Friday, December 03, 2010

We the Servants of the Fed's Multi-Trillion Bailout.

Very recently, it was revealed that the Federal Reserve not only paid out trillions of dollars to Wall Street and the American elite, but they included the international elite as well. 
"The financial crisis stretched even farther across the economy than many had realized, as new disclosures show the Federal Reserve rushed trillions of dollars in emergency aid not just to Wall Street but also to motorcycle makers, telecom firms and foreign-owned banks in 2008 and 2009."
Meanwhile,  in the rest of the United States, where we the people reside, the prices of basic necessities - food, energy, and healthcare - continues to rise, as about 2 million Americans are set to lose their unemployment in December (despite proof that unemployment insurance pays off in more ways the one) and millions more will start the new year with less income due to cut-backs in state and federal government spending, underemployment, frozen wages, and frozen Social Security cost of living adjustments (COLA) which have not kept up with inflation for years as it is.

So, the transfer of wealth continues, just asunemployment rates, which have remained stubbornly high, since the economy crashed in 2008, continue. It's fairly safe to say that unemployment is a chronic and deep-rooted problem. Yet,  we seldom hear about the detrimental impact that unemployment can have on the economy due to insufficient income going to those who would surely spend it - we the people -  thus returning earnings back to the stream of purchasing power necessary to the circular flow of production and income.

In other words, who is going to buy back the output of the economy if most of the "income" is in the hands of the wealthy?  The rich have the option of saving and/or investing their income, and not necessarily in the United States, therefore increasing their wealth at the expense of people who have no choice but to spend their income short-circuits economic flow.

Nevertheless, despite a $13 trillion national debt, the push to give tax breaks to billionaires goes on. Republicans are demanding a two-year extension of all Bush tax cuts.

This means that the historically long duration of unemployment will more than likely have a snowball effect on the employment and earnings recovery of too many Americans, even as the economy appears to be recovering in general.

And, as always, the poor get hit the hardest:

According to the U.S. Census Bureau, median household income in the United States fell from $51726 in 2008 to $50221 in 2009.

According to the U.S. Census Bureau, 29 states reported lower median incomes than the U.S. median, while 20 states and the District of Columbia reported higher median incomes than the overall median.

The government’s formula for poverty is only based on the states with the lowest cost of living, therefore, double the federal poverty level is normally required throughout most of the US, to provide a family with basic necessities such as food and housing, according to the National Center for Children in Poverty.


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