For instance, since 2008 15 million more Americans rely on food stamps. According to the Census Bureau, 146 million of us, nearly half of the U.S. population, are poor or low-income. The Civilian Employment/Population ratio, which is the broadest measure of employment in the country, is the lowest it has been since the early 1980s. Median household income has retreated to its 1995 level. Lastly, the economy is not producing jobs for U.S. college graduates as 53 percent of them under the age of 25 are either unemployed or underemployed. Given that many graduated with huge college debt, what could the future hold for these folks?
But, don’t despair. Some in our society are doing quite well because of the federal largess thrown their way. Most of them just happen to be located around New York City and the District of Columbia. You see, the U.S. stock and bond markets are at, or near all-time highs. Real estate in Manhattan and Washington, D.C. has bounced back nicely and are both at all-time highs. Even the Contemporary Art market in the Big Apple has seen sales skyrocket in spite of higher prices.
But, this is predictable given that New York and the nation’s capital is where the Wall Street/Washington Axis of Financial Evil is headquartered. It is where that axis prints the new money and injects it into the economy through its well-connected surrogates – i.e the “too big to fails”.
And it is all done in the name of stabilizing prices so the rest of us don’t suffer so much. How nice it is that the powers that be are looking out for us working folk!
Don’t be fooled for a moment.
The financial establishment in this country, which includes the Federal Reserve and its “too big to fail” cronies, knew exactly what it was doing. Through monetizing federal debt, a series of quantitative easing schemes and holding interest rates below market prices the banking establishment has succeeded at stabilizing the cost of living above market levels. Put another way, if left to its own devices with no monetary easing from the Fed, the market would have rid itself of all the mal-investment built up from the previous Fed induced false boom period (housing boom).
Consequently, housing prices would be lower, commodity prices would be lower; in fact general price inflation would be lower. The cost of hiring new workers would be lower causing an employment recovery. Savers would have gotten a decent return on their money. In short, working class Americans would have seen an enhancement in their standard of living.
On the flip side, many rich folks would have been devastated. Their stock and bond portfolios would have been decimated. Many would have lost their jobs through bankruptcy and restructuring. The value of their homes wouldn’t have been restored on the backs of working men and women.
This is what should have happened. After all, they caused the crisis along with their accomplices in government. Didn’t they deserve the consequences of their actions? That is capitalism. That is the American way.
Article first published as Gap Between Rich and Poor Rooted in Government Policy on Blogcritics.
Kenn Jacobine teaches internationally and maintains a summer residence in North Carolina