“Resilient” American consumers are digging into their retirement funds to pay their bills.
Mainstream financial pundits, politicians, and Fed officials keep telling us the economy is strong because Americans keep spending money. They just assume this is a sign of economic strength without ever asking exactly how they’re paying for all of this “robust” spending.
One of the reasons Americans were able to continue spending even as price inflation raged was they saved a lot of money during the pandemic lockdowns. But those savings are nearly depleted, according to a study released by the Federal Reserve Bank of San Francisco.
Aggregate savings peaked at $2.1 trillion in August 2021. As of June, the San Francisco Fed estimated that aggregate savings had dropped to $190 billion.
Most people believe the Federal Reserve stabilizes the economy and our money. In reality, the central bank incentivized debt and destroys wealth. Is there a way to sidestep the destructive forces of central banking and fiat money?
T.W. Thiltgen believes there is a freedom train we can escape on — gold.
When I was about seven or eight years old, I remember my mom taking me to the bank to open a savings account. She explained that if I put some of my allowance in savings, that money would grow over time.
Well, that doesn’t work anymore.
The stock market continues to climb on coronavirus vaccine hopes. But why should it? After all, it didn’t sell off because of the pandemic. It’s at record levels despite COVID-19. In this episode of the Friday Gold Wrap podcast, host Mike Maharrey explains why this really isn’t about a vaccine. He also talks about one of the pernicious effects of this super-loose monetary policy – the theft of our savings.
In a podcast earlier this month, Peter Schiff talked about the “twin deficits” of national debt and trade. We’ve talked a lot about the federal debt spiral, and there has even been some discussion about it in the mainstream. But almost nobody is paying attention to the growing trade deficit. Peter is an exception. When the August numbers came out earlier this month, Peter noted it was the largest trade deficit in merchandise since the summer of 2008. And what happened right after the summer of 2008? The collapse of 2008.
The reason the trade deficit got that big is before the collapse, we had a bubble. We had a consumer debt binge where all the cheap money that was being created was feeding imports because Americans were taking their incomes, or their cheap money, and buying imported products. And so the big trade deficit was evidence of the bubble. And of course, the big trade deficits in and of themselves are unstainable.”
Antonius Aquinas has also taken note of the trade deficit. In the following article, he points out that tariffs aren’t going to make America Great Again. We need savings and investment, not a trade war.
Apparently, the American consumer has bought into the notion that everything is great in the economy. Consumer confidence surged to an 18-year high this month and is close to the all-time record.
The Conference Board Consumer Confidence Index jumped to 138.4, up from 134.7. Analysts expected a dip.
It’s time to get real. This grand economy everybody keeps telling us about is actually a house of cards built out of cheap money and debt. And it won’t take much to blow it over.
A recent article by Reuters reveals just how precarious the so-called economic recovery really is. According to the report, the bottom 60% of American income-earners accounted for most of the rise in spending over the past two years even as their finances worsened. The data shows that the rise in median expenditures has outpaced before-tax income for the lower 40% of earners in the five years to mid-2017. In other words, poor and middle-class Americans are driving the US economy by spending more than they earn.
Americans are spending money, but it appears they are dipping into their savings to do it.
According to data released by the US Bureau of Economic Analysis, savings last month fell to a level not seen since 2007. The 3.1% rate in September was the lowest since it dipped to 3.0% in December 2007.
In his most recent podcast, Peter Schiff reminded us of what was going on in late 2007.
