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Question the Assumptions
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By Rob Meltzer
Dec. 17, 2013 11:11 a.m.

I’ve reread Rick’s thread on income inequality and I find the assumptions contained in the original newspaper article so dubious that its almost impossible to know where to begin on critiquing it.
this is the sentence that I was really struggling with:
“They were terribly successful and they helped turn America on its head. Since the late 1970s, it has been average Americans who have experienced comparative wage stagnation and who are more likely than their parents to stay in the same economic position. For the rich, the story is the exact opposite.
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Over the past thirty years, the trend in American history is to challenge the notion of a historic middle class. Truth is, the the middle class as we know it is a manufacturing success story that mostly impacts the so-called Greatest Generation. Post world-world II, veterans came home, were sold on the idea of the American dream and what it meant, were showered with federal programs to make it possible, and a standard of living exploded that created what we perceive as the modern middle class. Problem is, it was based on advertising and fraud and borrowing. Those trappings of middle class life that everyone needed were purchased with borrowed money, and with little questioning of whether the gizmos were ever needed. this was all well and good until it got to be cheaper to make the gizmos over seas. So, instead of making cars and tvs for each other, Americans began to cut each other’s hair and bought Japanese tvs, and the logical result was the crash of the entire ponzi scheme that defined middle class life. Thus, what we’ve seen since the late 70s is the logical deflation of structural deficiency, and a return to the pre World War II normal.
Problem is, people still want that middle class lifestyle, and still want to borrow to do it, and our government still wants to subsidize it, though now we borrow out children’s future as collateral to the Chinese.
Get over it–there is no middle class. Government programs are welfare programs, and Obama keeps piling more on. And the gap between rich and poor is just a return to the new normal, and whatever is left of the middle class is being taxed to death to pay for it all. NPR came close to a truth this morning in a story on monetary policy, and whether the fed would end its bond program. NPR noted that the fed has pumped nearly one trillion dollars into the economy and it hasn’t made any difference. Why? In large part, its because the banks aren’t lending out that money. Why? Well, two reasons. First, individuals can’t borrow if they can’t pay back. Second, most money is lent to small business owners, who aren’t borrowing because of uncertainty caused by government policies. Rick made that crack about people of “my class,” by which I guess he meant middle class business owners who are getting caught in Obama’s squeeze. But the truth is that the failure of QE kind of proves the point that its government policies that need to be eased, which means cutting regulation, cutting taxing and repealing Obamacare in order to flush the QE money into the economy. And, yes, I do think it will lead to increased savings and industrial investment.
But first, Rick has to get over the idea that income disparity or middle class status matters. Face it–the party is over. the lights have come on. those are empty cups and overflowing ashtrays visible in the bright light of day. The real question now is how we get those with money to create jobs, and you don’t do that by taxing those folks to death and punishing them for their self-interests.

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