Tuesday, May 25, 2010

More Evidence That It Has Been a Manipulated "Recovery"

Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year, a USA TODAY analysis of government data finds.

At the same time, government-provided benefits — from Social Security, unemployment insurance, food stamps and other programs — rose to a record high during the first three months of 2010.

Those records reflect a long-term trend accelerated by the recession and the federal stimulus program to counteract the downturn. The result is a major shift in the source of personal income from private wages to government programs.

The problem with this is that money used in government "benefit" programs, along with make-work and make-industry programs, do not create physical goods and services that the people want.

It's a very manipulated "recovery" that will crush the standard of living in the country.

USA Today quotes Donald Grimes on why this is not sustainable:

The trend is not sustainable, says University of Michigan economist Donald Grimes. Reason: The federal government depends on private wages to generate income taxes to pay for its ever-more-expensive programs. Government-generated income is taxed at lower rates or not at all, he says. "This is really important," Grimes says.
 The U.S. is quickly following the path of the PIIGS, but the size of the U.S. means there isn't any other country around that can bailout the U.S. once China stops buying U.S. debt. At that point the nonsense has to stop, and the government has to go through debt restructuring, or it's massive inflationary money printing by the Federal Reserve. There will be no other choices.

1 comment:

  1. What if anything is not manipulated in this country? Bernanke and the Federal Reserve crew continue to manipulate interest rates under the guise of stabilization. Courtesy of Ben and Company’s manipulative actions, our parents who made measurable sacrifices to provide food, shelter and education for their kids and still managed to save money for retirement are hosed given you would need a $500 million savings account to receive a $50,000 annual retirement income.

    As if Ben is not dangerous enough, the government manipulates every conceivable piece of economic data including birth/death models, GDP and the CPI placing additional burden on those that actually focused on building a better life for others and proudly focused on the needs of others.

    This country remains the most prolific bubble maker on the face of the planet. While congress and their chummy lobbyist buddies cut deals at the local pub, 40 million Americans rely on food stamps to place food on the table. We are nearly 2 years into the implosion of the self imposed financial meltdown with no financial reform and the manipulative deal making continues.

    Our grandchildren deserve honest and forthright representation. The financial burden placed on their shoulders due to self centeredness, incompetence and greed of other generations is simply shameful and ethically criminal.

    Okay, the vigilant grandpa has spoken. Well, I do have a few other “opinions” at vigilantgrandpa.blogspot.com.

    Special thanks to the Economic Policy Journal as you are "grandchildren friendly" and I thank you!