Despite all the happy talk about "recovery" and higher growth, wages have gone nowhere since 2000--
and for the bottom 90% of workers, incomes have fallen over 10% since 2002.
Why are falling wages for the bottom 90% a problem?
Our Federal Social Programs--Social Security, Medicare and Medicaid are pay-as-you-go.
When Social Security runs a deficit, the difference between receipts and expenses are filled by selling Treasury bonds in the open market--the exact same mechanism the government uses to fund any other deficit. The so-called "Trust Funds" are an accounting fiction.
The demographics of the nation have changed in the past two generations. The Baby Boom is retiring en masse, expanding the number of beneficiaries of these programs, while the number of full-time workers to retirees is down from 10-to-1 to 2-to-1: there are 60 million beneficiaries of Social Security and Medicare and about 120 million full-time workers in the U.S.
As medical expenses are soaring.
And Program Beneficiary growth exceeds projections.
If 90% of the households are earning less money how can we pay for Federal Social Programs which expand by 6-10% every year?
We Borrow The Money! (Actually the US Government does on our behalf)
Meanwhile, budgets of state and local governments also expand every year; maintenance of infrastructure, a new arena and/or stadium for the local teams, funding retirement benefits and the costs of providing services (soaring healthcare premiums are also a major driver of higher local government expenses).
How can we afford higher income and sales taxes to cover local government expenses?
Despite the confusing name, this chart depicts state and local debt, not including pension obligations.
We Borrow The Money! (Or our state and local governments do)
Then there's the consumer economy.
If wages are stagnant, how can households spend more money?
If you guessed "We Borrow The Money" you were correct.
So where does all this money go?
Total Income in the decade 2002-2012:
the bottom 90% lost 10% ,
the top 5% gained 6%,
and the very top 1/100th of the 1%, gained 76%.
This trend has continued through 2017 with no sign of slowing or reversing.
While some predict the end of the world or some huge reset, perhaps the Federal Reserve keeps printing money and buying bonds from the treasury and the wealthy keep buying municipal bonds and securitized consumer loans and this goes on for a long time.
If you are curious about how this all looks in the long term, visit India.