Quantifornication and An American Spring

By: Richard Mills | Fri, Apr 12, 2013
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As a general rule, the most successful man in life is the man who has the best information

Ironic isn't it? A record number of people on food stamps yet new highs for stock indices. Below is an interesting question posed by Michael Snyder. The answer is very important to your future.

"If the economy is getting better, then why does poverty in America continue to grow so rapidly? Yes, the stock market has been hitting all-time highs recently, but also the number of Americans living in poverty has now reached a level not seen since the 1960s. Yes, corporate profits are at levels never seen before, but so is the number of Americans on food stamps. Yes, housing prices have started to rebound a little bit (especially in wealthy areas), but there are also more than a million public school students in America that are homeless...should we measure our economic progress by the false stock market bubble that has been inflated by Ben Bernanke's reckless money printing, or should we measure our economic progress by how the poor and the middle class are doing?"

- Michael Snyder, infowars.com

CPIANUCNS - CPI

Consider:

A Rasmussen survey showed that only 39 percent believed the U.S. economy would be stronger in five years - the first time that figure has ever dipped below 40 percent.

The John J. Heldrich Center for Workforce Development at Rutgers University's survey showed that more than half of those surveyed believe the U.S. economy will not fully recover for another six years, and nearly one-third said the U.S. economy will never fully recover.


SNAP

Food stamp participation increased from about 17.2 million in fiscal year 2000 to 26 million people in July 2006. By August 2008, participation had reached an all-time (non-disaster) high of 29 million people per month.

Today roughly 15 percent (47.3 million) of Americans are on food stamps - the Supplemental Nutrition Assistance Program (SNAP).

Half of current SNAP recipients are children, and half of these ten million children live in extreme poverty, meaning family income is less than half the official poverty level.

In the 1970s, about one out of every 50 Americans was on food stamps. One in six Americans receives food stamps today.

Last year's average monthly benefit was $133 per person - Republican's are seeking $16 billion worth of cuts to the SNAP program over 10 years.

Three out of four households receiving SNAP benefits include at least one person who is working.

The ranks of America's poor have climbed to 50 million.


Dying Broke

Few Americans own any significant amount of financial wealth:

The Chained CPI and the CPI-U Since 2000
businessinsider.com


The class divide

The S&P 500 - an index of 500 large US companies - has finally, after a four year rally, recouped all of its losses from the 2008 global financial crisis.

The S&P 500 became the last major US index to hit a new high. The Dow Jones Industrial average has already climbed past its previous high.

The average net worth of the 400 wealthiest Americans, classified as the super rich, rose to an all-time record of $4.2 billion, up more than 13 percent from a year ago. Collectively, this group's net worth, currently at $1.7 trillion, is the equivalent of one-eighth of the entire U.S. economy.

"The vast majority of Americans are not the beneficiaries of this "buoyant economy." Rather, growing numbers of people have been thrown deeper into poverty and social distress. Long-term unemployment has become entrenched. Working families are saddled with growing debt and struggle to pay for housing and other basic necessities, let alone put aside anything for retirement...

The US Federal Reserve is pumping $85 billion a month in virtually free money into the financial system, fueling the stock market boom.This is more money in a month than the $76.6 billion the federal government spent all of last year to provide SNAP benefits to 47.8 million impoverished Americans." The two sides of the US economic "recovery", wsws.org

Income inequality is the highest it's been since World War II.

The ranks of the working-age poor are at the 1960s levels that led to the national war on poverty. One in twelve Americans are jobless, and 50 million live below the poverty line. Over 47 million people, many from middle-income families, now depend on social assistance for food. And across America, 1.5 million children are in families that have lost their homes.

It's obvious the 'recovery', concentrated as it is on just the stock market, has nothing to do with most Americans reality.

Average Income by Group, 1917 to 2011
washingtonpost.com

"Since the S&P 500 first reached its current level, in March 2000, the mad money printers at the Federal Reserve have expanded their balance sheet sixfold (to $3.2 trillion from $500 billion). Yet during that stretch, economic output has grown by an average of 1.7 percent a year (the slowest since the Civil War); real business investment has crawled forward at only 0.8 percent per year; and the payroll job count has crept up at a negligible 0.1 percent annually. Real median family income growth has dropped 8 percent, and the number of full-time middle class jobs, 6 percent. The real net worth of the "bottom" 90 percent has dropped by one-fourth. The number of food stamp and disability aid recipients has more than doubled, to 59 million, about one in five Americans." David Stockman, former director of the Office of Management and Budget under President Ronald Reagan


Stock Market Longevity

"On the earnings front, my concern continues to be that investors don't seem to recognize that profit margins are more than 70% above their historical norms, nor the extent to which this surplus is the direct result of a historic (and unsustainable) deficit in the sum of government and household savings. As a result, investors seem oblivious to the likelihood of earnings disappointments, not only in coming quarters but in the next several years. We continue to expect this disappointment to amount to a contraction in earnings over the next 4 years at a rate of roughly 12% annually."

- John Hussman, manager Hussman Funds, hussmanfunds.com

"Corporate profits are nothing if not mean-reverting. There are several explanations for this phenomenon; but whatever the cause, the current off-the-charts percentage of profits to GDP is highly unlikely to become an enduring feature of the New Normal. Especially not given the recent weakness across the rest of the data spectrum."

- John Mauldin, Mauldin Economics, mauldineconomics.com


Conclusion

We should we measuring our economic progress by how the poor and the middle class are doing. After all, besides the benefits being so narrowly focused, it hardly seems likely that the Fed induced stock market bubble, and off the charts corporate profits, are sustainable.

Quantifornication is the term I coined for what the Federal Reserve is selling to the world - the unrealistic, insane fiat dream that the monetary policy currently being employed by the Fed can fix the economy. It can't, you cannot fix a debt induced problem by adding more debt.

Welfares role's are going to grow, millions more will be looking for food stamps yet programs are being cut and taxes raised.

Is an American Spring coming? Certainly many of the same pressures that caused riots, civil disobedience and regime overthrow (perhaps this is why President Obama is militarizing the police and his government is buying ammunition - almost two billion hollow point bullets?) across the Arab world are beginning to build in America and for the very same reasons.

The Arab Spring had many causes, but chief among them was socio-economic turmoil - poverty, lack of adequate medical facilities and attention, low to no employment, low wages, disease, no clean drinking water, lack of shelter and shortages of food or unaffordable food can all cause socio-economic pressure to build.

"It seems to me there are very dangerous ambiguities about our democracy in its actual present condition. I wonder to what extent our ideals are now a front for organized selfishness and irresponsibility. If our affluent society ever breaks down and the facade is taken away, what are we going to have left?"

- Thomas Merton

"When you think about the largest central banks in the world, they have all moved to unlimited printing ideology. Monetary policy happens to be the only game in town. I am perplexed as to why gold is as low as it is. I don't have a great answer for you other than you should maintain a position." Kyle Bass, Hayman Capital, in a Bloomberg TV interview

"Gold is money, everything else is just credit."

- J.P. Morgan

Quantitative easing, a global currency race to worthless and a spring storm on the horizon means gold and silver bullion might be the best protection you can own and should be on all our radar screens. Are they on yours?

If not, maybe they should be.

 


 

Richard Mills

Author: Richard Mills

Richard (Rick) Mills
www.aheadoftheherd.com

Richard Mills

Richard lives with his family on a 160 acre ranch in northern British Columbia. He invests in the resource and biotechnology/pharmaceutical sectors and is the owner of Aheadoftheherd.com. His articles have been published on over 400 websites, including: SafeHaven.com, WallStreetJournal, USAToday, NationalPost, Lewrockwell, MontrealGazette, VancouverSun, CBSnews, HuffingtonPost, Beforeitsnews, Londonthenews, Wealthwire, CalgaryHerald, Forbes, Dallasnews, SGTreport, Vantagewire, Indiatimes, Ninemsn, Ibtimes, Businessweek, HongKongHerald, Moneytalks, SeekingAlpha, BusinessInsider, Investing.com and the Association of Mining Analysts.

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