American Middle Class Is Caught in a Vise
Today the American middle class is caught in a vise: squeezed by debt and facing a devalued currency. Add to that an increasing cost of living, stagnant wages, taxes, and government over-regulation and it’s easy to see why the “bedrock” of the US economy is struggling to keep up. A Pew Research report published in December 2015 declared, “the middle class is losing ground.”
As Peter Schiff said during a recent interview with MarketWatch, the American middle class used to be the envy of the world and it thrived as a byproduct of economic freedom.
“We had a very dynamic free market economy and limited government. People were out there pursuing their own self-interest and creating employment opportunities. We had a very upwardly mobile economy and that peaked around the 1950s when the typical middle class American family consisted of a father with a job and stay-at-home mom who took care of the kids.”
Today, many middle class families live paycheck to paycheck even with dual incomes and still find it hard to make ends meet. And forget saving for the future. A survey by Bankrate.com (and reported by MarketWatch last summer) revealed that a large number of Americans remain woefully unprepared for even minor emergencies that come up on a fairly routine basis. About 28% of Americans have“zero dollars” saved for an emergency.
Another survey last year found that 62% of Americans find it difficult to cover unexpected events such as a $1,000 emergency room visit or a $500 car repair without resorting to credit cards. Instead of savings, the middle class is piling on debt. Peter highlighted just how much things have changed for the middle class over the years.
“By the time people retired 50 years ago, they were out of debt. Not today. A school teacher would go to America and be a big shot because he had a lot of money. The cost of living wasn’t as high. Today, it’s changed dramatically. The bar has been lowered dramatically. The middle class today would be poor by the standards of the 1950s. Today, with two people working they would still live paycheck to paycheck … Today, people have lots of consumer debt, auto loans, and student loans. Not only do people not have savings, they’re loaded up with debt. They have no real chance of retirement. People have more TV sets and cell phones. They don’t travel as much as they did. They don’t have as much leisure time. A husband would usually come home to a cooked meal. Now he has to help make the meal.”
Rather than offer viable solutions, politicians only pander to the middle class. Both Republicans and Democrats constantly make the middle class a focal point of their campaigns, but their rhetoric diverges significantly from reality. As Peter points out, it’s the programs and policies pushed by these same politicians once in office that have squeezed the American middle class in a vice.
“We’ve lost the free-market principles that gave us the free market in the first place. We have lots of regulation, higher taxes, much bigger government, and a much smaller middle class.”
The reality is we can’t depend on the government or the central bankers to work in our best interest. It’s up to us to take control of our financial lives and find ways to wiggle free from the vice.
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