a poverty machine

Gregor Macdonald:

At best, unfolding now in the US economy is a recovery largely tied to exports that’s creating some moderate new job growth,  but at much lower wage levels. The United States, like the rest of the OECD, is now succumbing to the global wage deflation that was masked by last decade’s credit bubble.

As a result, and on many measures, poverty is soaring in America and in California especially as increased food and energy costs collide with new, lower payscales. Worst of all however is that the meager public assistance that millions of Americans now collect–the billions in food stamps and unemployment checks–are no match for rising prices of gasoline, bread, milk, coffee, sugar, and meat.

Indeed it is not merely the unpleasant fact of The American Dole in all its breadth, but, that these coupons are set to decline in value.

While congress will no doubt debate these billions and discuss federal obligations in static terms, what’s now set in motion is the loss of purchasing power of government benefits. And that may be the surprise that the political complex doesn’t see coming.

By combining reflationary quantitative easing and a failure to reform the financial system, in an era of higher commodity prices and deflating wages, the United States is not building an economy so much as a poverty machine.

The failing speculation machine since Reagan extracted from the real economy that we failed to improve.