Charles Hugh Smith, whom we've met in these pages many times before, illustrates the financial conundrum facing ordinary Americans like you and I - the 99% - compared to the wealthy - the 1%.
We've reached an interesting juncture in history, and I don't mean the pandemic. I'm referring to the normalization of extremes in the economy, in social decay and in political dysfunction and polarization.
Let's ask a very simple question. The S&P 500 stock index went up five-fold from its 2009 low at 667 to a recent high around 3,400. Did your income rise five-fold since 2009? Probably not.
Houses that sold for $150,000 in 2000 are now valued at $900,000, a six-fold increase since 2000. Did your income rise six-fold since 2000? Probably not.
State university tuition has risen about 2.5 times from 2004 to 2019. Did your income rise 2.5-fold since 2004? Probably not.
Even burritos from the local taco truck have tripled in price in the past 15 years. Did your income triple? Probably not.
The average household income in 2000 was about $42,000. To match the six-fold increase in urban housing valuations, that household would have to earn $252,000 this year. How many households saw their income soar from $42,000 to $252,000? Not many.
The average household income in 2009 was about $50,000. To match the five-fold increase in stock market valuations, that household would have to earn $250,000 this year. How many households saw their income soar from $50,000 to $250,000? Not many.
To keep up with tuition (never mind healthcare insurance), the household earning $45,000 in 2004 would have to bring home $112,000 this year.
The household earning $100,000 in 2004 would need to boost its income to $250,000 to keep up with college tuition. How many households boosted their income from $100,000 to $250,000 in the past 15 years? Not many.
In other words, what's been normalized over the past 20 years is the total subjugation of labor by central-bank inflated asset bubbles that benefit the top 0.1%. Labor has lost ground while assets have soared, leaving those whose income is earned less able to buy over-valued assets and more prone to borrowing money to maintain their lifestyle-- a situation I call debt serfdom.
There's more at the link.
Those figures also illustrate the insanity of the "official" inflation rate. It bears about as much relationship to reality as I bear to Mata Hari. It's been carefully calculated to include as many irrelevant factors as possible, and exclude as many relevant ones as can be achieved, for political purposes. (To illustrate just one aspect of that: if inflation were accurately calculated every year, Social Security and other inflation-index-linked payments would have to be vastly increased compared to their present, artificially-low levels. Neither Republicans nor Democrats can afford to do that, so they connive in covering up the real rate of inflation instead.)
Take a look at Mr. Smith's figures again, and compare your own income and expenditure over those same periods. Makes you think, doesn't it? We're all a whole lot worse off today than we were just twenty years ago. Where will we be in another twenty years? For that matter, where will we be twenty months from now? I'm not sanguine about the answer to that question.