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Old 03-23-2019, 05:00 PM
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The economy is "booming"? Maybe not.


There are a number of ways to evaluate the status of the economy. Many of these relate to factors that are germane primarily to the wealthy, e.g. stock prices, and others are large, overall factors that regular people don't relate to, e.g. GDP, trade balance, etc. And maybe by those vague and distant measures, the economy is "booming," which is what we keep hearing. However, according to the federal reserve board, 40% of Americans could not come up with $400 for an emergency expense. $400 represents a fairly small emergency given the prices of, say, car repairs, home repairs, medical treatment, and the like. And since such emergencies are fairly common across a wide array of people, this seems to suggest that individual people are not only not experiencing "booming" times, they are precariously balanced on the financial edge between hope and doom.
Given the fact that so many people are without sufficient financial support, the status of the economy for individual people seems to be crappy, not booming. The economy, while a lovely expression for a huge system of interlocking sub-systems, is also the economic reality of individually lived lives. It's not booming.

Last edited by CC; 03-23-2019 at 05:01 PM.
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Old 03-23-2019, 05:06 PM
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However, according to the federal reserve board, 40% of Americans could not come up with $400 for an emergency expense.
How does that compare historically?
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Old 03-23-2019, 05:14 PM
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While I don't disagree with your analysis, I think you may be conflating objective aggregate measures of economic performance with economic disparities, which are both valid but entirely different things. It is possible, for instance, for the overall economy to be booming while an increasing number of people fall into financial distress -- indeed, I think this is increasingly the story of American society in the late 20th and the 21st century. And the performance of the stock market is generally a good indicator of overall economic health, pretty much by definition, actually, since it reflects the consensus of expectations. This is true even if only a minority of the population are direct participants. Not that I credit the Orange Wanker with any of it, and in any case, the Dow and S&P both recently dropped on recession fears.

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Old 03-23-2019, 05:18 PM
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In re recession fears: Search "inverted yield curve" and you'll get a pageful of scary articles from major outlets.

NPR has:

Quote:
Stock Indexes Drop As Bond Market Flashes Recession Warning
March 22, 2019
The stock market tumbled Friday as investors digested an ominous warning sign: Interest rates on long-term government debt fell below the rate on short-term bills. That's often a signal that a recession is on the horizon.

..."We don't see that occur that often, but when it does, it's almost always bad news," said Campbell Harvey, a professor of finance at Duke University.

That's why warning lights started flashing Friday morning when the yield on the 10-year Treasury note slipped below that of the three-month bill. The last time that happened was just before the Great Recession. ...


https://www.npr.org/2019/03/22/70607...ession-warning
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Old 03-23-2019, 05:19 PM
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There are a number of ways to evaluate the status of the economy. Many of these relate to factors that are germane primarily to the wealthy, e.g. stock prices, and others are large, overall factors that regular people don't relate to, e.g. GDP, trade balance, etc. And maybe by those vague and distant measures, the economy is "booming," which is what we keep hearing. However, according to the federal reserve board, 40% of Americans could not come up with $400 for an emergency expense. $400 represents a fairly small emergency given the prices of, say, car repairs, home repairs, medical treatment, and the like. And since such emergencies are fairly common across a wide array of people, this seems to suggest that individual people are not only not experiencing "booming" times, they are precariously balanced on the financial edge between hope and doom.
Given the fact that so many people are without sufficient financial support, the status of the economy for individual people seems to be crappy, not booming. The economy, while a lovely expression for a huge system of interlocking sub-systems, is also the economic reality of individually lived lives. It's not booming.
The bond market experienced an inversion between short and long term interest rates. Normally, returns are longer on longer bonds as holding IOUs with longer payout periods is more of a risk than those that are repaid in the short-term. The market is saying that shorter-term bonds are becoming riskier. This alone might indicate a recession is coming -- or it may be a false alarm. Nobody knows yet.

It's indeed alarming that so many households don't even have $400 in emergency savings - even more worrisome to think about how whatever they do have in the bank would shrink if the price of gas goes up like it did in the summer of 2008. And there are plenty of entities who want to see higher energy prices.
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Old 03-23-2019, 05:20 PM
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In re recession fears: Search "inverted yield curve" and you'll get a pageful of scary articles from major outlets.

NPR has:





https://www.npr.org/2019/03/22/70607...ession-warning
Sherrerd, you ninja, you.
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Old 03-23-2019, 05:22 PM
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How does that compare historically?
It's actually lower than it was in 2013 (50%). So comparatively, things are better, I suppose. But in absolute terms, the 40% number tells us that a LOT of people are not living like we are in a booming economy.
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Old 03-23-2019, 05:29 PM
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Sherrerd, you ninja, you.
I was discussing it yesterday on Twitter, so I was primed to slide into this thread.

But seriously: I'm sure none of us want to be rooting for the economy to tank, but on the other hand, maybe we're better off with a failing economy than with thermonuclear annihilation. (Or in other words, the faster we can get a majority of voters to demand that their Senators vote to convict the impeached Trump, the faster we can get started on fixing the economy, free of the fear that Deranged Donnie will end civilization.)

Last edited by Sherrerd; 03-23-2019 at 05:30 PM.
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Old 03-23-2019, 06:14 PM
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It's actually lower than it was in 2013 (50%). So comparatively, things are better, I suppose. But in absolute terms, the 40% number tells us that a LOT of people are not living like we are in a booming economy.
I was thinking of the last 200 years or so, not just the past few years. And in relative terms, of course,
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Old 03-23-2019, 07:26 PM
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It's the catch 22 of a consumption economy. A "booming" economy requires people to be spending their money, not sitting on it.

I know quite a few folks in that 40% earn very decent, middle-class salaries. Their problem isn't poverty, but that they do not know how to manage their money.
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Old 03-23-2019, 08:44 PM
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I know quite a few folks in that 40% earn very decent, middle-class salaries. Their problem isn't poverty, but that they do not know how to manage their money.
Could it be that the cost of housing and necessities are going up up up, and wages have been stagnant since the seventies? It couldn't be that, could it?
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Old 03-23-2019, 10:18 PM
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Could it be that the cost of housing and necessities are going up up up, and wages have been stagnant since the seventies? It couldn't be that, could it?
It could be, but ultimately it's just that those people are bad at money; that's why they have none. It has nothing to do with external forces that they cannot control or influence: it's all because of personal deficiencies that they have problems, right Coastal Maineiac?

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Old 03-24-2019, 12:20 AM
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Here's an inflation-adjusted chart of household income (not the same as salaries, I know, but it's what I could find) for the past 51 years, ending at 2018. The second chart has households divided into quintiles by income, as well as showing a line for the top 5%. The middle quintile has gone up 35% (adjusted for inflation) since 1967. That's an average of about 0.7% over inflation per year. The other quintiles have done worse or better, but that is the middle one. That's the 2nd chart.

The next chart down shows the same information by age group. For ages 34 and up, 2018 was their best year since 1967; for ages 19-33, however, their best years were 1999 and 2000 (the tech boom, if that's not coincidental) and since then they have lost from 2.2% to over 9%.

The top 5% in the second chart, and ages 65+ in the third chart, have had far the best percentage growth, which isn't surprising.
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Old 03-24-2019, 12:44 AM
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It could be, but ultimately it's just that those people are bad at money; that's why they have none. It has nothing to do with external forces that they cannot control or influence: it's all because of personal deficiencies that they have problems, right Coastal Maineiac?
In the case of the people I was thinking of when I wrote that, it is absolutely a money management issue. They make close to $80,000 per year (or so they claim, anyway), but live paycheck to paycheck, and would be unable to pay an extra, unanticipated bill unless it happened to come due on payday. And before anyone talks about costs of living, this is rural Maine, not Silicon Valley. A household income of $80,000 here is very well off.

I'm sure for many, it is due to circumstances beyond their control, and I don't mean to discount that. I'm also sure, after doing some quick online research, that the people I mentioned are not an isolated case, but are indicative of a wider problem in American society. Almost 60% of Americans do not follow a budget (cite). Poor financial decision-making is a very real problem in this country, and it is all fueled by the consumption based economy we have. Everywhere you go, the message is spend, spend, spend, and spend some more. And when you run out of money, be sure and apply for our store's credit card so you can spend even more. Actually saving up to buy something seems to be a rarity anymore. People seem to buy everything on credit these days, and only about 35% of credit card users actually pay the balance off at the end of the month (cite).

It's a personal soap box of mine, because I've known so many people who—even with incomes well above average—have run themselves to financial ruin by trying to keep up with the consumerist society. IMO, a big part of the problem is our society does not teach the value of saving or the perils of debt. If I had not had both instilled in me at a young age, I'd probably be in the same circumstances as the co-workers I mentioned above.
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Old 03-24-2019, 01:52 AM
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its been almost 12 years since the last recession so we're about due for one ....if our fearless leader gets reelected id like it to happen about 9 months in just to see how he react .....
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Old 03-24-2019, 06:59 AM
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I was discussing it yesterday on Twitter, so I was primed to slide into this thread.

But seriously: I'm sure none of us want to be rooting for the economy to tank, but on the other hand, maybe we're better off with a failing economy than with thermonuclear annihilation. (Or in other words, the faster we can get a majority of voters to demand that their Senators vote to convict the impeached Trump, the faster we can get started on fixing the economy, free of the fear that Deranged Donnie will end civilization.)
The added benefit is that maybe more people would come out of it with a better understanding of how republican policies in general screw the average person, irrespective of Trump, though I don't disagree with you there.

I doubt these types of adverse experiences really change people's minds or educate people unless they're so severe that they impact people on a deep and emotional level - like the financial crisis or more so, the great depression. My hypothesis is that it's only when people fear for their economic survival, watching neighbors around them disappear from their homes as they go into foreclosure or watching people in neighboring cubicles disappear as the pink slips roll out - only then do people start to 'get it'.
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Old 03-24-2019, 07:04 AM
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its been almost 12 years since the last recession so we're about due for one ....if our fearless leader gets reelected id like it to happen about 9 months in just to see how he react .....
Indeed we're due, and what worries me is how our current growth is being fueled.

With interest rates being still very, very low during a time of strong economic activity, there's a tendency for companies of all stripe to find novel ways to make money, which has often involved high risk investing. The high risk investing in the mid-2000s was in the form of repackaged mortgage debt; the high risk investing now involves collateralized debt obligations, which can involve different types of debt. But we're still talking about the same kind of set-up: investors are investing in debt markets not having any real idea about the risk. That's what worries me even more than a recession, because a major blow-up there could turn a recession into something much worse.
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Old 03-24-2019, 07:08 AM
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In the case of the people I was thinking of when I wrote that, it is absolutely a money management issue. They make close to $80,000 per year (or so they claim, anyway), but live paycheck to paycheck, and would be unable to pay an extra, unanticipated bill unless it happened to come due on payday. And before anyone talks about costs of living, this is rural Maine, not Silicon Valley. A household income of $80,000 here is very well off.

I'm sure for many, it is due to circumstances beyond their control, and I don't mean to discount that. I'm also sure, after doing some quick online research, that the people I mentioned are not an isolated case, but are indicative of a wider problem in American society. Almost 60% of Americans do not follow a budget (cite). Poor financial decision-making is a very real problem in this country, and it is all fueled by the consumption based economy we have. Everywhere you go, the message is spend, spend, spend, and spend some more. And when you run out of money, be sure and apply for our store's credit card so you can spend even more. Actually saving up to buy something seems to be a rarity anymore. People seem to buy everything on credit these days, and only about 35% of credit card users actually pay the balance off at the end of the month (cite).

It's a personal soap box of mine, because I've known so many people who—even with incomes well above average—have run themselves to financial ruin by trying to keep up with the consumerist society. IMO, a big part of the problem is our society does not teach the value of saving or the perils of debt. If I had not had both instilled in me at a young age, I'd probably be in the same circumstances as the co-workers I mentioned above.
I don't disagree that our society is poorly educated when it comes to managing personal household finances. But there's a difference between a household income of $80,000 and an individual income of $80,000 per year. Not to mention, a lot of earners are paying back loans for their degrees and paying high health insurance premiums. There's also the understanding that if someone gets injured or becomes ill, it's a financial game-changer. Even people with high income and relatively health savings are not necessarily financially secure.
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Old 03-24-2019, 08:15 AM
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The yield curve inversion usually means we have 2-6 quarters before shit/fan.

I don't think the emergency savings number tells us much, given how dependent that is on personal behavior.
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Old 03-24-2019, 09:44 AM
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It's hard for me to accept the fact that the $400 dollar stat is simply a reflection of bad money management strategies on the part of so many people. I do concede that we are inculcated with the ideas that spending and having "stuff" should be our goal. Hell, we're reading all these stories lately about college admissions and the underlying ethic in all that is that college is not for educating a person; it's for preparing them to get a job with a higher income. That's the goal. Income. Money. That impulse for accumulating more and more is everywhere. But it's simply stupid to leave yourself with no financial cushion at all. On the other hand, as many posts allude to, we have elected some pretty incompetent and corrupt people recently. Maybe we actually are stupider than I thought or hoped.
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Old 03-24-2019, 10:46 AM
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It's hard for me to accept the fact that the $400 dollar stat is simply a reflection of bad money management strategies on the part of so many people.
I don't know about the US but here in the UK we often have both adults in a family working full-time low-paid jobs (there are over a million unemployed which keeps wages low - never mind the unemployed disguised as being sick, despite ATOS) just to keep their heads above water and saving money can be very difficult. It's expensive being poor: you can't afford good quality clothing which lasts longer and is therefore cheaper in the long run, your utilities run on meters which charge more, you may need to use payday loan companies (ditto), junk food is cheaper and fills bellies and you may well be too tired to cook after a long day at your job and then your second job. And so on.
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Old 03-24-2019, 11:38 AM
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Sure, that's definitely a common scenario in the U.S. too, plus we have atrocious health care costs & insurance premiums as frosting on the shit cupcake. Oh, and mind boggling college debt, which traps workers geographically and causes enormous financial and economic problems.

I have read about the supposed "spend! buy!" mentality for years, and I know lots of people who earn decent money who barely scrape paycheck to paycheck. Exactly zero subscribe to that consumerist mentality - they're not scraping by AND buying tons of fancy shoes or whatever. They're scraping by due to the myriad negative factors mentioned above (including the U.K. post right above mine) and frankly, it's disheartening and insulting to keep reading drivel about how "all Americans buy too much stuff" and "anyone without savings has poor money management skills, full stop" when the consequences of crippling college debt and/or medical costs isn't exactly a cryptic mystery.
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Old 03-24-2019, 11:39 AM
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... It's expensive being poor...
Just so. This was part of my original point (not well stated), that the economy is not booming and we have only to look at how many people are barely getting by - as evinced by that $400 statistic. Yes, there are many, many acquisitive folks out there who don't manage their money well, and social pressures lead to that overspending/undersaving dynamic. But lots of people just don't have enough to handle anything but the very barest of necessities. The expression that the U.S. is a "land of plenty" does not apply to many, many people, and that says to me that the notion that the economy is just happily percolating along is a tragic misconception.
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Old 03-24-2019, 11:50 AM
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I don't know the data, but it does certainly seem like there's a perfect storm brewing that consists of rising costs associated with an aging population, and rising debts among young adults who invest in their education and training costs. Young adults are also compounding these mistakes by turning to high interest bearing debt to get by during lean times. What we're headed for is a time when the elderly will outlive their savings and people under the age of 50 won't produce enough income to give us a healthy tax base.

This is why before we can talk about anything like medicare for all, free college, minimum income guarantees and whatever, fair taxation and capitalism's imbalances have to be addressed and fixed. But I fear it won't because talking about taxation is like talking about how to read hieroglyphs for your average Dancing With the Stars-watching moron sitting at home. The imbalances of taxation represent the economic and power disparities in our system. What comes next are more brazen attempts to remind the rest of us that we're essentially disposable.

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Old 03-24-2019, 11:53 AM
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1) It's reckoned that if people married randomly, rather than marrying those with a similar income and educational level, the gini coefficient of the US would be 0.34 instead of 0.43. The growth of inequality is likely the result of women's rights being a success and a shrinking wage gap.

2) Most people who don't have $400 to spend for an emergency are bad with money. It's not an issue that they couldn't have that money, it's that they've chosen to not have that money. Put two dollars away every day for 7 months and you have $400 in savings; find a group of friends to get an apartment with, and shrink your rent by 3/4ths, instead of living by yourself because you can just barely afford to do so; etc. Taking money away from the wealthy to fight income inequality does make sense from a macroeconomic and social sense, but giving that money to the poor wouldn't put money into their savings, it would just get wasted. Taxed money for social care is better spent going directly to hospital care, vocation training, food stamps, etc. You have to restrict the use of the money to limited, reasonable, and productive purposes.

60%+ of people just can't save a dollar or budget to save their lives. Giving them more money doesn't change that, it just gives money to Vegas and thereby the mafia.
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Old 03-24-2019, 12:24 PM
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Taking money away from the wealthy to fight income inequality does make sense from a macroeconomic and social sense, but giving that money to the poor wouldn't put money into their savings, it would just get wasted. Taxed money for social care is better spent going directly to hospital care, vocation training, food stamps, etc. You have to restrict the use of the money to limited, reasonable, and productive purposes.

60%+ of people just can't save a dollar or budget to save their lives. Giving them more money doesn't change that, it just gives money to Vegas and thereby the mafia.
Let's consider why people, particularly low-income and younger people, might have less income today than they did a generation ago:

1) Housing costs have rising faster than household income - by some.

https://www.apartmentlist.com/renton...th-since-1960/

2) Costs of education (and presumably career training) have also increased - by some - relative to income:

https://www.marketwatch.com/graphics...-now-and-then/

People essentially have the same amount of money, but two major factors that impact entry into the middle class have declined significantly.

What hasn't declined? Disparities in salary and wealth at the very top echelons of society.

In the 1950s, executives made 20 times what the average worker made; now he makes 360 times what an average worker makes. Consider, too, that the top 1% of all people who about 45% of this country's wealth.

https://www.forbes.com/sites/dianahe.../#3b74a39c776d

But that's not really the most telling statistic; the most telling stat is that for the bottom 50% of this country, mean net worth dropped from $30,000 to just over $10,000 between 2007 and 2013.

https://en.wikipedia.org/wiki/Wealth...panel_-_v1.png

Maybe that's why half this country is "so bad with money" -- they simply don't have any. We might not necessarily see it, but the Great Recession absolutely crushed millions and millions of people financially in this country.

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Old 03-24-2019, 01:11 PM
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I don't know about the US but here in the UK we often have both adults in a family working full-time low-paid jobs (there are over a million unemployed which keeps wages low - never mind the unemployed disguised as being sick, despite ATOS) just to keep their heads above water and saving money can be very difficult. It's expensive being poor: you can't afford good quality clothing which lasts longer and is therefore cheaper in the long run, your utilities run on meters which charge more, you may need to use payday loan companies (ditto), junk food is cheaper and fills bellies and you may well be too tired to cook after a long day at your job and then your second job. And so on.
Some of the things you mention (e.g. payday loans) are living beyond one's means.
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Old 03-24-2019, 02:05 PM
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Maybe that's why half this country is "so bad with money" -- they simply don't have any. We might not necessarily see it, but the Great Recession absolutely crushed millions and millions of people financially in this country.
People have always been bad with money. That ain't new.

Everything else you wrote had nothing to do with anything. Not only did I not deny the growth of income inequality, I said that it's a thing, explained why it is occurring, and I encouraged fighting it by taxing the wealthy. Giving me a list of examples of how income inequality is so too a thing and bad for society is not of large value given that I also said that it is so too a thing and bad for society.
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Old 03-24-2019, 02:14 PM
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People have always been bad with money. That ain't new.

Everything else you wrote had nothing to do with anything. Not only did I not deny the growth of income inequality, I said that it's a thing, explained why it is occurring, and I encouraged fighting it by taxing the wealthy. Giving me a list of examples of how income inequality is so too a thing and bad for society is not of large value given that I also said that it is so too a thing and bad for society.
The consumer economy is fueled by people who are bad with money. That's one reason economic problems related to consumption can snowball quickly.
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Old 03-24-2019, 04:19 PM
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Just so. This was part of my original point (not well stated), that the economy is not booming and we have only to look at how many people are barely getting by - as evinced by that $400 statistic.
How much would they have saved if the economy weren't booming - more, or less?
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The expression that the U.S. is a "land of plenty" does not apply to many, many people, and that says to me that the notion that the economy is just happily percolating along is a tragic misconception.
The US is a land of plenty. Some people are still bad at managing their money, and how the economy is doing doesn't change that.

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Old 03-24-2019, 04:51 PM
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People have always been bad with money. That ain't new.

Everything else you wrote had nothing to do with anything. Not only did I not deny the growth of income inequality, I said that it's a thing, explained why it is occurring, and I encouraged fighting it by taxing the wealthy. Giving me a list of examples of how income inequality is so too a thing and bad for society is not of large value given that I also said that it is so too a thing and bad for society.
It's not just income inequality that I was talking about. If the bottom half of American adults had an average net worth of $30,000, there would still be inequality, but even among the lower end of the economic spectrum, the average person would be much better off than they were 10 years ago -- like 3 times better off.

We're not talking about the bottom ten percent, or the bottom quintile or even the bottom quarter; this the bottom 50% of working-age people in this country who, already relatively poor, have about 1/3 of what they had a decade before. If you're just getting by, losing 2/3 means that there's a good chance that many of those who were just getting by are probably on their way to homelessness and destitution. Once people are stripped of their most basic needs, whether they're good with money or not no longer matters; it's a game of basic survival that point.
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Old 03-24-2019, 05:39 PM
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The growth of inequality is likely the result of women's rights being a success
Could you please expound on this or provide a cite to back it up?

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60%+ of people just can't save a dollar or budget to save their lives.
I don't know if the number is 60%, but there is a sizable percentage of folks who have no idea how to save money. Instead of a UBI, perhaps we would be better served paying health insurance premiums and a monthly food stamp allowance for each American.
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Old 03-24-2019, 05:58 PM
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The consumer economy is fueled by people who are bad with money.
Cite?
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Old 03-24-2019, 09:20 PM
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The US is a land of plenty. Some people are still bad at managing their money, and how the economy is doing doesn't change that.
Ah, there's an insight! So if someone is poor, it's their own damn fault, amirite? You wouldn't by any chance be of a Republican inclination, would you?

Yes, the US is a land of plenty -- plenty of natural resources, plenty of land, plenty of money. That's not the issue. The issue is the extent of how lopsided the distribution of national wealth is compared to other similar societies. Which is why when independent analysts rank the US relative to other first-world countries on important socioeconomic metrics like income inequality, income security, poverty, crime, general level of happiness, and general population health, the US invariably gets a shitty ranking far down on the list.
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Old 03-24-2019, 10:39 PM
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Could you please expound on this or provide a cite to back it up?
https://www.nber.org/papers/w19829
https://en.wikipedia.org/wiki/Nation...nomic_Research
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Old 03-24-2019, 11:03 PM
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Cite?
Well, for example, there's the high levels of credit card debt and impulse buying among US consumers:
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one out of five Americans report having spent more than $1,000 on an impulse buy [...]

Interestingly, Americans are also reporting feeling financially strapped, with two-thirds of Americans saying they can't handle an unexpected $500 car repair or a $1,000 emergency room bill.
Consumer culture is constantly trying to get us to pay more attention to how much we want something than whether we can afford it. Yes, I think it's fair to say that consumerism encourages financial irresponsibility and vice versa.
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Old 03-24-2019, 11:08 PM
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The issue is the extent of how lopsided the distribution of national wealth is compared to other similar societies.
Right. When normal life needs such as health care, education, and elder care have a high probability of landing a household with crippling levels of debt, then we can't just dismiss worrying trends in household finances as merely individual instances of people being "bad at managing their money".
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Old 03-24-2019, 11:18 PM
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The consumer economy is fueled by people who are bad with money. That's one reason economic problems related to consumption can snowball quickly.
While that is true and that is an interesting point, I'm not sure that the thrust of your argument is correct.

For example, I just sent my girlfriend a picture the other day of the egg section at the supermarket, commenting, "Pre-cracked eggs for people too lazy to crack their own eggs":

https://www.dropbox.com/s/o7w0za67ou...0029.jpeg?dl=0

Imagine if the money that went into the R&D for shell-free eggs had gone into solid-state battery research. Which is actually better for the economy over the long-run?

The general trend of consumerist spending is on cheap thrills and short-term solutions. To be sure, sometimes it leads to something like the smart phone and that's desirable by all means, but more often it's Vegas and pre-cracked eggs.

Whereas, the general trend of investor and government spending is on things that advance the state of technology, so that the more real quality of life - not having to work in the coal mines, not having to work 100 hours per week, etc. - are improved.

Consumerism has its place, but in a country with pre-cracked eggs and an average BMI of 26.5, I think it's fair to say that we're over the recommended dosage at the moment.
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Old 03-24-2019, 11:25 PM
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Instead of a UBI, perhaps we would be better served paying health insurance premiums and a monthly food stamp allowance for each American.
Probably. I also quite like the idea of Sweden's "club activity funding" initiative:

https://en.wikipedia.org/wiki/Sverok

It keeps people healthy, active, and social instead of sitting at home, watching TV and getting fat. But, note, you're not forced to go outside and be social, it's just cheaper to go do things with a local club.
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Old 03-25-2019, 05:06 AM
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It's hard for me to accept the fact that the $400 dollar stat is simply a reflection of bad money management strategies on the part of so many people.
It's not "simply" that, so I don't think you need to accept that. Obviously one needs income in order to save any of it. And wealth and income do correlate.* But unless one is at the very extreme, there are always better or worse savers with more or less income. Ability to save goes up as income goes up, but so does ability to spend. Hell I consider myself a good saver. But I make 5x what I did 10 years ago and didn't put that all into savings. Nowhere close. Many of us have coworkers or relatives who struggle financially when we are not or did not, and those anecdotes color perception.

In order for emergency savings to be useful as an indicator, we need to understand how it changes with changes to income, other economic indicators, time, and with human behavior. And I just don't think we have enough data to get much use out of a one-time or occasional survey like this.

* Fuzzily. Pretty pictures and discussion here: https://dqydj.com/correlation-of-inc...-america-2016/
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Old 03-25-2019, 05:53 AM
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It is difficult for people of very low income to save; what about people with middle income? Are they driven by American consumerist ideals and the power of commercial advertising to spend beyond their means?

I'm NOT proposing that advertisements be banned! (I'm an INTP not an INTJ.) But can we acknowledge that the American consumerist spirit has drawbacks?

The savings rate for Germany and Japan is 28%. The U.S. is at 17.5%, behind every other developed country except U.K. It is this low savings rate that is the source of both our huge trade deficit and the impending financial shortfalls from Baby Boomer retirements. (Like a party where the host never runs out of champagne and cocaine the trade deficit fuels a great American boom that will go on and on and on ... until suddenly the music stops.)
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Old 03-25-2019, 07:05 AM
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I was discussing it yesterday on Twitter, so I was primed to slide into this thread.

But seriously: I'm sure none of us want to be rooting for the economy to tank, but on the other hand, maybe we're better off with a failing economy than with thermonuclear annihilation. (Or in other words, the faster we can get a majority of voters to demand that their Senators vote to convict the impeached Trump, the faster we can get started on fixing the economy, free of the fear that Deranged Donnie will end civilization.)
I must have been under a rock. When was Trump impeached?
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Old 03-25-2019, 07:08 AM
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It's not "simply" that, so I don't think you need to accept that. Obviously one needs income in order to save any of it. And wealth and income do correlate.* But unless one is at the very extreme, there are always better or worse savers with more or less income. Ability to save goes up as income goes up, but so does ability to spend. Hell I consider myself a good saver. But I make 5x what I did 10 years ago and didn't put that all into savings. Nowhere close. Many of us have coworkers or relatives who struggle financially when we are not or did not, and those anecdotes color perception.

In order for emergency savings to be useful as an indicator, we need to understand how it changes with changes to income, other economic indicators, time, and with human behavior. And I just don't think we have enough data to get much use out of a one-time or occasional survey like this.

* Fuzzily. Pretty pictures and discussion here: https://dqydj.com/correlation-of-inc...-america-2016/
One thing that strikes me in your graphic (thanks for that, btw) is that older people tend to have more savings despite less income.

We have a window of time in which we have to get our finances in order. That window starts to close at around 45-50 years of age. At around that age, we've probably maximized our income potential (not all cases certainly, but most). We're as desirable and 'hireable' as we'll ever be (young enough to be trainable and mature enough to have experience to go with it). And our bodies haven't begun to break down in noticeable ways just yet. But once you get into your 50s, and preferably before then, you want to be adding to your net worth, not paying off debt. Someone who's perennially earning minimum wages is going to need help later in life, and that's true even if they're careful not to take on a lot of debt.

I don't know this for fact but I suspect that in a lot of cases, people who have $400 or less in emergency savings could be perennial minimum wage earners, but they may also be technically 'middle class' according to IRS income level, but may have taken on large sums of debt. One growing problem these days is the amount of college debt that is being taken on either by 20 and 30 somethings, or by their parents who are nearing retirement. Whether it's the child or parent paying, it's unhealthy because it either jeopardizes the graduate's ability to build wealth, or it jeopardize's the parents' wealth that has been accrued. Another growing problem is that Americans just aren't healthy, and that costs money - lots of it in some cases. Whether we're talking about obesity or addiction, this is something that's threatening our future as a healthy economy. And again, consumerism is probably to blame to some degree, though I am also a believer in personal responsibility myself.
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Old 03-25-2019, 08:10 AM
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Student debt, to a degree, is about consumer choice. Yes, sticker prices have become ludicrous. But fewer students are paying sticker price. For whatever reason, there's some price insensitivity when credit is easy.

There's no denying even the cheap options have gotten more expensive. But public two-year colleges are still averaging under $4k tuition/fees. Still not effortless if you're barely scraping by. And if you don't graduate, that money spent or borrowed isn't doing much for you. But the stories about tens of thousands of dollars of undergraduate debt are unusual and typically a matter of choice over cheaper options.

https://trends.collegeboard.org/coll...oard-over-time
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Old 03-25-2019, 08:14 AM
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More graphics here, showing 25/50/75th percentile income by age. Obviously we're not doomed to follow those traces, but the difference between percentiles stops changing as we approach 40.

https://dqydj.com/income-percentile-by-age-calculator/

Last edited by Ruken; 03-25-2019 at 08:14 AM. Reason: It helps if I actually post the link
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Old 03-25-2019, 09:57 AM
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While that is true and that is an interesting point, I'm not sure that the thrust of your argument is correct.

For example, I just sent my girlfriend a picture the other day of the egg section at the supermarket, commenting, "Pre-cracked eggs for people too lazy to crack their own eggs":

https://www.dropbox.com/s/o7w0za67ou...0029.jpeg?dl=0

Imagine if the money that went into the R&D for shell-free eggs had gone into solid-state battery research. Which is actually better for the economy over the long-run?

The general trend of consumerist spending is on cheap thrills and short-term solutions. To be sure, sometimes it leads to something like the smart phone and that's desirable by all means, but more often it's Vegas and pre-cracked eggs.

Whereas, the general trend of investor and government spending is on things that advance the state of technology, so that the more real quality of life - not having to work in the coal mines, not having to work 100 hours per week, etc. - are improved.

Consumerism has its place, but in a country with pre-cracked eggs and an average BMI of 26.5, I think it's fair to say that we're over the recommended dosage at the moment.
The money for R&D has to come from somewhere, consumerism is our economic base, it shifts money from the earner class into the investor class. When the economy begins to turn downward it is the smart money that begins to save first, contributing to the downturn, but not as greatly as the next phase when the dumb money consumerists start running out of money.

None of this may matter right now, the situation has changed because of record low unemployment, I think the economic problems are more of a market concern, a bursting bubble will hit the investor class creating a soft recession, unless there's a lot more fraud and mismanagement than we can see right now.

There are other ways it's hard to assess this situation. There are plenty of people who only have $400 in savings right now, but not all of them are on the low end of the economic scale doing their best to save $400. There are plenty more who just have high enough income that they can stop wasting money and build up more savings rapidly. Again, the high employment figures change the formula, I don't see any reason businesses would rapidly shed all the jobs created in the last several years, so far fewer people run out of money as a result of an economic downturn.

Since this is the Pit I feel free to present my own theories, feel free to disregard them if you like, but I think these are all things to consider if you want to prognosticate on the future of the economy.
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Old 03-25-2019, 10:39 AM
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according to the federal reserve board, 40% of Americans could not come up with $400 for an emergency expense. $400 represents a fairly small emergency given the prices of, say, car repairs, home repairs, medical treatment, and the like.
This isn't a good measure of economic performance, because spending-and-not-saving is deeply embedded in some of American culture. Some people will just spend whatever they earn and not sock away savings. Sure, there are many Americans who can't afford to save because they are living on a knife's edge as you speak, but many other Americans earn more than enough to meet their needs and still blow it anyway. The reason they have no savings isn't necessarily because of a bad economy.
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Old 03-25-2019, 11:36 AM
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The growth of inequality is likely the result of women's rights being a success
So you are equating women's rights with the fact that more women, particularly married women, are in the work force now than 50 years ago?

That's a bit of a stretch, IMO.
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Old 03-25-2019, 02:04 PM
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While that is true and that is an interesting point, I'm not sure that the thrust of your argument is correct.

For example, I just sent my girlfriend a picture the other day of the egg section at the supermarket, commenting, "Pre-cracked eggs for people too lazy to crack their own eggs":

https://www.dropbox.com/s/o7w0za67ou...0029.jpeg?dl=0

Imagine if the money that went into the R&D for shell-free eggs had gone into solid-state battery research. Which is actually better for the economy over the long-run?

<snip>

Consumerism has its place, but in a country with pre-cracked eggs and an average BMI of 26.5, I think it's fair to say that we're over the recommended dosage at the moment.
They apparently should be spending more on advertising, because you totally missed the point. Egg Beaters are not "pre-cracked eggs," they are fortified egg whites. They contain far less cholesterol than shell eggs.

Just Crack an Egg bowls contain no eggs at all; they're instant breakfasts that you have to add your own egg to.

So those "pre-cracked eggs" are actually reducing our BMI. Nice try, though.
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Old 03-25-2019, 02:24 PM
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So you are equating women's rights with the fact that more women, particularly married women, are in the work force now than 50 years ago?

That's a bit of a stretch, IMO.
I'm not sure if you're being sarcastic or failed to write what you intended correctly. It's not what I was saying but, yes, women's rights successes have lead to there being more women in the with force than 50 years ago. And no, that's not a stretch.

On the other hand, what I pointed it is that a macroeconomic research organization famous for spitting out Nobel Laureates and Federal Reserve heads equates assortative marriage, in an age when women laborers have successfully climbed the economic ladder, to income inequality across the general population.
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