The future of the economy in the US

The economy

Everyone talks about it. Politicians, pundits, and the news media.But, I don't think that they're telling all that they know. I think that there is a conspiracy by the government and/or big business to make people think that our economy is just in a bit of a rough spot. I think that the recession has bottomed out but it will be a long time before it's over. My opinion is that when it's over, we'll have a new definition of normal here in the US.

For the past 50 years the US has enjoyed a pretty good standard of living. The returning soldiers of WWII got married, had kids and bought houses, cars and all the things that people advertise on TV. That stimulated the economy for a long time. Cars were made in the US by US workers. The quality of US made goods was second to none. If you saw a made in Japan label on something you assumed that it was inferior quality.

Times slowly changed. Manufacturing jobs went overseas. Made in Japan became a signe of quality. Fewer and fewer Americans worked in factory jobs. Don't worry said the politicians. Our economy will be based on our breakthroughs in technology. And for a while it was. There was the development of the personal computer. Then came the internet. Businesses once again boomed but these were different businesses.

As those businesses were outsourced, more Americans lost their jobs. But others made fortunes in the stock market until the bubble popped. Then came the real estate bubble but it also popped. Personally I think that both of those bubbles were at a minimum directed by our politicians in conjunction with the wealthy to squeeze every last drop out of the US that they could. Trillions of dollars were made but when the bubbles popped, where did that wealth go? The wealthy are still fine, but the middle class took the hit.

Now, were experiencing a recession that has many states with unemployment over 10%. Real estate prices have fallen even though interest rates are still very reasonable. The government spends money as fast as they can print it to save businesses that were "too big to fail". Our dollar is not tied to anything concrete, like based on gold". So, when the government creates more dollars, the individual dollars are worth less.

So what does the future hold? My personal belief is that we will see a devaluation of the dollar vs other foreign currencies. So it will take more dollars to buy goods manufactured in China or software written in India. It will take more dollars to import those fruits and veggies that are grown in South America for the US market. I do think that the economy will recover but I don't think that it's going to be like the economy of the 80s or 90s or after the turn of the century. I think that we're going to have a different definition of normal.

We're setting a new set point for the economy. The rich will still be rich. The middle class will be reduced in size and/or purchasing power. The middle class won't be getting a new car every three years, it may be every 6. They won't be purchasing a flat screen TV for every room in the 4500 square foot McMansion. In short, the middle class will still be OK but they will have reduced purchasing power. The lower classes are going to have to work harder for far less. Social services are going to be reduced every year. It will be harder and harder to live off the State.

Social security will be paying out more than it takes in starting in 2018. Will the government raise taxes to pay their retired worker? Or will benefits just get cut? I think that benefits will be cut. Medicare isn't much better off. As the population ages I think we're going to see fewer and fewer procedures for the elderly. There just won't be enough money unless you are one of the lucky ones that has insurance. Don't expect to get your heart valves replace when you 85 unless you can pay for it. The state won't have the funds. Minimum wage, always one of the sacred cows for the democrats, won't keep up with the cost of living. All those people on fixed incomes will have a hard time getting by as the years go by.

It's kind of a grim picture for people that have enjoyed a very good standard of living for the past half century but I don't see how we're going to avoid reducing our standard of living.

All those people who are preparing for some sort of disaster, probably aren't preparing to live in a world like I'm describing. I'm curious about your thoughts?