Posted on 02/26/2021 9:16:23 AM PST by SeekAndFind
Following today's release of the latest Personal Income and Spending data, Wall Street was predictably focused on the changes in these two key series, which showed a surge in personal income (to be expected in the month when the $900BN December 2020 stimulus hit), coupled with a far more modest increase in personal spending.
But while the change in the headline data was notable, what was far more remarkable was data showing just how reliant on the US government the population has become.
We are referring, of course, to Personal Current Transfer payments which are essentially government sourced income such as unemployment benefits, welfare checks, and so on. In January, this number was $5.781 trillion annualized, which was not only up by nearly $2 trillion from the $3.8 trillion in December it was also $2 trillion above the pre-Covid trend where transfer receipts were approximately $3.2 trillion.
This means that excluding the $2 trillion annualized surge in govt transfers, personal income excluding government handouts actually declined by $22.3BN from $15.696TN to $15.673TN, hardly a sign of a healthy, reflating economy.
Shown in longer-term context, one can see the creeping impact of government payments, shown in red below.
This, as noted earlier, was due to the latest round of government stimulus checks hitting personal accounts which in turn helped push the savings rate to a whopping 20.5% from 13.4% at the end of 2020.
Stated simply, what all this means is that the government remains responsible for over a quarter of all income, or 26.9 to be precise!
Imagine what that income chart will look like after Biden's $1400 checks go out?
Putting that number in perspective, in the 1950s and 1960s, transfer payment were around 7%. This number rose in the low teens starting in the mid-1970s (right after the Nixon Shock ended Bretton-Woods and closed the gold window). The number then jumped again after the financial crisis, spiking to the high teens.
And now, the coronavirus has officially sent this number into the mid-20% range, after hitting a record high 31% in April.
And that's how creeping banana republic socialism comes at you: first slowly, then fast.
So for all those who claim that the Fed is now (and has been for the past decade) subsidizing the 1%, that's true, but with every passing month, the government is also funding the daily life of an ever greater portion of America's poorest social segments.
Who ends up paying for both?
Why the middle class of course, where the dollar debasement on one side, and the insane debt accumulation on the other, mean that millions of Americans content to work 9-5, pay their taxes, and generally keep their mouth shut as others are burning everything down and tearing down statues, are now doomed.
The "good" news? As we reported last November, the US middle class won't have to suffer this pain for much longer, because while the US has one one of the highest median incomes in the entire world, with only three countries boasting a higher income, it is who gets to collect this money that is the major problem, because as the chart also shows, with just a 50% share of the population in middle-income households, the US is now in the same category as such "banana republics" as Turkey, China and, drumroll, Russia.
What is just as stunning: according to the OECD, more than half of the countries in question have a more vibrant middle class than the US.
So the next time someone abuses the popular phrase "they hate us for our [fill in the blank]", perhaps it's time to counter that "they" may not "hate" us at all, but rather are making fun of what has slowly but surely become the world's biggest banana republic?
And as we concluded last year, "it has not Russia, nor China, nor any other enemy, foreign or domestic, to blame... except for one: the Federal Reserve Bank of the United States."
Just over a fourth. The goal is to make it almost 100%, and that would be communism. Before they get there, they will take as much as they can from the producers until there are no more producers and hyperinflation of the currency begins and everyone is poor, cold and in the dark (except the ruling elite which will have everything it wants.)
“Umm nope - it comes from other taxpayers.”
“No it doesn’t. It comes from a printing press.”
I think from both combined. As for printing money:
https://review.chicagobooth.edu/public-policy/2020/article/how-fed-plans-pay-country-s-bills
I resent the idea that Social Security is gummint money.
My money was stolen and if I had received a lump sum payment from the Feds with just a 3% ROI, I would have received a check for $3,300,000.00 instead of the $36,000.00 per year.
It will only take 92 years for me to break even, so don't talk to me about gummint money, it is my stolen money, being repaid in dribbles.
Ordered up by the gov’ment.
How large a section of the middle class is being prevented from going to work?
Until that part of the equation is remedied the need for checks will continue.
Fact Checked. Missing Context. It doesn’t actually “come” from the Government because the Government has no money other then what they print or what they take from the citizens in taxes fee etc. I get a social security check. That odes not come from the government. It comes from an American tax payer
What the government giveth, the government can taketh away!
And that taxpayer is you, your money you pay taxes on twice, right?
Not anymore, a large percentage is simply created out of thin air via modern monetary theory. Which will eventually result in runaway inflation.
Winner. Exactly what I was going to post. Thank you!
Wealth transfer is a prime communist goal...
This 27% will be viewed as alarmingly low by the communists who now rule us with an iron fist...
They only need to get it to 50% and their rule is guaranteed for many centuries...
By the time the coming culling of all sheep deemed deplorable is completed, that percentage will go to about 70%...
On the bright side, we only have to suffer through this tyranny for 11,998 more months..
Yes it was stolen, but from SSI recipients I have talked to today, they are oblivious to that it is stolen from the current workers to keep receiving a SSI check. The “Third Rail” of politics doesn’t apply to the current workers who are having to pay for ever increasing numbers of those on SSI (and of course other government payouts). The bloated Government debt has been with us for decades, but SSI recipients demand that they never suffer from it.
Completely unsustainable.
Who writes these idiotic headlines?
Why not post the Zero Hedge Link?
RE: Why not post the Zero Hedge Link?
Zero Hedge is not allowed in FR for reasons unexplained.
Didnt know that. Thanks.
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