The Middle Class Retirement Nightmare
Once again we bear grim news...
Millions of Americans may have to delay retirement for years - if not permanently.
Like a squirrel that hasn’t saved against approaching winter... 80% of American workers have under one year’s salary salted away for retirement.
This we learn from a recent report issuing from the National Institute on Retirement Security.
We are further informed that over 100 million working-age Americans own no retirement accounts whatsoever — including 401(k)s, individual accounts or pensions.
Meantime, 77% of Americans fall woefully behind “even the most conservative retirement savings targets for their age.”
Summarizing the dismal business is Diane Oakley, the report’s author and Cassandra:
Thus for millions a “middle-class nightmare” is fast displacing the American dream:
How has American retirement come to such a sad state?
Today we grope for clues, hoping to stub our toe upon some accidental truth.
We stumble at once upon a lead...
In the mid-1970s, Richard Nixon scissored the dollar’s final tether to gold.
The gold standard, neutered though it was in its dying days, nonetheless kept the balance of trade in a range.
A nation running a persistent trade deficit risked depleting its gold stocks.
The ersatz dollar removed all checks.
America no longer had to produce in exchange for goods... or worry about losing its gold.
“By the sweat of your brow you will eat,” Genesis instructs us.
But under the new dollar standard America could eat by the sweat of others’ brows… without perspiring a bead of its own.
Scraps of paper, rolling off an overworked printing press, were its primary production.
Ream upon ream went abroad in exchange for goods — real goods.
The international division of labor was opened to hundreds of millions, particularly peasants from the labor-rich fields of China.
They entered the factories in their millions, each toiling for one dollar per day. Perhaps two.
The competition depressed average American wages… which have never recovered.
Overall U.S. productivity has increased 77% since 1973, the Bureau of Labor Statistics informs us.
But average real hourly pay (adjusted for inflation, that is) has only increased 12.4% over 45 years.
Thus we find the average American worker a hamster upon a wheel… running mostly in place:
Here our co-founder Bill Bonner reduces to concrete the abstract plight of the American worker:
But it is not only the F-150 owner who has lost the value of his dearest commodity — time:
Meantime, the past decade has only deepened existing trends...
The trickle-down theory of economic progress argues you must first feed the horses in order to feed the sparrows.
It certainly has its points - poor men do not open businesses. They do not provide employment.
But because of the massive distortions in today’s economy... the sparrows have largely gone without.
The Federal Reserve’s false fireworks have pushed the stock market to record heights — even with the latest blood and thunder drama.
The artificially inflated market has put the asset-owning classes in easy waters.
As our own Charles Hugh Smith reports, those earning $1 million or more have captured 63% of all capital gains.
But the Main Street economy has pegged along at a lilting 2.1% annual pace.
Does that not explain how Donald Trump came to occupy his current address?
He pledged to bring jobs home… to make the Rust Belt glitter… and America Great Again.
The president will likely fall short of the glory — as would any mortal man.
Even a George Washington would throw up his arms in surrender.
The permanent bureaucracy — the Deep State — would have him under lock and key.
But what about growth in 2019… and beyond?
It goes on time borrowed as is.
Growth will come to a crawl as the nearly decade-long recovery breathes its last.
Meantime, the nation plunges deeper into debt… as the great middle class slips further down the greasy pole.
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