A Dismal ShareThe Dow fell back below 17,000 on Wednesday, after Wal-Mart warned that it was having trouble selling things to people with no money – at least online. Its e-commerce efforts don’t seem to be paying off as quickly as it hoped. Why?
“[A]ccording to the Social Security Administration’s wage records, there were 100 million workers who held any kind of paying job during 2013, who earned a collective total of just $1.65 trillion that year. That amounts to the incredibly small sum of just $16,500 per average worker. And not for a small slice of the labor force but fully two-thirds of all Americans with a job.”
“Evidence of how far the bottom 50% of America’s wealth distribution has fallen comes from Credit Suisse in its 2014 Global Wealth Report. As interpreted by Mike Krieger, the data show that the bottom half of America’s wealth distribution ranks dead last among 40 major economies, with “just 1.3% of national wealth. Only Russia comes close to that dismal share, at 1.9%.””
At the Diary, how much other people earn is none of our business. And we have no truck with those who urge the feds to “do something” – by which they mean take away money from rich Peter and give it to poor Paul.
The feds are not very good at it. Much of the money sticks to their hands. Also, Peter has friends in high places. Speaking fees, lobbying jobs, campaign contributions – when Peter talks, the feds listen.
Besides, we’re suspicious of the feds’ motives. The common critique of Fed policy is that it was a “mistake” to push down rates so low for so long. And now, the poor federales are having trouble getting rates up off the floor. Last month, Janet Yellen – supposedly in good faith – believed the world was not ready for it.
The essence of larceny is taking something that doesn’t belong to you without permission. Imagine the poor retiree. He has saved his money all his life. Now, in his twilight years, is he not entitled to his recompense?
But instead of earning a decent rate on his savings, he gets the ultra-low rate that is fiddled by the feds. He gets almost nothing. This is not just an abstract point to be argued by economists. It is theft.
Think of the aging person who had $100,000 saved in 2007. If he had earned 4% a year on his money, he would have earned $28,000 in interest since then. But if he got only 1% (or less), he would be short $21,000. What happened to it? Who took it?
They are busy too – lobbying… eating foie gras and caviar… and offering to save the world with increasingly radical monetary policies. They are, of course, those who pay net interest, not those who earn it. Who exactly?
The U.S. federal government is the biggest debtor in the world (in terms of the total dollar amount owed). Who gained the most from the federales’ policy? The federales themselves. And who else?
The cronies, of course – Wall Street and corporate America. They were rich before the massive intervention began in 2008. Now, they are much richer.
“But you never offer any solutions. What would you do about it?”
“We would do nothing. We would undo a lot,” we replied.
The first thing we would undo is the Fed’s control of the financial system. Let takees get the interest they are entitled to. And let the takers get what they’ve got coming to them.