Understanding the Expanding Wealth Gap

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Kenedy Signing Bill into Law

A rising tide lifts all boats, these were the words of President John F. Kennedy. He spoke them before he set in motion of series of tax cuts that strengthened the economy and saw revenue to the government increase. It was not a new concept, Calvin Coolidge did the same, lifting the U.S. economy out of the terrible post WW I depression. Reagan, in turn, did much the same and with similar results. Booming economic times and increased tax revenue are the predictable result of the government lifting its heel off the neck of the economy. A lesson proven over and over again, but still an enigma to those with agendas to push.

The present president sees not the wisdom of the past; morally, socially or economically. He would rather forge his own path, determined in his own mind that his is the right way, no matter the mounting evidence to the contrary. This is especially true when it comes to the economy. A few voices have been warning that things have gone awry, dangerously awry. Famously and most notably, Steve Forbes, Peter Schiff and David Stockman have been ringing the warning bells. This despite coming from different economic philosophies. This site, and a multitude of others, have been trying to awaken people to the dangers ahead as well, but to little avail. The main stream media and the profit hungry pundits on financial shows have ignored the problems, leaving most Americans in the dark. That could be starting to change.

The driving force for re-examining the present course has not been a closer look at the underlying facts, but the leftest screaming about the growing income gaps. They of course miss the underlying issues at hand, but their point, in this case, is partially legitimate. The problem is not that the rich are getting richer, that is of little consequence, what is, is the fact they are getting wealthier while everyone else is struggling. As Kennedy said, “a rising tide lifts all boats,” but that is not what is happening. The tide is stagnant or even still ebbing but for a few select boats. A classic case of trickle up economics,

FED StimulusWhile blaming the Federal Reserve (FED) has been historically looked down upon by the liberal press, such has not been the case for many economists and financial experts. This last week, David Stockman, adviser to President Reagan, and the man responsible for trickle down economics, went on CNBC and FoxNews to ring the alarm bells once again. (Read his latest analysis of FED actions here) What he and others are saying is that present increase in income disparity is fundamentally different. Not a product of differing economic success, but rather a product of having access to the Federal Reserve’s free money. Leftest rags like the New York Times are lamenting the increasing income gap under Obama as well, but without the corresponding insight of a Stockman or Schiff.

American debt, business and personal combined, has increased and now exceeds what it was before the crash. Nations are also leveraged beyond sustainable levels. While the perils facing Europe, China and Japan are being shouted from the rooftops, American issues have been largely ignored. The U.S. economy, now officially dropping back into its lazy semi-growth pattern, is a hollow shell. Only energy has shown real growth and that is now taking a hit from low oil prices. Stock market highs driven by quantitative easing and zero interest rates, are merely fancy colors painted on an egg shell containing a core of stench filled rot.

The present flight to the dollar, like on and off again flights to gold, is a reflex reaction to trouble ahead. Like rats jumping from a fast sinking ship to one that is also sinking, albeit slower.The dollars apparent rise will be temporary, only waiting on the popping of the stock market bubble or other calamity to send it crashing down again. Once things start going south, everyday Americans will be devastated and put at the mercy of the cash infused rich. This is not capitalism, it is not socialism, it is absolute insanity.

The above graph will be shown again and again in economic posts until it shows up in the mainstream media. It illustrates the extent to which the Federal Reserve has distorted the economy, the monetary system and put the world at risk! The plunging velocity represents the rate at which everyday Americans are spending money. The stratospheric increase in the money supply represents the transfer of wealth to the upper classes. Like water running up hill, the FED has managed to make the laws of economics seem irrelevant. The wealthy need not a vibrant and growing economy to feed their bank coffers, just a complacent set of bankers at the Federal Reserve. In today’s world, it is not a choice between a bond bubble or a stock bubble, the FED has managed to create both at the same time. Of course, the laws of economics are not irrelevant and present mirage of prosperity can only exist so long, and then it must all come crashing down.

How long before Obama’s trickle up economy buckles under the load? Years, months, weeks or days, it is anyone’s guess. A good bet would it will be sooner than later. The stock market is once again trading at insane profit to value ratios. Real estate is in huge bubble as well, prices are rising even as private ownership continues to plunge, values being propped up by corporate investors using nearly free FED magic cash. Bonds prices and the dollar are soaring, even as interest rates remain low. Enjoying these good times, the rich are buying any and everything with a high price tag. Add to this, the debt issues, leverage capital problems, and huge national debts, you get a picture is not pretty. One thing is for certain, the longer it takes for the bubbles to burst the worse the collapse will be.

“The Conservative Mind”

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