While the President asserts that the economy is on the mend and prosperity is within reach for all, those living outside the Washington beltway, who earn their keep through honest work, recognize this as little more than a comforting delusion.
True, certain areas like North Dakota have experienced genuine economic growth thanks to advancements in fracking technology uncovering vast oil reserves in the Bakken Shale, resulting in the lowest unemployment rate in the nation at just 3 percent.
However, a broader look reveals that many are still stalled in neutral. A recent study conducted by Sentier Research indicates that American households are struggling more now than they were four years ago, at the peak of the recession. According to their findings, household income has plummeted by 4.4 percent. Let’s delve into some of the study’s significant insights…
“Based on new estimates from the monthly Current Population Survey (CPS), real median annual household income has experienced a 4.4 percent decline since the so-called ‘economic recovery’ commenced in June 2009, even though it has rebounded somewhat from its lowest point in August 2011. When adding this post-recession drop to the 1.8 percent decrease experienced during the recession, median annual household income is now 6.1 percent lower than it was in December 2007.”
This research clearly shows that for most households, there has been no recovery. Incomes have stagnated, sitting well below pre-recession levels.
Hidden Forces of Economic Law
The government may be hesitant to acknowledge this reality because doing so would mean admitting the failure of their policies. Moreover, their inflationary measures tend to obscure the visibility of falling incomes. Even though many people intuitively sense that something is amiss, the precise dynamics remain elusive.
Renowned British economist John Maynard Keynes illuminated this in his 1919 work, *The Economic Consequences of the Peace*:
“Through a continuous process of inflation, governments can covertly extract a significant portion of their citizens’ wealth.
“There is scarcely a more subtle or effective method to disrupt the existing societal framework than to corrupt the currency. This process leverages all the concealed forces of economic law toward destruction, all while remaining undetectable to the vast majority.”
It’s essential to understand that inflationary policies are currently the norm amongst the U.S. government and many others around the world. However, most individuals do not adjust their income figures for inflation. Instead, they perceive an increase—or at the very least, stability—in their earnings, even as they recognize, perhaps subconsciously, that their purchasing power has diminished.
Fortunately, the diligent researchers at Sentier Research took the time to perform the necessary inflation adjustments for us…”
Things Are Getting Better and Other Popular Lies
“After accounting for fluctuations in consumer prices, the median annual household income fell during the officially defined recession from $55,480 in December 2007 to $54,478 in June 2009. Despite the supposed ‘economic recovery’, where unemployment remained alarmingly high, median annual household income continued to decline, hitting a low of $50,722 in August 2011. By June 2013, it had recovered somewhat to $52,098 (seasonally adjusted estimates).”
Since 2008, Federal Reserve Chairman Ben Bernanke has tripled the Fed’s balance sheet while reducing the federal funds rate to nearly zero. Either of these actions alone is questionable; together, they present an unprecedented monetary experiment. Even Alan Greenspan, Bernanke’s predecessor, who was known for his lax economic policies, never ventured this far.
By artificially decreasing the cost of money, the Fed aims to stimulate demand and drive economic growth. But thus far, in what can only be described as the weakest recovery since World War II, aside from saving large financial institutions and allowing the Treasury to accumulate immense debt, the Fed’s efforts have yielded negligible results.
Although the Fed operates with the best intentions, the reality is that American households are worse off today. Instead of making strides, they are in fact losing ground.
“Now, today, five years after the onset of the Great Recession, America has fought its way back,” the President claimed last month.
Despite such assertions, it’s clear to many that the situation is not improving. Both Obama and the Federal Reserve have perpetuated a narrative that simply isn’t true.
Sincerely,
MN Gordon
for Economic Prism
Return from Things Are Getting Better and Other Popular Lies to Economic Prism