Historic story number 2! How is it possible for cities to file bankruptcy (Detroit) when the stock market(s) are at all time highs?? Think two things: 1. Devalued dollar. By printing trillions of dollars, the Federal Reserve has devalued the dollar so much that the stock market will increase in value simply to keep up with it! Think about it. The Federal Reseve has a goal - to devalue the dollar by 33% over the next 20 years (19 years now, because that was over a year ago!). So a stock that is valued at $100 today will cost $120 in 19 years simply because of currency devalution. That explains (partly) the record highs. 2. But the second reason as to why cities are filing for bankruptcy is that the bottom 50% of American households only hold 1.1% of the wealth in this country (down from 3.6% in 1997 which was the highest ever). Wow! That is a sad state of affairs. Now, the top 10% hold 75% of the wealth and guess where much of that is located? Correct! Stock market - so their money is safely increasing in value and keeping up with the devaluing dollar. But the bottom half (actually 75%) typically do not have these investments and are having to deal with the loss of purchasing power on a weekly (or bi-weekly - however often they get paid) basis. Energy, food, and housing expenses are all increasing and incomes are not. So when that happens, more governement assistance is needed and Cities cant keep up. High metropolitan unemployment = less tax revenues and more government expenditures. And that equals unbalanc
Posted on: Thu, 18 Jul 2013 21:25:30 +0000
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