Hang on, this is going to be long and will go pretty far off topic to make a larger point.
For the past 30-40 years there has been a big squeeze on labor to gain profits, as well as a FED and Treasury policy to avoid inflation (which destroys capital, because it is essentially a tax on investment). These inflation-avoiding policies include jacking up the interest rates, deregulating the banks, opening up the capital markets, and we essentially globalized the production.
The big, long-term problem is wages have not kept pace with production. For instance, a Minimum Wage tied to productivity (i.e. output of the company) since the 1960s would today be on the order of $23/hr. Labor can’t complain about things too much or else they will watch as their jobs get shipped abroad (as has happened). That gap between productivity and wages has been widening, and becomes corporate and shareholder profits. On top of that, the wages are kept so absurdly low which effectively forces many people who work full-time jobs onto the government housing, medical, and food programs just to make ends meet. In a sense the government (city, state, and federal) are subsidizing the low wages these companies pay.
Another way to look at it is the people at the lower end of the pay scale* pay a regressive ‘tax’ through their low wages (*officially this refers to full-time employees making $11k for one person, or $24k or less for a family of 4; note the ‘living wage’ is considered roughly $30k/yr, and that the MAJORITY of American workers make LESS THAN $22/hr – or approx. $44k/yr). This compounds when government spending is cut and the very programs people rely on to make ends meet suddenly are unavailable to help them, and of course their employers aren’t going to simply raise their wages, etc. The richest country in the history of the world, at the wealthiest point of its history, and over 50% of workers make only slightly a bit above the amount considered to be subsistence wages. No wonder so many people are merely a paycheck or two, or one bad health issue, away from living on the street. The richest country in the history of the world, and half of its citizens is poor or in poverty. This seems to be the very definition of a failed system.
Unfortunately 94% of the jobs created over the last 20 years are part-time, irregular, have no benefits, are ‘independent contractor’-types, etc. Therefore while it may be true that we have a very low official unemployment rate, the actual truth is that people are hardly any better off. This is the first generation in US history to have an average standard of living that is worse than their parents’.
As a result of this people leverage themselves up to their eyeballs in debt, just to live. US citizens currently hold somewhere over $4.5T in unsecured credit card debt. And now that credit card debt is being used to back commodity vehicles the way mortgages were used to back securities.
The pain we went through by cutting a ~$2.5T hole in the economy where mortgage-backed securities used to be will be small potatoes compared to the pain the entire world will feel when the coming burst of the commodity bubble occurs. At least the mortgage-backed securities were somewhat secured because they were backed by actual houses which have actual value, and were liquidated into the real estate market to soften the blow to the overall economy. If the commodity bubble happens to burst then we are all royally f**ked, because there isn’t really anything backing the CC debt and therefore there isn’t anything to soften the eventual blow.
If that happens I wouldn’t be surprised to see people show up with (figurative) torches and (figurative) pitchforks and fire up the (figurative) guillotine in the public square.
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