Consumers are so demoralized by inflation and high rates they've given up on saving for the American Dream and are spending money instead, economist says
Consumers are so demoralized by inflation and high rates they've given up on saving for the American Dream and are spending money instead, economist says
I'm saving up for the American Dream 2.0™️: Moving to another country
It's not just America though.
Where I'm from:
UK average income before tax) £34,963 - £27,911 after tax (assuming NO student loan and NO pension) (for context: a band 3 nurse with 3 years experience makes £24,336 before tax or £20,631.51 after with no pension)
England average house price: £375,131
Approx ratio after tax: 13:1
Minimum deposit: 5% - £18,756.55
Tax: 0% on first time buyers
Fees: about £1,000 - £5,000
Total cost to get going: Approx £21,750 - nearly a years wage.
Now let's look where I live: Spain!
Turns out Spain really is a load of countries wearing a hat so getting unified stats is not easy. Let's try Barcelona:
Average income before tax: €33,837 - €25,470 after tax
Average house price: €376,399
Approx ratio after tax: 15:1
Minimum deposit: 10% - €37,639.90
Purchase tax: 10% - €37,639.90 (plus 1.5% for new builds)
Fees: 2 - 5% - 7,527.98 - 18,819.95
Total cost to get going: €82,807.78 - €94,099.75
Turns out treating housing as a market to speculate on might just be the problem all along.
Yeah, I hate this American-centric idea of "Oh, only my country is experiencing this totally unique problem, I'll just go somewhere else."
As if late-stage global capitalism would somehow be a problem that is unique to a single country.
To be fair, the UK is essentially aiming to be America 2.0
Many countries are trending more expensive (Belgium went up 30% house price in 4 years) but the UK is on another level of the wealthy literally owning all property and purposely leaving tens of thousands of houses empty just to spite the working class.
Just to add to this, there's zero chance you're getting a 13x mortgage. For a 375k house on a 25k salary you're going to need something more like 250k to start.
Unfortunately not much better elsewhere, if at all. What would make me move is the idiotic healthcare system.
“Consumers demoralized by capitalism…” …paywall…
Let's go a little hollow, as a treat 💀
Every time I read the phrase 'the American Dream' I think of the part of Fear and Loathing in Las Vegas when, after spending the whole novel trying to find the American Dream, they're given directions, only to find the remains of a burnt-down nightclub, "a huge slab of cracked, scorched concrete in a vacant lot full of tall weeds."
Thompson rightly concludes that the American dream is already dead by the 70s.
If you look west you can almost see the place where the wave broke and rolled back....
Thompson rightly concludes that the American dream is already dead by the 70s.
Important context for that is that the novel is a famous, and relatively early, meditation on the failures of the 1960s counterculture movement and the intense, if ultimately unfocused vision for a better future for the nation that was central to it.
Fear and Loathing should be required reading in schools. A lot of the meaning gets lost in all of the drugs, but in the midst of that haze one can find a lot true things about America.
I think of the Carlin bit... It's the American Dream because you have to be asleep to believe in it.
If the American Dream were realistic, we wouldn't be calling it a dream...
You have to be asleep to believe it --George carlin... I probably dodnt get it right
Nah, that was pretty much word for word what he said 🙂
An ad.
Exactly, it would just be the "American Way".
I mean, it was real for white people. It makes sense why they're the most pissed and confused lately
"Everything is very expensive, and people can't save money"
FTFY
Its a curious state of affairs, because the stock market has been booming all the while.
If you have savings you're getting enormous passive incomes. 20-30% jumps in accumulated investments annually. If you don't have savings you're watching prices skyrocket while salaries flat-line in the face of anti-inflation economic policy.
This does kinda raise the question "Where are equities markets getting all this extra cash from?" And the answer appears to be... its very profitable to charge people more and pay them less.
The stock market is a measure of how much wealth can be extracted from the working class.
It does not measure the health of the economy. That sometimes the market is doing well as the economy is doing well is closer to coincidence than causality.
The fact that the working class can no longer save money, and must spend every dime is great for the stock market. Next they will come for the dollars we have not spent yet. Because mortgages are no longer feasible for most people they'll have to find new debt traps. Cars will skyrocket in price, you'll be able to take out a loan to rent an apartment. Student debt will spiral to laughably unrepayable levels.
They'll take every dime we have, then they'll take every dime we'll ever make. And when it gets to the point where there's no more money to bleed, unless a new source of endless dollars can be found, the market will feed on itself.
If you think peacefully protesting Wall Street is going to fix that, I'll sell you the Brooklyn bridge.
This is true, I asked a new-ish employee about getting/saving for a house and she was like, "why bother? They cost to much."
the price of homes goes up faster than anyone can save. that's the problem.
housing prices used to rise at or below inflation. now they rise at like 3x inflation.
Even you are thinking too far ahead. I'm spending rent money every month that obviously could be saved to someday buy a house... But on top of that my rent has increased faster than my income. Every place I've lived. By renting, you're guaranteeing you're going to be priced out of affording your shelter. And most young people have to rent, to start out. The rich have us fucked at every turn...
The headline reads like big retail trying to squeeze more profits. Of course people aren't saving as much, they have to buy groceries.
No, but even for those of us with some extra money… we’re not building a savings pile for a house or anything… we’re just spending the extra on doing things and buying stuff beyond our needs.
This is how you never accumulate wealth...
we’re just spending the extra on doing things and buying stuff beyond our needs.
That's one of many problems and majority of the people who fit this category like to point the finger at anything and everything else... when the problem is themselves and their spending habits.
Oh. Oh shit it hurts that reading this made me self-aware of this behavior. It’s one thing to be in this mindset and not be aware of it and it’s another to have it written out in front of you. 🤢
My retirement plan is a heroine overdose. I'll try to do better than that, but I'm not expecting much.
Ya know, I've been saving better than most my age. 401k, savings account, emergency fund, investments, crypto, etc. and I keep being reminded that no matter how much I save, I'll still never achieve the American dream without help.
I'm in a similar boat, minus crypto. If anything it's made me realize how big that chasm has become.
What the fuck is this American dream anyway?
Economists: “WONTFIX: Working as designed.”
it actually kinda pisses me off. we have been dropping the ball as consumers for a long time. if people would just stop buying all this bullshit, the market might reconsider.
🙋♂️ That'd be me. Keep moving the goalposts society. I'm over it. I'll wait for my mom to die to get her house. Idgaf anymore. Don't need a house.
Same. My dad dying and leaving me his house is the only way I was able to afford to stop renting and stop living paycheck to paycheck. A perk of being an only child I suppose.
Well, you gotta be asleep to believe the American Dream, so maybe this means a lot of people are waking up.
By brother in Satan, high inflation makes you spend money now. It's either that or going to hell.
Im saying that this bs is out of some relative comparison of how much generations are saving/investing. Everyone tried saving. But with low relative wages ofc ppl wont save as much as eg boomers - they didn't give up vacations or buying whatevers, but still saved money. Younger gens are just left with no money after that.
And also falling relative wages (inflation) makes you buy things asap to actually save money.
It’s literally cheaper to buy things I know we’ll need at some point (assuming we have the space to store the thing) using a rewards credit card that’ll give us 1-3% back than it is to save and buy those things later when they’re even more expensive. (Paying off the CC before it accrues interest, of course.)
The only move that is ‘smarter’ is to be risky with our money and invest in some way. Which then either makes me a part of the corporate enrichment cycle or a member of the rentier class.
The only move that is ‘smarter’ is to be risky with our money and invest in some way. Which then either makes me a part of the corporate enrichment cycle or a member of the rentier class.
Online savings accounts also exist.
Investing isn't that cheap, especially if you want to be moral about it (no shadow pools, company screening, etc). Coz you know, you are just fueling the same problem you are solving.
If you would have bought a basement full of canned food somewhere shortly before corona or shortly before the russians went full loco in ukraine, it would have been a top tier investment. And if it wouldn't have been, they don't go bad fast and you can still eat them :') In high inflation environment, buying stuff instead of stacking money can make sense indeed.
Why grind when production is way higher than needed.
Just eat the rich.
Historically it always led to an era of prosperity.
This is literally a tool tip in the fascist parody helldivers 2.
I've gone the other way with this. I've significantly cut my spending down in the last couple years. No more eating out, no vacations, grow my own food, don't eat meat, no ac and minimal heating to only to keep pipes from freezing. Even with all that and more I'm spending as much as I did a few years ago but a much more restricted lifestyle. Be cool if my pay rate kept up with this inflation but my union agreed to a shit contract just before all this started.
As a SWE I hope we have the gusto to unionize soon
Organize a mass, simultaneous bankruptcy filing nationwide. Overwhelm the system with claims, and all debt collection ceases the moment you file for bankruptcy while the claims are being processed.
I was thinking similar. Would be interesting to see what happens. I just wonder if it'd be possible to do on a mass scale before they catch on and start disallowing bankruptcy filings.
Might devolve into everyone just ceasing payments on CCs, loans, mortgages period.
Problem is things will have to get worse for a lot more people for that to really happen en masse, I support the idea but I wouldn't probably stop because none of my debts are debilitating. I have a good savings and my only payment is my mortgage and whatever I put on my credit card that month. I'm not going to just stop paying my mortgage for a political movement, and a lot of other people won't either, supporting or not, people don't like risking their homes when they don't technically have to.
All the banks have to do is make examples of a few good people and all the others will likely fall back in line. Finances and debt is something that is very personal to a lot of peopl so people are hesitant to let that flag fly and unite publicly as well.
Paywall removed https://archive.is/IyuC2
We have been very lucky and fortunate to acquire the American dream. My wife and I wouldn't have been able to do it without the help of her family though. Every time I look at the housing market it's only gotten crazier.
having family help isn't the american dream. that's the aristocratic dream, where land is only owned by the wealthy who inherit it.
It blows my mind that the world basically runs on Monopoly money and accounting smoke and mirrors.
It'd really be great if journalists even attempted "educating" readers or providing meaningful context. But then again, would it get this kind of traction?
The interesting story here is that interest rates are raised to SLOW spending and encourage saving. The interest rates spiked to CURB inflation. It has worked, despite most journalists seeming keenness for it not to, for the most part. If consumers and businesses reduce their spending due to higher costs of borrowing, this will bring down prices over time, aligning with the Fed's inflation targets.
No one explains this to the average person, ever. Ironically, the story here should be consumers are spending money even when saving it should be incentivized because they can't afford not to... because of profiteering by large companies, grocery chains, etc as well as stagnate wages for the past few decades. This means that inflation will creep up faster than it should because of demand-driven inflation. This makes the problem worse for low-income earners.
It seems to me that THAT type of inflation might require less of an "interest rate adjustment fix", and more of a wage adjustment fix. Even potentially a regulatory fix to go after price gougers.
Yup.
Yay GDP!
We're in late stage capitalism. Getting rid of the gold standard was one of the biggest mistakes in US history.
It blows my mind that the world basically runs on Monopoly money and accounting smoke and mirrors.
For a while now, I've had a hypothesis that money does have a real, tangible underlying asset attached to it, in the exact same way as it used to be backed by gold or oil.
The underlying asset is human capital and the value is derived from human labour.
The reason for my belief is because private banks actually create 80% of the money in circulation. They create this money when they issue loans.
How do we determine the amount of loan we can take? The amount of money we earn. We earn money either via our own labour or someone else's. Ergo, money is created at the value human labour you own, like how we used to do so with gold and oil.
Money here acting as both an iou and as a labour token, in the same way a British Bank note was both an iou for gold and affected gold prices, we have been buried under a labour debt our great grandkids would come close to paying off. Printing of future Labour ious also depresses wages for everyone who works for their money.
Imo, its much worse than monopoly money.
I find people who make this "argument" very silly. The gold standard is unsustainable. The amount of cash in circulation will always outstrip the amount of gold in whatever vault it been tied to. Fiat money is always an economic inevitability for a growing state.
The amount of cash in circulation will always outstrip the amount of gold in whatever vault it been tied to.
That's... the entire fucking point. They printed away our futures, now we suffer.
That's only true when you are dealing with the infinite growth of capitalism. Nations and empires have used the gold standard for thousands of years. It only became "impossible" when we tried to inflate the value of economies into the stratosphere to enrich the aristocrats of society.
The government runs out of money... so it drops the gold standard to "to invigorate the economy"... by taking away value from those that hold cash... which is always the lower class. Higher classes hold assets that dont inflate away.
laughs in Calvin Coolidge
Yes. YES! Let the Austrian Economics flow through you! Speculation is a consequence of federal monetary policy and commodity inflation. I can't possibly have anything to do with private credit or free market auction rates.
Bootstraps are too expensive to buy because your daddy thinks his broken ass house should be worth a cool mil.
And that's while already having a trillion in credit card debt.
The wonderful thing about debt is, if you have enough of it, it suddenly becomes somebody else's problem.
I wish I can go back in time to when I was 18 and never accept that damn cc offer. Took 30+ years to pay off since it started a series of debt that didn't stop until I changed my life.
So is that what's keeping the economy afloat?
Yes, that’s me.
Why You'll Never Achieve The American Dream https://youtu.be/vu7IJ-HDIos
Pretty fun stuff I mean I wonder where it is going. Will there be some kind of collapse crisis or smh
douchebags gonna douche
This is what happens when history is forgotten. Obviously we've had inflation B4. Don't read all the negative sh*t out there. And don't let other people with their agenda run your life.
We've had inflation before and, on a historic timescale, we've had revolutions to correct that inflation. France existed for almost a thousand years before they had the big one.
This is exactly what mega-corporations want. If we save money, they don't get it.
The powerful rich are always pushing for the closest thing to slavery they can get away with.
Once they have everything, then what happens next? If there is nobody to buy things
Why we are not having kids or even getting married can’t collect my debit when I am dead and have nothing. Just go full nihilist
On the other hand, some of them just refuse to do any overtime or aim for promotion. It won't get them any closer to their goals so why bother. It's quiet quitting by default.
I've never understood "quiet quitting" as a term. When did just doing your job become something that needs a term? "Working adequately" seems more apt, but I can't imagine the context that would be worthy of discussion outside an employee review.
Quiet quitting is just middle management's manipulative language for people doing their jobs adequately but then not putting in a bunch of unpaid extra effort. When there is no incentive to go above and beyond, why should anyone? It is the job of management to create those incentives, but if they are unwilling to pay for that, complaining about people's work ethic to try to guilt them into doing unpaid work is their next strategy. It isn't very effective.
Fuck overtime. Forty hours a week is plenty.