Lombardi Publishing Corporation, a 28-year-old consumer publisher that has served over one million customers in 141 countries, is offering its expert opinion on the growing income disparity in the United States that is now worse than that of Great Britain during the 1920s.
“The gulf between the rich and poor in the U.S. is widening, so much so that a sliver of the American population earns most of the total income generated by the economy. This means the majority of Americans are suffering as their wages have failed to rise in step with those of the rich,” says economist and lead contributor Michael Lombardi. “It’s even greater on a global scale; the wealthiest 85 people in the world now hold as much wealth as the about 3.5 billion people that make up the poorest half of the planet’s population.”
According to data tracked by the Paris School of Economics, the richest Americans account for a higher share of the country’s national income than the aristocrats did in Great Britain during the 1920s. Today, the richest 0.1% of Americans earns nine percent of the national income—this is the same percentage earned by the richest 0.1% in England in 1920. At the same time, the bottom 90% of Americans earned just 50% of the national income in aggregate; in 1920s Britain, the bottom 90% earned 60%. (Source: Arends, B., “Inequality worse now than on ‘Downton Abbey,’” MarketWatch, February 24, 2014; www.marketwatch.com/story/welcome-to-downton-abbey-america-2014-02-24.)
Lombardi explains that aside from income inequality, the other big problem in the U.S. is that the majority of Americans simply don’t have enough liquid wealth. Liquid wealth consists of assets that can be quickly converted into cash if needed. It should be noted, Lombardi adds, that a home is not considered liquid.
“One quarter of U.S. households hold about 75% of the liquid wealth in this country,” he observes. “More and more we are becoming like Europe, where there are the very wealthy and the very poor. The middle class, who are supposed to be the economic backbone of America, have all but disappeared.”
In 2010, 20.6 million households used food stamps, and according to the most recent data (December 2013), 22.7 million U.S. households now use them. This was before President Obama passed legislation that will cut $8.7 billion in food stamp benefits over the next 10 years; which will cause 850,000 households to lose an average of $90.00 per month. (Source: Resnikoff, N., “President Obama signs $8.7 billion food stamp cut into law,” MSNBC web site, February 7, 2014; www.msnbc.com/msnbc/obama-signs-food-stamp-cut.)
“For economic growth, there needs to be an increase in personal incomes at all levels. When the average American feels better about their income, they go out and spend; this creates economic prosperity, since companies have to produce more because they are selling more,” Lombardi adds. “As a result, these companies will hire more people, invest in new projects, and stimulate the U.S. economy—three things that are not happening right now.”
The Federal Reserve’s policies of money printing and keeping interest rates artificially low for so many years have made the rich much richer. At the same time, Lombardi notes, these same policies have hurt America’s middle and lower class and have made retirees who are dependent on fixed income from their investments even more strapped for cash.
“Income inequality is dangerous. It leads to chaos, not economic growth,” he concludes. “The current bull market is not representative of economic growth; it’s an unsustainable mirage and it won’t last.”
Founded in 1986, Lombardi Publishing Corporation, which has served over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more information on Lombardi Publishing Corporation, visit www.LombardiPublishing.com.
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