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richardhutnik on 08 October 2011
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mrstickball said:
binary solo said:

I'm not sure what the point of your point A) is. That's pretty much a given. However I've heard some economists say that there has been no true economic growth since the late '60s. What looks like growth since then has basically been achieved by going into debt and the interest accumulated on that debt has negated any apparent growth that's been achieved from the borrowed amount.

As to your point B). That there is the problem. Those of us who are among the richest 10% (hell even the richest 20%) SHOULD feel rich. Why don't we? because there's stuff we don't need that we want but that we can't afford, and we also know that our material situation is quite fragile mostly because we are all in debt up to our eyeballs (mostly from having a mortgage). There's bound to be plenty of other factors. Those who are poor who think of themselves as lower middle class don't realise how badly off they are, they seem to be living on some kind of social hallucinogen but all the while they still suffer from the various ill effects of poverty. They think that because they aren't homeless they are living a prettty average life.

As one Australian put it: when he was a kid in the 70's his dad worked, and his mother didn't. He dad had a median wage sort of job. They could afford to throw a steak on the BBQ whenever they wanted and they lived a comfortable life. Now someone with a family doing the same level job can barely make ends meet and inevitably both parents need to work to get ahead. Is that really economic progress? Seems kinda arguable to me.


The problem with that statement is that is very, very inaccurate.

If you have a 2-income home and cannot make ends meet, you have a problem. Period. I've ran the numbers over and over again, and the reality is that a two-income household, even earning minimum wage each, working 40hrs/wk should be doing rather well for themselves as long as they didn't live a lavish lifestyle.

The reality of differences between Mr. 1970's and Mr. and Mrs. 2011 is that Mr. 1970's didn't have massive credit card debit because he had to have the newest HDTV, car, or PC. Mr. 2011 usually does. In 1970, the average family had a credit card burden of under $300. In 2008, it was $8,000 USD. At an APR of 19.9%, that means that each US household is paying $2,000 a year just to service their credit card debt, much less buying needed things for the family! Additionally, credit card debt as a percentage of household income has risen from 3% in 1980 to about 15% in 2000 and has held generally steady since then. This has a huge draining effect on the health and well-being of the poor and middle class household.

This is just one example, but there are many when it comes to comparing the household of the 1970's to 2010, but the reality is that spending habits are vastly different which causes a lot of strain. I've seen it personally, and can attest to its negative effect on income and savings... Among other things.

And, with this trend reversing, look for economic activity to slow down.  A large chunk of economic activity in America, which also then impacts China and any nation importing to America, is going to be affected by this.