good job of bamboozling the public into believing in some sort of financial Disneyland.  Things appear better than they are until you look behind the curtain.  You have a lot of props and gimmicks but the substance is being eroded.  For example, we now have more than $1 trillion in credit card debt outstanding.  This is largely driven by Americans buying more than they can afford so they can keep up with the notion that they are still middle class.  Credit card debt is really just spending your future earnings today.  So you pull demand from the future into the present.  This is not a sound path of wealth management.

I think things fall into two dramatic camps.  You have the “screw the poor, they deserve it” camp and you have the “all capitalism is evil, therefore control every company” camp.  Of course life falls in the gray area.  Capitalism thus far has proven to be one of the stronger economic systems out there.  But even in the U.S. we have some strongly socialistic systems in place:  the military, Social Security, Medicare, public parks, public education, and on and on.  I do believe that there is a basic price to live in a modern society.  However, when it comes to business creation the free market does the best.  Can you picture a government trying to design an iPhone, Facebook, or running Amazon?  These companies do well because they operate (largely) in a free market.

With that said, the current system is stripping out the middle class from the United States.  You have the financial sector speculating and essentially using cheap funds to inflate values in many areas.  It is a system where very few Americans are participating in and many are losing out simply by the inflation that is being created.  Americans have no savings for very good reasons.  Will that change?  That is yet to be seen.

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