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On July 1st the interest rate on student loans rises from 3.4 percent to 6.8 percent of this year.
One year ago, the trillion dollar mark was crossed for the amount owed and required to be paid back for a student’s education..
3.4 to a 6.8 is a doubling… Just on a gross scale, off a Trillion dollars, the interest per year is jumping from $34 billion to $68 billion. On a $16 trillion GDP, that is nothing. But when you look at other figures, that jump has shocking consequences for the world-wide banking system.
The post graduate boom is usually what drives our economy. New cars, New electronics, New houses. Dining out. Spontaneous purchases. A study by the New York Federal Reserve shows that graduates are living austerely to pay of their gigantic debt, most of which are more costly than the mortgages owned by middle America. Asking someone to buy a house while paying off their educational loan, is equivalent to asking then to buy a second house while still paying off their first, How rich does one have to be in order to do that? What amount of yearly income is required to do that? +$125,000? Does this mean there will be no net new buyers of houses for 20 years? Anyways, after July 1st, there will be $34 billion less with which to purchase houses.
The Department of Education predicts a default rate of 13.4%… Off a trillion that means $130.4 billion dollars will be the amount defaulted. $130.4 billion.
So adding the two together, the upcoming shock on our economy will now cost $198 billion. Poof, right out the door, $198 billion. Gone from our economy.
Tran Union a credit reporting agency says the data in it’s files show that almost half, or 43.5% of student debt is in deferment. In dollars off that trillion total, that would amount to $435 billion dollars of debt not being paid in a timely fashion.
Particular concern must be paid here, because more than half of college graduates under the age of 25 are either unemployed or underemployed — the highest rate in 11 years, according to an analysis of government data.
Putting the two together, we have half of those required to pay $435 billion defaulted, who are either under or unemployed.
As we saw with mortgages, when people can’t pay, there is no notice, They just walk away.
A nation depends upon its newest generation to lead them forward with energy and enthusiasm, long after the previous ones are tired and ready for rest. This generation is coming out on the playing field, weighed down like knights of old, in ancient armor…. The upcoming football game does not look promising… Their best 100 yard dash is just under 10 minutes.
Courtesy of Delaware Liberal
Because Social Security is getting cut down, you choose to put your money in an IRA… Since doing percents are easy with amounts starting with a one and ending in zeros, let us assume you choose to put $100,000 in an IRA for 20 years…. The Wall Street firm will charge you 2%. You think, $100,000? 2%, ok … $2,000 over 20 years that’s nothing.. I’ll still have 98% plus interest over 20 years…
You think? This is Wall $treet we’re talking about……
So take this interest compounding calculator. … Seriously, you need to do this. Right click it into a new tab so your computer doesn’t have to download flipping back and forth….
Add $100,000 as principle. No new additions on the first round. Time Frame: 20 years. For the interest rate put in negative 2. Since you are going to be receiving only 98% of your earnings on a yearly basis, a negative 2 works better than having to do the extra step latter and subtracting two totals.
Hit total… At 2% compounded off that $100,000 you originally placed,… after commissions all you will have left is $66,760… Wall $treet takes 1/3 of what you earn…..
Not convinced? Let’s go a different way. Let’s say you will average 7% increases with a 2% commission… We’ll do it in two steps. We will use the calculator to figure out what we would have earned at 7%, and again, what we would have earned at 5%. We will subtract the two to see how much Wall $treet is taking out from your future…
At 7% increases we would have earned $386,968 over 20 years with no additions after the initial deposit. At 5% increases our total maxes out at $265,329. That 2% costs us…..$121,639 dollars…. The same 1/3 as above….
The argument can be made that since we agreed to it in the beginning and never got it, the commissions really doesn’t cost us anything. But if we change the wording so we say that it costs us $121,599 in “potential earnings” that clears that hurdle and if probably a more truthful line.. But there is no question …. these calculations show us how much Wall $treet intends to make when our retirements go their way instead of coming through Social Security….
We now remember why Franklin D. Roosevelt went with Social Security in the first place. Those who saved across all their lives, can not afford to live after they stopped working.
Forget about the deficit. Forget about class struggle. Forget about intra-class equity. Forget about soaking the rich….
“Just forget about it…..”
Our current tax base inequity is killing our economy….. Not just ours, but the global economy as well. The solution to the worlds economy is our tax rate, right here in the USA….
Imagine all the wealthy in the United States. It is here. It is full of one color.
Now, let us show you how that wealth was divided just before 1980. That was the beginning of the Republican Party (you know what I mean).
Now, let us show you how wealth is divided with the closest available figures today.
Now let me show you how the US dominates the worlds wealth.
It is pretty clear to everyone that the economy is driven by demand. If there is demand, then investment flows into options to create more supply. When supply is higher than demand, cutbacks have to occur until both are closer in alignment. Right?
So the big global economic problem is…. in America there is a lack of spending!…. Unfortunately it has been going on 5 years. and a lot of this lack of spending comes from the collective behavior across this country now put towards paying down individual debt from what we once spent in our past….
The solution is to spend more. The burden on spending more must lie with those who have money to spend.
This group failed us. The trickle down theory never trickled down. Seriously? Why would it? Who except the Mother Theresa’s of us, would simply give our money away to help the poorer and downtrodden?
Our forefathers lived through this a hundred years ago. If you want to see our future, study the economy from the Civil War to the Great Depression. Business and the wealthy could not be trusted to look out for anyone’s interests. There had to be another way.
We stumbled upon it funding WWII. Tax wealth. Use that as seed investment money. Build things.
Has anyone ever thanked our forefathers for their investment into the building of a vast network of interstate highways? Imagine if we had counted upon the private sector to make this improvement to our lives?
Highways were paid for by taxing those “with money”. As seen above, in the past the middle class had money and chipped in accordingly. Today that money is no longer in middle class hands and is instead of being reinvested it is now getting siphoned off-shore where it does no good what so ever.
Until Americans return to the good habit of spending, the soft economy will continue…. To get that quick transfusion which will jump start our economy, our nation needs to put money back into the hands of the middle class, so they will again start buying things that employ people….. The middle class likes to spend. They are the gas that runs the economy’s engine.
The simplest method accomplishing this, is to increase the taxes a little bit on those who have way too much money. …
Studies show that for every penny in increased tax, there is 99 times that economic benefit as that penny circulates through the system until it again finally settles into the pockets of the rich. From there, it needs to be recycled again so we can again create the type of pie chart above showing the golden days when wealth rested in the hands of those who would run right out and spend it….
The answer is not socialistic, that is to take money away from the wealthy. Oh no. Instead, it is to temporarily borrow it, to force their investment into the economy so all again reap the benefits, not just the 1%…. Seriously, we should all get rich together, and we will, once we raise taxes on ”Those Few Who Will Not Spend…..”
Chart Courtesy of Dartagnan
One can see the split between those who grew up still under the New Deal, and those who came after Conservative Reaganomics…. It is enough to make one cry…..
“If you deprive the military of the ability to train, the ability to have flight hours for our pilots and air crews, the ability of our people to have the right kind of equipment to fight with, then you are putting us in danger in my view,” John McCain said.
Here is a clip of McCain speaking with Lindsey Graham alongside, correctly assessing the harm the sequestration will cause our armed forces… No repairs? Mothball fleets? 20% pay cuts for all military personnel? What will that do to morale?
So, dude, why didn’t you do anything to stop it?
All you had to do was vote for an additional tax of one single penny on every dollar earned over $1 million…..
This sequester then would never have happened? Why did you singlehandedly cause this sequestration by your own inaction, when you and your party could have so easily prevented it?
And then you go on television to say it is really bad? America is looking at you like you are the dumbest person alive….
So, you who have put your faith and service into the United States of America, who have sacrificed a lot for principle, and enlisted or volunteered in the armed forces, are now, about to get a 20% cut in pay?
- How will your family live?
- How will you pay your bills?
- How long until the Sheriff puts your home up for auction?
And why it this?
Because Republicans don’t want billionaires to pay one more penny per dollar earned on all income OVER a million dollars……...
There is no other reason you are taking a 20% cut in pay for serving your nation in the most patriotic fashion….
You just got bumped by millionaires…. Thanks to the Republican Party of the United States of America……
So, how do you feel now?