The 21 Key Statistics About The Explosive Growth Of Poverty In America

If the economy is getting better, then why does poverty in America continue to grow so rapidly? Yes, the stock market has been hitting all-time highs recently, but also the number of Americans living in poverty has now reached a level not seen since the 1960s. Yes, corporate profits are at levels never seen before, but so is the number of Americans on food stamps. Yes, housing prices have started to rebound a little bit (especially in wealthy areas), but there are also more than a million public school students in America that are homeless. That is the first time that has ever happened in U.S. history.

So should we measure our economic progress by the false stock market bubble that has been inflated by Ben Bernanke’s reckless money printing, or should we measure our economic progress by how the poor and the middle class are doing? Because if we look at how average Americans are doing these days, then there is not much to be excited about. In fact, poverty continues to experience explosive growth in the United States and the middle class continues to shrink. Sadly, the truth is that things are not getting better for most Americans. With each passing year the level of economic suffering in this country continues to go up, and we haven’t even reached the next major wave of the economic collapse yet. When that strikes, the level of economic pain in this nation is going to be off the charts.

The following are 21 statistics about the explosive growth of poverty in America that everyone should know…

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1 – According to the U.S. Census Bureau, approximately one out of every six Americans is now living in poverty. The number of Americans living in poverty is now at a level not seen since the 1960s.

2 – When you add in the number of low income Americans it is even more sobering. According to the U.S. Census Bureau, more than 146 million Americans are either “poor” or “low income”.

3 – Today, approximately 20 percent of all children in the United States are living in poverty. Incredibly, a higher percentage of children is living in poverty in America today than was the case back in 1975.

4 – It may be hard to believe, but approximately 57 percent of all children in the United States are currently living in homes that are either considered to be either “low income” or impoverished.

5 – Poverty is the worst in our inner cities. At this point, 29.2 percent of all African-American households with children are dealing with food insecurity.

6 – According to a recently released report, 60 percent of all children in the city of Detroit are living in poverty.

7 – The number of children living on $2.00 a day or less in the United States has grown to 2.8 million. That number has increased by 130 percent since 1996.

8 – For the first time ever, more than a million public school students in the United States are homeless. That number has risen by 57 percent since the 2006-2007 school year.

9 – Family homelessness in the Washington D.C. region (one of the wealthiest regions in the entire country) has risen 23 percent since the last recession began.

10 – One university study estimates that child poverty costs the U.S. economy 500 billion dollars each year.

11 – At this point, approximately one out of every three children in the U.S. lives in a home without a father.

12 – Families that have a head of household under the age of 30 have a poverty rate of 37 percent.

13 – Today, there are approximately 20.2 million Americans that spend more than half of their incomes on housing. That represents a 46 percent increase from 2001.

14 – About 40 percent of all unemployed workers in America have been out of work for at least half a year.

15 – At this point, one out of every four American workers has a job that pays $10 an hour or less.

16 – There has been an explosion in the number of “working poor” Americans in recent years. Today, about one out of every four workers in the United States brings home wages that are at or below the poverty level.

17 – Right now, more than 100 million Americans are enrolled in at least one welfare program run by the federal government. And that does not even include Social Security or Medicare.

18 – An all-time record 47.79 million Americans are now on food stamps. Back when Barack Obama first took office, that number was only sitting at about 32 million.

19 – The number of Americans on food stamps now exceeds the entire population of Spain.

20 – According to one calculation, the number of Americans on food stamps now exceeds the combined populations of “Alaska, Arkansas, Connecticut, Delaware, District of Columbia, Hawaii, Idaho, Iowa, Kansas, Maine, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Oklahoma, Oregon, Rhode Island, South Dakota, Utah, Vermont, West Virginia, and Wyoming.”

21 – Back in the 1970s, about one out of every 50 Americans was on food stamps. Today, close to one out of every six Americans is on food stamps. Even more shocking is the fact that more than one out of every four children in the United States is enrolled in the food stamp program.

Unfortunately, all of these problems are a result of our long-term economic decline. In a recent article for the New York Times, David Stockman, the former director of the Office of Management and Budget under President Ronald Reagan, did a brilliant job of describing how things have degenerated over the last decade…

Since the S&P 500 first reached its current level, in March 2000, the mad money printers at the Federal Reserve have expanded their balance sheet sixfold (to $3.2 trillion from $500 billion). Yet during that stretch, economic output has grown by an average of 1.7 percent a year (the slowest since the Civil War); real business investment has crawled forward at only 0.8 percent per year; and the payroll job count has crept up at a negligible 0.1 percent annually. Real median family income growth has dropped 8 percent, and the number of full-time middle class jobs, 6 percent. The real net worth of the “bottom” 90 percent has dropped by one-fourth. The number of food stamp and disability aid recipients has more than doubled, to 59 million, about one in five Americans.

For the last couple of years, the U.S. economy has experienced a bubble of false hope that has been produced by unprecedented amounts of government debt and unprecedented money printing by the Federal Reserve.

Unfortunately, that bubble of false hope is not going to last much longer. In fact, we are already seeing signs that it is getting ready to burst.

For example, initial claims for unemployment benefits shot up to 385,000 for the week ending March 30th.

That is perilously close to the 400,000 “danger level” that I keep warning about. Once we cross the 400,000 level and stay there, it will be time to go into crisis mode.

In the years ahead, it is going to become increasingly difficult to find a job. Just the other day I saw an article about an advertisement for a recent job opening at a McDonald’s in Massachusetts that required applicants to have “one to two years experience and a bachelor’s degree“.

If you need a bachelor’s degree for a job at McDonald’s, then what in the world are blue collar workers going to do when the competition for jobs becomes really intense once the economy experiences another major downturn?

Do not be fooled by the fact that the Dow has been setting new all-time highs. The truth is that we are in the midst of a long-term economic decline, and things are going to get a lot worse. If you know someone that is not convinced of this yet, just share the following article with them: “Show This To Anyone That Believes That ‘Things Are Getting Better’ In America“.

Article Source: Zerohedge

More Monetary Quackery

Central Banks Urged to Drop their ‘Fear of Inflation’

An example for the relentless pro central planning and pro inflation propaganda we are regularly confronted with nowadays is a recent editorial at Bloomberg, entitled “Central Banks Must Master Their Fear of Inflation”. Here is an excerpt from this pro-inflation screed:

“The details get complicated, but the basic reasoning is straightforward. Although nominal interest rates can’t fall to less than nothing, real (inflation-adjusted) interest rates can. To push real short-term interest rates as low as it deems necessary, a central bank merely has to achieve a sufficiently high rate of inflation. (A nominal interest rate of 3 percent is a real rate of 3 percent if prices are expected to be stable, but a real rate of only 1 percent if inflation is expected to be 2 percent.)

In fact, the central bank only has to promise to raise inflation and be believed — that’s enough to change real rates. This is a promise a central bank, and only a central bank, is in a position to make.

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Could it therefore make sense for the Federal Reserve to promise, say, three years of 4 percent inflation as a way to drive real short-term interest rates lower? Theoretically, it turns out, the answer is yes. Yet the idea fills most central bankers, raised on the consensus forged in the 1980s, with dread.

The dread is understandable. If higher inflation becomes entrenched, bringing it down again may require a policy-induced recession. Any central banker will tell you that anchoring inflation expectations is vital for economic stability. Few want to be suspected of even considering a controlled dose of higher inflation — in fact many would say there is no such thing.

This thinking is counterproductive. Modern central banks pay lip service to the idea of transparency and insist they want their actions to be better understood. When it comes to discussing the trade-off between inflation and a more rapid recovery, they prefer to look away.

Lately, however, this reluctance has collided with the inescapable reality that, with all the advanced economies growing so slowly, maintaining or increasing monetary stimulus through QE is necessary. At the same time, central banks know that doing QE while promising to keep inflation very low is partly self-defeating.

Which brings us to the important question: As part of a new monetary-policy framework, can central banks openly aim for a therapeutic spell of higher-than-target inflation while containing the danger that the treatment would go too far?

The answer’s unclear, and the central banks’ unwillingness to confront the issue squarely isn’t helping the discussion. Our view is that a new target, tied to nominal incomes or to the level of future prices rather than the rate of inflation, could serve this purpose. (For a more thorough examination of this idea, see this accompanying essay.) There are good reasons to fear inflation. But no one should be so afraid that the subject can’t even be discussed.”

(emphasis added)

The fact that such arguments are forwarded in editorials and by many modern-day economists is simply stunning. Even if one knew absolutely nothing about economic theory and were instead only aware of economic history, one should recoil from such ideas. The very same argument – namely that there is a ‘trade-off between growth and inflation’, read: inflation can somehow ‘create growth’ – has for instance been made the members of France‘s revolutionary assembly in 1789. And for a while it seemed that they were right. These men were not stupid; they thought: ‘all we will do is give the economy a brief shot in the arm, until it is revived again, then we will stop’. But then it turned out that they simply could not stop.

They then proceeded to deliver a historical achievement of some distinction: they completely destroyed two currencies in a row, back-to-back (the ‘assignat’ and the ‘mandat’). For a detailed account of that experiment, see “Fiat Money Inflation in France” (pdf) by Andrew Dickson White. This is a text everyone should read – it stands as a monument for the folly of continually trying to ‘stimulate’ the economy by means of inflation. It also shows how well educated men can, in spite of actually knowing better, easily fall for committing this abject error.

As Ambrose Evans-Pritchard recently remarked quite correctly, the very same fate awaits the Fed and BoE’s ‘QE‘ operations. They will never be ‘reversed’. In fact, prominent academic economists are making precisely this argument, namely that ‘QE‘ should just be continued forever!

“Columbia Professor Michael Woodford, the world’s most closely followed monetary theorist, says it is time to come clean and state openly that bond purchases are forever, and the sooner people understand this the better.

“All this talk of exit strategies is deeply negative,” he told a London Business School seminar on the merits of Helicopter money, or “overt monetary financing”.

He said the Bank of Japan made the mistake of reversing all its money creation from 2001 to 2006 once it thought the economy was safely out of the woods. But Japan crashed back into deeper deflation as soon the Lehman crisis hit.

“If we are going to scare the horses, let’s scare them properly. Let’s go further and eliminate government debt on the bloated balance sheet of central banks,” he said. This could done with a flick of the fingers. The debt would vanish.

Lord Turner, head of the now defunct Financial Services Authority, made the point more delicately. “We must tell people that if necessary, QE will turn out to be permanent.”

(emphasis added)

That the dangerous quack quoted above is regarded as the “world’s most closely followed monetary theorist” is shocking, though perhaps not surprising. We have previously discussed the question of central banks canceling the government debt they hold and what to expect from such a move. It doesn’t need to be repeated, except to say that it would compound the foolishness of the current path of policy.

One really wonders why people have lately sold gold. It seems to make little sense in light of the widespread mainstream views on what the ‘correct’ monetary policy should consist of. Monetary cranks abound wherever one looks. The ultimate outcome of all this inflationary experimentation is preordained, so people have every reason to be very concerned about preserving the value their assets. Of course we are well aware that markets can often behave in an irrational manner for extended time periods. In fact, this is what allows astute speculators and investors to make profitable trades, as there are frequently opportunities created by the markets getting it wrong. In this particular case it is still astonishing, considering how blindingly obvious it is in which direction things are currently moving. Mr. Woodford wants to ‘scare the horses’. We are wondering why they are not scared yet – but we suspect they will be soon enough.

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Michael Dean Woodford, a proponent of ‘QE forever’ who even wants central banks to cancel the government debt they hold, thus enshrining the inflation of recent years irrevocably.

Article Source: Zerohedge

Sprott: Why SocGen Is Wrong About Gold’s Imminent ‘Demise’

A Retort to SocGen’s Latest Gold Report

Société Générale (“SocGen”) recently published a special report entitled “The end of the gold era” that garnered far more attention than we think it deserved.  The majority of the report focused on SocGen’s “crash scenario” for gold wherein they suggest that gold could fall well below their 2013 target of US$1,375/oz. It also included a classic criticism that we’ve heard so many times before: that the gold price is in “bubble territory”. We have problems with both suggestions.

To begin, the report’s authors appear to view gold as a commodity, rather than as a currency. This is a common misconception that continues to plague most gold market analysis. Gold doesn’t really work as a commodity because it doesn’t get consumed like one. The vast majority of gold mined throughout history remains in existence today, and the total global gold stockpile grows in small increments every year through additional mine supply. This is also precisely why gold works so well as a currency. Total gold supply can only grow marginally, while fiat money supply can grow exponentially through printing programs. This is why gold’s monetary value is so important – it’s the only “currency” in play that is immune to government devaluation.

Chart A illustrates the relationship between the growth of central bank balance sheets in the US, EU, UK and Japan and the price of gold. This relationship has an extremely high correlation with an R2 of about 95%. As central banks increase the size of their balance sheets through ‘open market operations’ to buy bonds, mortgage-backed securities (“MBS”) and the like, they inject more fiat dollars into their respective banking systems. As gold has a relatively stable supply, if there are more dollars available, the price of gold should rise in dollar terms. It’s really a very simple and intuitive relationship – as it should be.

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Global -Central -Bank -Assets -vs -Gold

Source: Bloomberg and Sprott Asset Management LP

This relationship between central bank printing and gold has existed since the beginning of the gold bull market in 2000. In fact, this relationship shows that for every US$1 trillion increase in the collective central banks’ balance sheets, the price of gold has generally appreciated by an average of US$210/oz.

Somewhat surprisingly, it turns out that the collective central bank balance sheets have actually shrunk over the past three months – by approximately US$415 billion. The biggest drop was seen in the ECB’s balance sheet, which shrunk by the equivalent of US$370 billion, while other central banks also experienced small declines. Based on our simple model above, a decrease of US$415 billion should produce a gold price decline of roughly US$87/oz. And as it turns out, gold fell by US$76/oz over the first quarter of 2013. Does this sound like a bubble to you? It certainly doesn’t appear to be. Gold is performing almost exactly as it should – by acting as a currency barometer for the amount of money being injected into or withdrawn from the economy… which leads us to Japan.

Japan’s recent QE announcement is a thing of wonder. It represents an absolutely massive injection of yen relative to the size of the Japanese economy. The Bank of Japan’s US$75 billion equivalent per month of yen printing, coupled with the US Federal Reserve’s $85 billion per month (through its current QE program) will addUS$1.97 trillionto the collective central bank balance sheets over the next 12 months. Given Japan’s considerable contribution, we seriously question how SocGen believes gold can drop to US$1,375/oz by the end of the year. For that to happen, we would need to see a collective balance sheet decline of roughly 15%. Does SocGen seriously believe the US Fed (or any other central bank for that matter) is going to reverse its QE accumulation and then start aggressively selling balance sheet assets over the next year?

The only gold ‘crash scenario’ that makes sense to us at Sprott is if governments begin to balance their budgets and return to sound money practices. There is no question that gold could lose its utility if western governments made a concerted effort to fix their fiscal imbalances, but who honestly believes that’s going to happen any time soon? We certainly don’t – especially in the US. While US deficit spending may diminish in scale, it will remain well above $1 trillion per year after factoring in unfunded obligations. We don’t know of any creditable forecaster who believes otherwise.

We also don’t see a chance of the US Federal Reserve ending its QE programs, despite the continual jaw-boning by various Fed officials of a planned QE exit strategy. There is simply too much risk to the US bond market for the Fed to cut the US$85 billion in monthly Treasury and MBS purchases that the current program employs. After all – remember that those purchases are what keep interest rates close to zero today. If the Fed were to remove that flow of capital, the free market would once again dictate US bond yields and stock prices. There’s not a chance the Fed will take the risk of finding out what US bonds or stocks are worth to the market without a perpetual government-induced backstop. Why take the risk?  Especially since the cumulative QE programs to date have not caused a drastic increase in inflation expectations.

While we expect the Fed to continue to threaten to lower its monthly QE purchases, we believe the chances of even a mild decrease to its current US$85 billion per month rate are negligible. Four years into it this grand QE experiment, money printing has become the backbone of the US bond market, and the unsung driver of the US equity market. In our view, gold cannot become irrelevant for the precise reason that QE is here to stay… and the collective central bank balance sheets will continue to increase over time. We would question any pundit who believes otherwise – unless they can clearly articulate how the Fed can exit QE without causing irreparable harm to the very financial markets the QE programs were designed to assuage.

We believe gold is nowhere close to ‘bubble territory’ today. It is acting exactly as a currency should. Under its current stewardship, we expect the Federal Reserve’s balance sheet to continue to expand along with Japan’s. SocGen’s “crash” scenario would require a complete reversal of this trend, which we do not believe is even remotely possible at this point.

Gold is the base currency with which to compare the value of all government-sponsored money. Investors can incorporate it into their portfolios as ‘central bank insurance’, or ignore it entirely. Either way, we believe gold will continue to track the total aggregate of the central bank balance sheets of the US, UK, Eurozone and Japan. If SocGen believes the aggregate central bank balance sheet will continue to shrink as it did in Q1, then gold should continue its decline. We strongly suspect that shrinkage is over, however. Given Japan’s recent QE decision, we would expect the aggregate to grow a lot bigger, and fast. If there was ever a time for gold to be a relevant currency alternative – it’s now.

Article Source: Zerohedge