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Income Gap in America hits a Record High
The income gap has widened between the young and old more than ever before in America. According to the census data released on Monday, the typical U.S. household lead by an individual 65 or older has a net worth of 47% more than a household lead by an individual under 35 years old. There really is no shock that this gap has doubled in the last 5 years and is up nearly 5 times from about 25 years ago. It really does reflect the tough times that the world is facing. Most everyone, since the crash of 2008, has lost some of what they have accumulated in terms of their net worth. For many of the baby boomers, their homes and 401k have decreased in value. If they were fortunate enough not to have lost their job during major waves of layoffs that might have been the extent of their losses. However, for the younger crowd across the board, it’s important to understand that in general there really was no such thing as a foundation and the majority of whatever they had was an accumulation of debt that has valued this crowd with an extremely low net worth.
The median net worth of a household led by someone 65 years or older is $170,494, according to the Census Bureau. The median household net worth of a younger individual was $3,662, according to a study done at Pew Research Centre. Thirty-seven percent of younger aged households have net worths of 0% or less. To live relatively basic and excluding anything extravagant or fancy, the minimal and mandatory expenditures are substantial and make any sort of savings very difficult for young people.
The downward spiral for America’s youth has been worsened with more and more taking on additional student loans and returning to school to make an attempt to educate themselves out of the depression. Due to the timing of young families being in a position to own a home, many got caught up with purchasing their home during the boom or even at the peak which would have had significant impact on the net worth of young households. Many individuals who have the redistribution of wealth mentality are proposing that because of these numbers, things like social security and Medicare should be cut to some extent from seniors and given to struggling younger families that are having a difficult time getting a foothold into the race.
There is really no worse time to be a young person with absolutely nothing trying to get on their own, start a family, and live a normal lifestyle in terms of the economic climate. There is a major leap for individuals in their 20s who are living with their parents to actually be able to support themselves on their own because the cost of living now is much more of a burden. Of course this can be attributed to high unemployment, high gas prices, expensive groceries, out of control insurance costs, etc. Now the ones who are managing the best are the older generations that are established. Many of them have their mortgages locked in for 20 plus years or better yet, have homes that are paid off. Some are even at points where they are ready to retire because of the long-term decisions that they have made over the years to position themselves. Even for the ones that are not ready to retire, it directly impacts the youth who are getting out of college and hoping to replace many of these positions that would have normally been opened. There really is an uphill battle that the youth are facing and the government isn’t helping because they are only encouraging them to get into more debt to pay for their overpriced college education that is only making them poorer and putting them even more behind.
It’s important to understand the relationship between why the rich get richer and the poor get poorer during situations like this. When inflation kicks in, the ones who will be paying for it will suffer and the ones who own the “inflatable” assets increase in wealth. For those older populations who own the majority of assets and wealth, they are the ones who are going to increase in their net worth and not be as crushed by the rising costs.
It will be very interesting to see what will happen during the next few months with all the latest buzz coming from the Presidential front-runner Herman Cain. He has denied all accusations, but the accusers aren’t backing down. The potential outcomes from this are that the American population will turn their back on him and reject him for what he was accused of doing or that many more people who were never really turned on to him will now actually take some time to listen. Maybe someone should come out and accuse Ron Paul of sexual harassment and put him in the mainstream spotlight so that the soundest message can actually get through to the American people. Go Ron Paul!!!
Some positive news to report is that job openings in the U.S. rose to a three-year high. This in-part means that companies are anticipating some improvements in the economy, but is also accounting for seasonal employment that is going to take place during the holidays. Job openings increased by 225,000 to 3.35 million which is actually the most seen since August 2008. Though some positive news, Lindsey Piegza an economist at FTN Financial in New York said, “we are still far from the robust levels needed to dent the elevated level of unemployment.” CrushTheStreet.com
tends to be a little more blunt than that and will just flat out say that one step forward after a million steps back does not signify anything.
Here’s some more insignificant economic hype. Private payrolls were up by 104,000 as of November 4. A number hardly worth mentioning considering that there are 14 million people unemployed according to the government and significantly more considering underemployed and individuals who have fallen off the list because they have gone longer than 99 weeks without finding a job. Speaking of unemployment, there has still been no updates on whether or not benefits will be extended again at the end of the year. This will be a devastating time for those who are depending on the government’s aid to get by. This is also a good time to remind our readers to continue to think about the future and store food and have some protection. The small hype and volatile jolts in the stock market aren’t going to fix the fundamental issue that we are facing.
Fannie Mae is now seeking $7.8 billion dollars in aid after reporting their losses. This government sponsored had a net loss of $5.1 billion dollars in the last 3 month period. The borrowing brings their total draw from the government to $112.6 billion, which only $17.2 million has been repaid thus far. Freddie Mac reported a $4.4 billion dollar loss and said it will seek an additional $6 billion from the treasury.
USA Today reports that foreclosures will go on for years and could take decades to clear out. New research shows that it will take 8 years to clear out the 2.1 million homes in foreclosure or with serious delinquent mortgages. The courts in New York and New Jersey have imposed new rules last fall that will now take lenders up to 50 years to clear their books of foreclosures that they currently have. Why is it when the government tries to help one person, they end up screwing an other?
President Obama and Ben Bernanke may feel like the heat is somewhat off their back with the mess Europe is going through, but Peter Schiff tends to feel like the dollar is in worse shape than the euro and the time will come when the U.S. dollar will face some serious backlash.
See what Peter Schiff has to say in the featured video that we currently have posted on our front page, CLICK HERE TO WATCH!!!
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“The rich are richer and the poor are poorer, in the city than elsewhere; and, as a rule, greater are the riches of the rich and the poverty of the poor.” -Josiah Strong
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