Fed doublespeak and the dismantling of the middle class: Fed states dropping “patient” word doesn’t mean it is impatient on rates. In 1970 roughly 7 percent of all income was earned by the top 1 percent. Today it is closer to 20 percent.

Thursday, March 19, 2015
By Paul Martin

MyBudget360.com
3/18/2015

The Fed has taken a page out of George Orwell’s 1984. Doublespeak is all the rage and the Fed’s statements are analyzed as if sifting for gold. Even when they don’t do anything markets jump. The Fed sets the tone on our debt addiction. The Fed dropped the word “patient” in terms of increasing interest rates but then goes on to say this doesn’t mean that it will be impatient. Say what? The Fed hints at tapering and balks because it claims there is “low inflation” but when we look at real inflation, the price of many items is shooting up dramatically. Many of these items were staples of the middle class including an affordable college education, a home, and being able to earn a good wage. Back in 1975 roughly 7 percent of all income earned went to the top 1 percent. Today it is closer to 20 percent. The last time it was this high was during the years prior to the Great Depression.

Share of income

The middle class is being dismantled by economic forces. More Americans find that they are working in the low wage economy that is booming. For most households income does matter because this is how you finance your life. The Fed has created a system where savers are punished. Negative interest rates punish traditional savings. It makes stocks, junk bonds, and other speculative items seem more lucrative. Those that take on big levels of debt are encouraged. So it is no surprise then that all items financed by debt are suddenly going up in price: housing (mortgages), college (student debt), and cars (auto debt). Yet the larger gains are not trickling down to workers.

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