The prevailing view in Washington sees as the basic economic problem of our time that Americans have been living beyond their means, and must now live within them. The real problem is the means of most Americans haven't grown in thirty years, even though the economy is twice as large, and all the gains from growth have gone to the very top. The Great Recession occurred because most Americans ran out of ways to maintain their standard of living other than by borrowing against the rising values of their homes; so when the housing bubble burst, they were stranded without enough money to keep the economy going. That's still the case. The real median wage continues to drop. All supposed signs of a more vigorous recovery are smoke and mirrors, emanating from the Fed's artificially-induced near-zero interest rates -- which are helping investors but few average Americans. Anyone who thinks we can restore this economy without tackling the fundamental problem of increasingly concentrated income and wealth at the top hasn't been paying attention.
David K Johnston has much more.
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