A nation in the pangs of deleveraging – The long-term trend of a declining dollar and a collapsing middle class.
As Americans go out to vote many go blissfully unaware of the reality that our total public debt is now above $16.2 trillion. If your only source of information was the mainstream press this fact rarely came up in any debates or journalistic investigations. The discussion of stagnant household income never even came up in any of the important debates. It was all simply accepted that the decrease in the standard of living was somehow a normal part of the process. The squeeze in the middle is so extreme that we have dollar stores symbolically cropping up in places like the Silicon Valley and Beverly Hills. Rich and poor but very little left for the middle. While momentum continues to ebb the economy forward we are entering what you can describe as stagnation. An economy limping along while American households slowly undergo a painful process of deleveraging.
The great deleveraging continues
US households continue to deleverage as they undergo bankruptcy, foreclosure, and simply paying off existing debts. The appetite for new debt has been largely capped as the banking system recapitalizes through various subtle bailouts. The same result has not occurred for US households: