Quote:
Originally Posted by bunt_q
You've still never adequately explained to me how we are all supposed to be plummeting from $50,000 per person average income to $5,000 per person overnight, which is what it would effectively take for your reality to come to pass. Because countries with 1/10 of our income still have cars. So we'd have to get really, really poor to see what you claim is coming sooner than we would have wished. I am curious what you see that leads you to believe we'll have Iraq-level incomes in a few years.
(And don't give me some nonsense about deficit spending. Let's be real, taking a snapshot of the national debt and population. We have $16.891 trillion in debt. Population of 316.404 million people. That's $53,384 per person. It's going to take a LOT more than that to make as as poor as you imagine.)
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Not true, IMO.
It would not take a huge drop in the standard of living.
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This is why we need well designed, well run, and, continually improving people centric public transportation.
Take the median of the bottom 90% of the population, many graphs of which can be found via the Internet under "bottom 90%", and look at their income growth, network etc. This is the demographic which determines the health of the country, i.e., defines consumption patterns. Over the last decade or so, the net increase in income for this entire group as been low. Some figures point to a net real increase in income for that group of $59 in constant dollars since 1966.
Here's an interesting table from NY for 2011 data
http://www.nytimes.com/interactive/2...come.html?_r=0
There a vernier scale on the left, move it up and down to see values.
Factor in real inflation- not the Fed's figures that are used to minimize COLA payments- but changes in medical, food, energy, housing, college education, and transportation costs (primarily automobile).
Figures between 8% and 10% are easy to find. Shadowstats has interesting inflation graphs, but, others exist.
http://www.shadowstats.com/alternate...flation-charts
My point is when the bill comes due for our gross Federal Reserve and TBTF banks mismanagement, that any down turn will hit the bottom 90% the most, as this group has the least discretionary income. This group, as it is, pays the highest percentage of their income to both service debt and for their cost of money (interest rates they pay).
Let's say the US economy drops 10% in constant 1950 dollars, adjusted for real inflation. So, the per capita income for 100% of the population drops in 2013 dollars from say $50,000 to $45,000. How does this affect the bottom 90%? To start with, discretionary income evaporates in something like an inverse logarithmic relationship between percentage of US population and this type of income. For example, the number of people on food stamps, barring some billionaire's meddling (let start to starve and they will get off their asses), would grow far faster than the inverse linear drop in median income.
The relationship between increase and decrease in the median of all of us, does not affect each income segment in the same fashion. If I made $250,000 (excluding taxes) and, my buying power dropped to $225,000 excluding taxes, the impact is not nearly as severe as if I made $40,000 (excluding taxes) and my buying power dropped to $35,000.*
With China's meteoric rise, India's rapid growth, Russia's mending, Latin America's increased stabilization, I can see no way that cost to us of resources- agricultural, mineral, and, energy, will not rise. This, IMO, will determine the trend lines that will underlie real inflation costs in the US. Impose upon that trend line, large volatility due to TBTF, Federal Reserve, and, Federal government mismanagement, and, the trend line steepens.
Frankly, I believe that even a 15% drop in median income might be possible over the next decade. This would cripple the bottom 90%, and, lower the number of cars sold, regardless of technological advancement. Add in the adjustments that all of us will be forced to make due to a combination of rising interest rates (1% rise in cost of money adds $160,000,000,000 to federal government debt service) and mark to market adjustment on toxic paper and evaporating derivatives, and, the decline is inevitable.
But, we can still live well. Just far more frugally, and, hopefully, as a more humble nation.
*In more realistic terms, if the per capital income drops 10% the drop will be proportionately higher the lower one is in the economic food chain.