Hey There Income Hunters,

 

I want to follow up yesterday’s Power Income with further discussion on how poor the “real” wages look today compared with past recessionary periods. 

 

I get how hard it is to intuitively understand the impact inflation has on our income, expenses and wealth. 

 

Our government, Fed and banks (and media, for that matter) have done a great job brainwashing the masses into thinking they are always looking out for Americans’ best interests … and are in total control. 

 

Well, look at this chart produced by the Atlanta Fed. It compares real, inflation-adjusted wages after the 2020 recession with the 2001 and 2008 recessions.

 

 

There is a reason for why the economy is underperforming so badly and why it will get worse.

 

Today, I’ll reveal the key reasons why our economy is stuck in such a low-growth funk. 

 

Plenty of Dollars But No One Is Spending

 

It is unbelievable when you think about the helicopter money that has been dropped on this economy and in these markets … Yet spending activity as measured by money velocity is non-existent. 

 

You’ll recall the velocity of money measures the number of times a dollar circulates throughout the economy. Here’s a quick overview of the way velocity is measured:

 

1. 1. 1. Let’s say you won $1,000 on the Super Bowl and you took everyone out for beers at the local bar. (How kind!)
      2. You gave the bartender a nice tip. So instead of walking home, he called an Uber.
      3. The Uber driver also received a tip. He stopped at Domino’s and got a pizza on his way home.

 

Your winnings were used to buy drinks, which were then used to pay the Uber drive, which were then used to pay for the pizza. That’s a velocity of 3. 

 

So, today with the velocity of 1, using the example above, it would mean you took your winnings, went home and paid bills. (Boring!)

 

Here is what that looks like:

 

 

Growth is nonexistent because wages, adjusted for inflation, are not near enough to keep up with the rising cost of living. 

 

Why The Government Lost Its Ability to Create Growth

 

The amount of government, corporate and household debt in this country has suffocated our ability to grow.

 

Here is why …

 

When a country’s debt-to-GDP ratio is over 100%, it reaches a level where another dollar of debt produces less than a dollar of growth. 

 

Today, US debt is 130% of GDP, which means another dollar of debt will only produce about $.50 of growth. This means the government can never grow its way out of debt.

 

Combine that with all the corporate, household and credit card debt and you get this picture …

 

 

• • • $18 trillion in household debt
    • $12 trillion in corporate debt
    • $800 billion in credit card debt

 

Oh, I forgot to mention off-balance sheet liabilities, like Social Security and Medicaid.Those amount to about $160 trillion of additional government obligations.

 

Hopefully this helps you understand why I bang the drum about the death trap the US and most of the Western world has fallen into

 

The only way out is to hold interest rates down, well below inflation, which creates financial repression by devaluing consumers’ dollars and thus their purchasing power …

 

Although the govt, Fed, Banks or media would never tell you that. 

 

Bring It Home

 

The good news is you do not have to suffer just because the government is suffering.

 

You can capitalize on their misfortunes and turn them into your prosperity.

 

I believe this could unfold quickly due to our inept government making one mistake after another. 

 

Power Income Trader has built a portfolio that is stacking profits as the end-game progresses.

 

Become a member today and you will get access to core bear market portfolio, live events and every trade we send out, which I also also personally trade myself.

 

Don’t waste any time. Come join the fun.

And as always …

Live and Trade With Passion My Friend,

Griff