federal reserve bank

Imagine the reaction you would get if you walked into an off-the-hook fraternity party and shouted, “Stop this party! There are too many drunk people and some of you are going to get hurt.” That’s the same reaction you get when you try to warn people about an economic bubble. It doesn’t matter if people were burned before because it is different this time. However, we have a zombie economy that is artificially kept alive through financial engineering and there is a living, growing bubble that is ripe for a big burst.

Of course, one might retort, “We are the wealthiest nation in the world, the stock market is at record highs, housing is booming, inflation is low, and unemployment is reasonable. What are you talking about?”

Let’s take a look at the economy first.

How Bad is Inequality?

When 45 million Americans are on food stamps, 72 million are on Medicaid, and 81% of households are worse off today than they were in 2005 … you know that there is something amiss.

If you look at the overall nominal GDP, yes, the U.S. is still #1. And even under the GDP per Capita, the U.S. is ranked 6th or so in the world, depending on the metrics. Not bad. However, such “average” statistics can be misleading. If I have $999 and you have $1, then on the average, we have $500 each, but that fact is not going to help you buy a coffee at Starbucks.

This inequality has only grown more rapidly since the crash of 2008. To understand what is happening, imagine $1000 being distributed to 1000 people. In a socialist world, everyone will get $1. In the current crapitalist system, this is what is happening:

1 guy gets $600, 9 other people get $39 each, and the remaining 990 peasants get 5 cents each.

The income and wealth inequality is the worst since the Great Depression. In 2015, the Top 1% earned 22% of all income earned in the U.S.