By the numbers, the economy really is doing very well. GDP growth has been spectacular and unemployment is some of the lowest ever recorded, especially among minorities and women. Then of course you have the stock market making record gains on an almost weekly basis. Overall, it’s hard to find a weak spot in America’s economy at the moment.
Being president, Trump has taken much credit for the booming economy, and as well he should. His policies and actions have put the American economy on the right track and as I said earlier, by the numbers it all looks great.
However, there is one aspect of the economy, and it’s one Trump really has no control over, that is slowly going to derail any notions of a good economy for most people. And that thing is the cost of living, or out of control inflation.
As most of you reading this probably have already experienced, the cost of living seems to be going up by the month. Inflation that you use to feel over the period of years now seems to creep up in between visits to grocery store or local restaurant. Food prices have been one of the worst items when it comes to price increases.
Next we have the cost of housing. Most cities are struggling with affordable housing. Even in smaller cities, the average one-bedroom apartment can run you $1800 a month if you want to live in a safe area. That’s nearly $22K a year just for an apartment. So for someone making $30K a year, that only leaves $8k to live on for the entire year. An almost impossible task.
So once you’ve spent nearly 70% of your income on an apartment, you’ll need a car to get to work. But car prices have jumped 60% in some cases in just the last 10 years according to this CBS News report below. In the news report, we find a new Ford Explorer can run you over $800 a month. Something to has led to the 8-year car loan being the norm for many people.
So now that we see inflation has made basically everything virtually unaffordable, we have to ask to what has caused this runaway inflation.
Well, the answer is simple. It’s very low interest rates for the last few decades along with QE (quantitative easing) which is essentially a backdoor method for printing money out of thin air. With QE, central bankers basically buy the government’s bonds to add fake liquidity into the system.
Imagine it like this. You open a shoe store. Once open, you come in posing as a customer and buy all of your own inventory. Then you go the the bank and tell them how great your business is because you sold out of all your inventory. The bank gives you a loan and you do it all over again. Of course, anybody can see this is all fake and no real value is being produced, but according to central bankers this is sound monetary policy.
So you basically have the main policies of the Federal Reserve are both made to increase money supplies, which in turns makes every dollar worth less. It also happens to create an updraft of money towards the top 1% as the regular Joe spends more and more money for the same items year after year.
You see, at first inflation was seen as a bad thing by central bankers, but now they realize it funnels money to the top. It’s extracting wealth and buying power from the poor and middle class and consolidating it at the top. And with low interest rates and cheap money, the wealthy can buy up every asset they can get their hands on with cheap borrowed money.
But the real bad news is the fact that nothing can be done about it at this point. It’s gone on for far too long, and now trying to undo it would crash the economy which has become addicted to the flow of cheap money to keep itself afloat. So the central bankers are just going to let it play out until it self-destructs. A time when people simply can’t afford the basic necessities of life even after taking on second and third jobs as Uber drivers or food delivery couriers.
So if you’ve noticed prices at the local grocery store or your favorite restaurant seem to be going up every time you visit, you’re right. But sadly, you’re also most likely witnessing the impending implosion of our fiat-based economic system, and the middle class.
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