The Wreck of America's Middle Class - The Daily Reckoning
The Daily Reckoning by Bill Bonner
On This Day - 30 January 2013
The Wreck of America's Middle Class A  A  A

Brooklyn, New York

We've been exploring the site of a disaster. The pieces are scattered all over. The survivors are many...but few without scars and open wounds.

If you measure inflation properly, the damage has been much worse than most people realized. At 10% per year, few middle class families can keep up. They've lost income...purchasing power...and wealth over the last 20 years.

What caused it? Is it over?

You listen to the financial press and you might think the middle class is getting ready for a major comeback.

Manufacturing is supposed to take off, thanks to lower fuel costs.

Housing - the number one asset of America's mittleburger households -- is said to be in another upswing

A year of StockSelect for less than 25% of its full price! (Ending fast)

Our "Once-in-a-decade" offer for StockSelect is set to end PERMANENTLY on this Saturday, 2nd February.

As you know already, through this offer you can get StockSelect for just Rs 1,200... which is less than 25% of its normal price.

StockSelect is our proven research service which has made thousands of investors very wealthy. And for this reason, we sincerely want YOU also to use it and benefit from it.

But clearly, this opportunity is running out very fast now!

So just sign up and give StockSelect a try. If you don't like it, we'll refund your full payment without any questions...

Click here for full details...

And stocks are set for a major hullaballoo too. This year, they've risen almost without a pause. Yesterday was no exception, with the Dow up 72 points...

As to the housing boom, here is Reuters:

    Home prices rose in November, climbing more than five percent from a year ago in the biggest increase since August 2006 when the housing market was starting to collapse.

    Data on consumer confidence on Tuesday was less encouraging, with moods falling to their lowest level in more than a year as Americans became more pessimistic about the economic outlook and their financial prospects in the wake of higher taxes for many.

    In a fresh sign the housing sector is on the mend, the S&P/Case Shiller composite index of 20 metropolitan areas gained 0.6 percent in November on a seasonally adjusted basis, in line with economists' forecasts.

    Prices in the 20 cities rose 5.5 percent year over year, making for the strongest yearly price increase in more than six years when prices were on their way down.

    The housing market became a bright spot for the economy last year as prices rose and inventory tightened, and the sector is expected to contribute to economic growth in 2013.

    "What we're seeing is really a gradual improvement in the overall economy," said Anthony Chan, chief economist for Chase Private Client in New York.

    Rising home prices and recent gains in the stock market should blunt the impact of tax increases for consumers and spending should improve by the second half of the year, said Chan.
And stocks? Yes, investors are coming back to equities, say the pundits.

Why? Because bonds stink. The Fed is buying them to hold down yields (and long interest rates). Why settle for 2% yield from bonds when you can get 3% from stocks?

And so the middle class is all set. - all going up.

But wait. It's not another boom that the middle class is headed for; it's another big rip-off!


Because the middle class is still the primary victim of the world's biggest scam. The feds create more money - more than $1 trillion per year. The money doesn't go to the middle class. It goes to zombies. Bad companies with good lobbyists. People on food-stamps. Government employees.

The middle class doesn't have any idea what is really going on. But every dollar created by the feds...and distributed to the zombie insiders...costs the outsiders in the middle class 50 cents worth of real wealth. How could it be otherwise? Double the money supply and you cut the real value of the existing money supply in half. Grosso modo. That includes wages, savings, pensions, investments - anything that doesn't rise as fast as the tide of new money.

That's the tsunami that wrecked the middle class. When they ran into it - a huge wave of cash and credit - everything they had got smashed.

Wages stopped growing in the '80s; the middle class turned to debt.

And now, it's counting on the government. The feds have promised more health care...better Social Security benefits...more bailouts...more stimulus...and a stronger economy with more jobs and higher salaries.

But how can the feds provide these things? By printing more money ...and transferring more money from the middle class to the zombie class!

Don't believe it? See tomorrow's Rogue Economist at work.

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

Get The Daily Reckoning directly
in your mail box.
Just enter your e-mail address » 

Read our Privacy Policy and Terms Of Use.

Equitymaster requests your view! Post a comment on "The Wreck of America's Middle Class". Click here!

1 Responses to "The Wreck of America's Middle Class"


Jan 30, 2013

Believe it or not, but the script is playing out just as old Karl (as in Karl Marx)had written over 150 years ago in the Communist Manifesto, written with coauthor Frederick Engels: The petty bourgeoisie (which description fits today's middle classes very well) will either slide into the proletariat or a handful may join the ranks of the bourgeoisie.

Equitymaster requests your view! Post a comment on "The Wreck of America's Middle Class". Click here!

Recent Articles:
Trump Takes a Beating
August 18, 2017
Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.
Which Gods Will Bring Down the US Empire?
August 17, 2017
Mr Trump is in the White House and the gods are in their heavens; what's not to like?
Will They Haul Off Trump's Statue, Too?
August 16, 2017
All across the country, the old gods become devils. New, gluten-free gods take their places...
Farm Loan Waivers: Why Bad Economics Makes for Good Politics
August 14, 2017
It is because the negative effects of the waivers aren't clearly visible.