Tag Archives: economy

The Rich Get Richer; The Poor Get Poorer

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We know the  U.S. economic system favors the rich; you have to have money to make money.  But just how rigged is it against the average person. Let’s consider the pandemic; U.S. Billionaires got 62 percent richer, bringing their net worth up to 1.8 Trillion. But for the average American, it was a different reality.  

Twenty million adults live in households that did not get enough food to eat, and twelve million adult renters are behind on rent.  According to Nerd Wallet January 2022 study, more than a third of Americans (35%) say their household financial situation has gotten worse over the past 12 months, according to the survey. Of that group, 38% say it’s because their household income decreased overall, and 36% say it’s because their household expenses increased overall. More than 1 in 5 of those whose finances have worsened (21%) say it’s because they lost their job. Over the past two years, median income has actually gone down — decreasing 3% — while the overall cost of living has increased by almost 7% in that time frame. [3] And decade-long trends show dramatic growth in two of the biggest living costs: housing and medical expenses. One in 5 Americans (20%) report increasing their overall credit card debt during the pandemic. Additionally, 18% of Americans say they relied on credit cards to pay for necessities during the pandemic  

The impact of these numbers isn’t just a short-term problem for the average American either. Credit scores impacted negatively during the pandemic will be affected for several years, making it harder to secure a loan or credit and, when possible, at exorbitant interest rates pushing people deeper into debt. 

With eviction moratoriums ending, many will face the prospect of homelessness. The possibility of being homeless is daunting enough, but an eviction can easily be accessed by prospective landlords through public court records making it difficult to secure an apartment.  

Homeowners face either a short sale or foreclosure, making it difficult to purchase another home in the near future. 

When one considers all these factors, the average American is likely faced with a more significant debt burden with less to show for it for years to come. At the same time, banks and very well-off investors who profit from the banking industry, real estate, and auto markets, to name a few, ends up adding to their net worth as they continue to profit off the average American.  

America’s financial system

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America’s financial system, as highlighted by the COVID 19 pandemic.

COVID 19 hits the economy; the average American loses job or has hours drastically cut. They fall behind on credit cards and rent. They ask the banks for a loan to get them through this tough time. The banks tell them their current income doesn’t qualify. They tell the banks their income is only down because of the pandemic. The banks tell them they were fiscally irresponsible; they should have been planning for a rainy day; this is why they’re a bad risk. They fall further behind on their credit cards, banks report it to credit bureaus, their credit is destroyed for several years.

COVID 19 hits the economy: big business immediately loses revenue because rather than using their profits from prior years to pay off debts and save for a rainy day, the big four airlines, for example, grew their combined liabilities to $166 billion, all while spending $39 billion on share repurchases to bid up their stock prices and enrich their executives. The government says no biggie here is a big bailout paid for by the taxpayers who are suffering financially due to this crisis. Big business asks, doesn’t it matter that we were fiscally irresponsible and didn’t maintain a low debt-to-equity ratio? Of course, not, says the government, we will always be there for you.