Monday, August 12, 2013



Despite all the hype about growth—minimal growth may I add—and despite recent statistical changes which have resulted in an increase in our reported GDP, plus the Fed buying $85 billions worth of bonds every month—some very disturbing things are happening to this economy which do not bode well for the majority of Americans.

  • Income inequality is at an unprecedented level. A few are getting ever richer while the earning power of most Americans is actually decreasing.
  • The share of our national income going to corporate profits is higher than it has ever been.
  • The share of our national income being paid to people as wages and salaries is at its lowest since the figures were first recorded.
  • The share of corporate profits going to financial institutions was 11 percent back in 1947. That share has now risen to 42 percent—and the Fed projects it to rise still further.
  • Corporate investment in the kind of activities that create well paid jobs is way below the historical norm.
  • Federal and state investment in infrastructure is way below what is actually required.
  • Walmart’s U.S. sales have actually declined.

So what does all this mean? It means we have a financial economy based upon speculation rather than investment—and which is of little good to most Americans—operating side by side with a traditional economy which is suffering from under-investment, and where the labor force is being squeezed and squeezed and squeezed.

Decreasing earnings combined with higher prices leads inevitably to having less money to spend which, in turn, leads to fewer people being required to produce goods. That is a death spiral as far as jobs and the economy are concerned.

The above are only a few of the structural problems of this economy. There are many, many more.

IRONY: The primary blame for the recent Great Recession lies with the major financial institutions, yet not only have they scarcely suffered in an significant way, but they are now bigger than they were before the Great Recession and are the primary beneficiaries of the Fed’s $85 billion a month of quantitative easing. The total cost of the great recession has been estimated at $14 trillion plus—and it is being born by the average American taxpayer. That is injustice on a truly epic scale, but it is the logical outcome when the political system is effectively owned by the rich and their corporations.



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