There seems to be a disconnect between all levels of our government and most of our financial system and the daily lives of the common American. Our federal government says that the average American needs to save more of their income but the Federal Reserve keeps interest rates so low that you will lose money in a savings account if your bank charges any one of the numerous fees that banks charge now to inflate their profits. The USDA suggests that we eat more fresh vegetables and less fats and sugars, yet it provides subsides that make fatty, sugary foods cheaper than vegetables (should the most expensive thing on McDonald’s menu be a salad?). I cannot believe that a head of lettuce costs more to produce and process than a twinke!
I am not sure if this disconnect started in our finical system our started with us, the American people. It seems to me that we have lost our historical values and any idea of what the American dream use to be. We seem to value money and physical possessions more that we value each other. This might be because we have be targeted by incessant advertising telling us we will be happier and have more time if only we buy the “New and Improved, WonderThingamagig”. When in actuality the only reason that we have the same relative standard of living that our grandparents had in the 1950’s and 60’s is because both parents are working, so now it takes two incomes to maintain the same status quo that one income did 40 years ago. This is where one of the disconnects lie, because since the 1970’s we have seen a great increase in average income but it is concentrated in the top 20% of the income bracket. The CIA World Fact Book (https://www.cia.gov/library/publications/the-world-factbook/geos/us.html) claims that “Since 1975, practically all the gains in household income have gone to the top 20% of households.” It further states “Long-term problems include inadequate investment in economic infrastructure, rapidly rising medical and pension costs of an aging population, sizable trade and budget deficits, and stagnation of family income in the lower economic groups.” If you look at the table provided by http://en.wikipedia.org/wiki/Affluence_in_the_United_States (so take it for what it is worth) you can see that in the last 35 years median income has increase by almost $10,000 but the income for the 80th percentile has increased by a over $30,000 and the 90th percentile’s income has increased by almost $65,000 while the bottom 20% income has only increase by $3,000!
So for my situation where I am making the median income I am actually earning less now then when my Father was making the median income 30 years ago once we account for inflation.
I think this is caused by our government valuing economic growth (as measured by the creation of money) above all else. By adopting these values we have drifted from a production based economy to a consumer economy. Do you think that we can sustain an economic system were we sell each other stuff that was imported from someplace else? This has not only created a financial system that favors the creation of wealth over everything else, but seems to have created a society that favors material possessions over personal relationships. It has created a disconnect in local governments, where they want to attract a Super Wal-Mart for the increased tax base even though it will wipe out the small business that make up (or did) the traditional upper middle class of most American towns. Yes you create more (but lower paying) jobs but you lose the nexus of your local civil society. We value short term gains over long term prosperity, even though we are destroying our country and our traditional way of life.
We live in a time where it is perfectly acceptable (and legal) for a power company to sell its natural gas futures and stop producing power if that is deemed more profitable. It does not matter if it is in the middle of a blizzard and tens of thousands of households will lose power. It does not matter if making money hurts people, you can always find more consumers.
We can create wealth out of thin air, the $100 (if I had $100) bill in my wallet will provide no nutritional value if I eat it. I cannot put it in my gas tank and drive my car with it. It will provide a little heat if I burn it, and it is too small to make good toilet paper with. It’s only worth is what other people are accepting it to be, and we are creating billions of dollars now. We have become addicted to debt (which is another way to create money out of thin air) both as a nation and a society. Our debt addiction is not limited to a political party or certain demographic but spread widely and deeply throughout our culture.
We have almost $13 trillion in debt now as a nation and I can only see three potential ways out our current situation (of course this is expecting our society to remain stable)
1) Hyper-inflation – if we keep borrowing at our current rate, other nations probably will stop lending us money and demand that our debts be paid. This will put us in a similar situation that Germany was in after WWI with prices sky-rocketing as our dollars become useless.
2) Stagflation- Similar to what we saw in the late 1970’s early 80’s were we had a stagnate economy and inflation, the only solution was to raise interest rates up to 20% and wait until the money comes out of the system (no more borrowing no more money being created).
3) Deflation- Were we stop printing money raise interest rates sky high or tag our currency to something of real value like gold or silver (I am actually not sure how or even if this will work but some people on the far right seem to think that this is a good idea). In this case we remove the money from the system so fast that prices actually fall. I know this sounds good but it is what happened during the Great Depression (which wasn’t good at all) and no one had any money to spend on the now suddenly cheaper goods.
I am sure and do hope that there are more and better options than I have stated. I am not an economist but a biologist. As a biologist I know that you cannot have infinite growth in a finite system (something that economists seem not to account for) and our planet is a finite system.
I will save for later my thoughts about our over consumption of all things and what it means as we start to run out of resources.
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