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Sun Mar 8, 2015, 04:16 PM

TRNN, Prof. Wolff: U.S. Workers Returning to Labor Force with PT Jobs & Stagnant Wages

Last edited Sun Mar 8, 2015, 06:15 PM - Edit history (1)

Economist Richard Wolff discusses the latest unemployment figures and says the raising of interest rates by the Federal Reserve during a weak recovery would be disastrous for our heavily indebted society - March 8, 2015

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The Department of Labor released its jobs report for February, and the press is hailing it as a strong sign that the economy is flexing some muscles after adding 295,000 new jobs in the month of February. The unemployment rate dropped to 5.5 percent, which is its lowest level since May 2008. That's back in the early days of the recession.

Now joining us from New York City to give us the story behind these figures is Richard Wolff. Richard is a professor of economics emeritus at the University of Massachusetts Amherst, and he's currently a visiting professor at the New School University in New York.

DESVARIEUX: So, Rick, the labor market is getting better--at least that's what the numbers are telling us. But is that the whole story?

WOLFF: No, and it's not only that, the whole story. It's not even the most important part of the story of unemployment. And let me explain. First of all, sure, that we've added almost 300,000 jobs is a lot better than adding 100,000 or cutting thousands of jobs, which is what has happened for much of the last five or six years. So it's better than where we have been. But it is very, very far short of what a functioning economy ought to do.

And let me explain. The minute you break down these numbers--which, by the way, newspapers that do this properly have been able to do. And I've actually mentioned the Wall Street Journal for having given a list of charts to help people understand what these numbers means. One of those charts shows that the increase in jobs that they're talking about has overwhelmingly been part-time jobs, not full-time jobs. And when you look at full-time jobs, we're not even back to where we were seven or eight years ago, because that is how bad this depression or recession, whatever you want to call it, has been.

Second most important reality: wages have gone nowhere. There's been no increase in wages. That means if you put together that the wage averages have been the same, but in effect what you're doing is giving people part-time jobs, not full-time jobs, then you begin to see that this is not an economic recovery. What has actually happened is over the last eight years of this economic crash since 2008, millions of Americans have suffered unemployment, often for one, two, and three years. Little footnote: unemployment is lasting longer now than at any other downturn since the Great Depression. What you've done is put people through long, painful unemployment, using up their savings, using up the resources of their family, using up all unemployment compensation that they're eligible for, so that now they are forced to go back to work part-time instead of full-time, and at lower-wage jobs that they had before.

You put all this together, and what you're seeing is an economic slump that continues. It's not as bad as it was in late 2008, 2009, and 2010, but to compare that, where we are now, with what the worst was is not the right way to go. It's to compare us now with what we could have and should have been all along and what we should have now made up for. What happened in the last seven years, nothing like that has is shown by these numbers.

DESVARIEUX: But, Rick, I'm going to challenge you a bit, because at the end of the day there has been real growth. In the construction industry, they've added 29,000 jobs, the restaurant industry added 59,000 jobs, both of them in the service industry. And the Bureau of Labor found that unemployment decreased in every state, all 50 states, including D.C., during the year 2014. That sounds, at least on the surface, as good news. I mean, that hasn't happened since 1984. So, for you, I want to ask you: what do you think is at the root of this growth? Are we actually seeing the private sector deciding to reinvest in the economy? And can you at least say that this is a minor victory?

WOLFF: Again, it depends in comparison to what. Is it better than losing jobs? Yes. Is it better than a growth of jobs that's slower? Yes, no question. I'm glad these people have been getting jobs. But I know as an economist that if you put people mostly into part-time jobs, and if you put them mostly into low-paying jobs, and if you look at where the growth in jobs has been, not just in the month of February, but for the last several years, it's very clear that we're moving from a high-wage, high-benefit, secure-job economy to a low-wage, low-benefit, precarious economic situation for the majority of our workers. That is not a recovery. That is going to a new place in this economy far inferior to what we had both before this crisis and during it. It's basically saying to the American working class, we have put you through a proverbial economic hell in the last seven years of unemployment. At the end of that title, what awaits you is a poorer job with fewer benefits that is less secure than you had before we put you through this economic disaster. That's why focusing on the fact that over a few month period the numbers go up instead of down distracts the attention of the people from the larger, broader reality, which is one that they ought to be very, very concerned about rather than having themselves on the back for this number.

DESVARIEUX: So, Rick, for you, then, what would be a economic indicator that would represent a healthy economy?

WOLFF: For me it would be using the term full employment for what it means in simple, honest English, and that would be one percent, one and a half percent of our people out of work, because basically they're moving from one job to another. There's always a certain amount of friction like that. But that's it. The rest is what we're not solving as a problem. And that is in fact getting worse.

And let me explain really simply what I mean. We currently have, depending on how you count, between 10 and 20 million Americans who are not able to work in a proper full-time job that they want to have and that they want to do. At the same time, the Federal Reserve teaches a statistic called capacity utilization: what portion of the tools, equipment, machines, floor space, factory space, office space, what part is being left idle, not used? And the answer is: about 20 percent these days, which means we have more than enough tools, equipment, and raw material for those 10 to 20 unemployed millions of Americans to work with. If we put those people to work with the equipment and tools and raw materials available, we could produce a wealth of output that could do a major job in rebuilding the destroyed cities of the United States, providing for the elderly that we are increasingly a part of our population, providing the daycare that we ought to have and that finds us far behind other countries like us, and make a real contribution to overcoming poverty in around the world, which would be a lot more successful a foreign policy than the one we pursue. We have the capacity to do it. But we have an economic system that can't, that fails to put together the people who want to work with the tools and equipment they need to produce the wealth we all know would make this a better society. That's the catastrophe that these numbers distract attention from, which is why I'm so concerned to put them back in the context they deserve so that they can be understood in terms of the real crisis we still are living in.

DESVARIEUX: Alright. Let's go back and talk about the Federal Reserve that you mentioned. So if the economy is deemed to be at full employment, which some headlines are even saying after these unemployment figures came out, or at the very least it's on its way back to a pre-recession sort of labor market, could this news potentially affect interest rates? And more importantly, what would this mean for everyday people?

WOLFF: Yes. The conservatives in both parties, who are, unfortunately, the majority in both parties, the conservatives have been pushing for raising interest rates. I won't go into the disputable theory and science that this is the basis for, but that's what they want. And they need public signs that can allow them to increase the pressure on Janet Yellen at the Federal Reserve and on the whole Federal Reserve board to begin to raise interest rates.

This kind of statistic, especially when it's hyped in the way you have quite correctly characterized, will give them a bit more ammunition to put pressure on the Federal Reserve even to raise interest rates or to raise them sooner, etc. And if the Federal Reserve does it, then that will increase the cost of homes because your mortgage rates will go up, of automobiles because your car payments will go up, of the cost of our education because student loans will likely go up, and credit card debt.

This is a very dangerous in an over-indebted economy. It means production and demand for goods and services will be cut back. That's not good for production. And so it's quite understandable that the chief at the Federal Reserve, Janet Yellen, is very nervous about these kinds of statistics pushing her and the board to raise interest rates.

And here's what it reveals. They know better than the headlines we're discussing now how very weak the current recovery is, how the majority of Americans have not been allowed to participate in it, and therefore how dangerous it would be to raise interest rates above the near-zero level that they're at now, because anything that could disturb as weak and uneven a recovery as we have is too scary to contemplate. Therein lies the real recognition that this hoopla over 5.5 percent is meant to distract people from.

http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=13366

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Reply TRNN, Prof. Wolff: U.S. Workers Returning to Labor Force with PT Jobs & Stagnant Wages (Original post)
mother earth Mar 2015 OP
chervilant Mar 2015 #1
wolfie001 Mar 2015 #2
mother earth Mar 2015 #12
uhnope Mar 2015 #3
mother earth Mar 2015 #5
uhnope Mar 2015 #6
mother earth Mar 2015 #7
chervilant Mar 2015 #20
uhnope Mar 2015 #21
mother earth Mar 2015 #22
chervilant Mar 2015 #23
mother earth Mar 2015 #24
DeSwiss Mar 2015 #4
AdHocSolver Mar 2015 #13
DeSwiss Mar 2015 #14
The Jungle 1 Mar 2015 #8
mother earth Mar 2015 #10
HatTrick Mar 2015 #9
mother earth Mar 2015 #11
LineNew Reply ,
blkmusclmachine Mar 2015 #15
AdHocSolver Mar 2015 #16
mother earth Mar 2015 #17
AdHocSolver Mar 2015 #18
mother earth Mar 2015 #19

Response to mother earth (Original post)

Sun Mar 8, 2015, 05:15 PM

1. So glad to see multiple OPs featuring Professor Richard Wolff.

This:

It's basically saying to the American working class, we have put you through a proverbial economic hell in the last seven years of unemployment. At the end of that title, what awaits you is a poorer job with fewer benefits that is less SECURE than you had before we put you through this economic disaster. That's why focusing on the fact that over a few month period the numbers go up instead of down distracts the attention of the people from the larger, broader reality, which is one that they ought to be very, very concerned about rather than patting themselves on the back for this number.


I have been un- or under-employed for the past seven years, have exhausted my retirement accounts in order to survive, and am in worse debt than when I left mortgage lending. I have no reserves, no tangible goods (other than my 14 YO car), and no one will hire me--likely because I am 59 and over-qualified. The tires on my car are almost bald, and I am about to run out of propane. I don't hold much hope for my future.

NO ONE can tell me that our economy is "recovering"! I agree with Dr. Wolff, and I think it bears repeating, that the corporate megs (who've usurped our media, our politics AND our global economy) want the vast Hoi Polloi enslaved in dead-end jobs, mesmerized by the propaganda on FOX and other media, and/or kept incarcerated for drug-related offenses. ALL of this is about THEIR money and THEIR continued hegemony. Their hegemony depends on the majority of the Hoi Polloi BELIEVING that capitalism is our best economic system, and CONTINUING to swallow the wealth carrot meme.

I think we're seeing more from Professor Wolff, and others, because people are waking up. MORE of us see that capitalism benefits a minuscule number of vile hedonists, and the wealth carrot meme is rotten to the core.

The storm IS coming! I hope I live to see it.

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Response to chervilant (Reply #1)

Sun Mar 8, 2015, 05:39 PM

2. The Walmart Klan seems to be doing spiffy. eom

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Response to chervilant (Reply #1)

Sun Mar 8, 2015, 07:34 PM

12. TY, for adding your voice, chervilant, your story is one of many. Too many people are struggling

and the struggle is far deeper than ever before. You are not alone by any stretch of the imagination.
I see what friends and family have gone through & it compares with nothing else before. We all see it, we all know when there's an improvement or isn't.

What we are seeing is a morphing of the economy and it cannot be described as anything good.
We are truly witnessing a deterioration of the American way of life.

There is no recovery, but as he said, they want to make us all believe there is one so the rates can be up'ed.
It is all about public opinion at this point, which may be why some seek to ridicule rather than discuss.
Who knows?
We are all able to judge for ourselves.

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Response to mother earth (Original post)

Sun Mar 8, 2015, 05:51 PM

3. would you classify Wolff as a Troskyite?

 

Or just as an old-school Marxist, pre-USSR-style?

I saw one of his videos. He seemed to be simply proposing a Marxist plan for reorganizing the American workforce.

Or are his views more moderate? Do employee-owned and run businesses, like the insurance giant USAA that doesn't have shareholders, get the OK from Wolff?

Curious.

Listen, anyone who would put this on his website has something really wrong with him:
http://rdwolff.com/content/eu-1-big-scam-ukraine-its-next-victim

The date on this video is March 25, 2014--this was after the Russian puppet government collapsed and fled to Russia with a substantial amount of the national treasury. This was when Euromaidan was still new, the victory was fresh.

Wolff pretty much equates Soviet dictatorship with what Ukraine has experienced since the collapse of the USSR. It's bullshit. Economically Ukraine remained bad, but other freedoms were greatly expanded. The freedom to travel, for example, which was nonexistent for most under Soviet Communism.

At 9:30, Wolff goes into total utopian views of some kind of violent revolution he thinks is going to happen when the greedy and corrupt will no longer rule. WTF?

I also despise the rise of corporate and 1% power, the stagnant wages and other concerns in this video but when I look into Wolff's proposals etc he kind ends up sounding like a kook. A harmless one, I suppose.




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Response to uhnope (Reply #3)

Sun Mar 8, 2015, 06:34 PM

5. I don't practice McCarthyism. You'll have to do some research for your questions,

I told you before & I'll tell you again, our interaction (save this final reply) is over. I ask you honor this second request, otherwise it might appear you are repeatedly seeking me out for another purpose.

I'm sure it is all harmless, but I'm left wondering why you spend so much time on OP's that you feel are anti-American or kooky, or simply a waste of time?

Good luck in your work on the board.



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Response to mother earth (Reply #5)

Sun Mar 8, 2015, 06:47 PM

6. It's bizarre when someone won't answer basic questions about a subject they constantly post about

 

and then call the questions "McCarthyism". WTF?

I ask questions of people on DU from time to time. Sometimes I post them and someone else answers them. It's kind of what DU is for, right?

There is an ignore function if you don't want to see my questions.

I'm honestly curious about Wolff since he seems to be on DU a lot.

I only ask that someone (and you post him a lot) summarize his views on what his vision is for a different economic system.

But you can't do that, and ignore questions about the things I've learned from watching the vids you post!

Bizarre.

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Response to uhnope (Reply #6)

Sun Mar 8, 2015, 06:53 PM

7. Third request. nt

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Response to uhnope (Reply #3)

Fri Mar 13, 2015, 04:04 PM

20. A harmless kook?

So, is he a "harmless kook" because you disagree with his interpretation of what's happened in Ukraine?

Or, is he a "harmless kook" because he believes (as do I and many others) that the Hoi Polloi will soon have a revolutionary response to the radical income inequity which has become our slavery du jour?

We will likely have to agree to disagree.

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Response to chervilant (Reply #20)

Fri Mar 13, 2015, 04:07 PM

21. the latter. No, both. nt

 

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Response to chervilant (Reply #20)

Fri Mar 13, 2015, 06:45 PM

22. Never feed the trolls, they will follow again and again, tis best to send them off and be done with

it. When one seeks only to disrupt, it speaks volumes.

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Response to mother earth (Reply #22)

Fri Mar 13, 2015, 10:58 PM

23. Actually,

I almost replied to your post in which you asked said person for the third time to cease and desist. I find that we've a number of these types herein, whose raison detre seems to be condescension, derision, disruption, or some combination thereof. I usually relegate such types to my IL, and will do so with said person, post haste.

I thank you again for this video. I think it's essential that we know who is oppressing us and destroying our democracy.

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Response to chervilant (Reply #23)

Sat Mar 14, 2015, 06:30 PM

24. We sure do, and we sure see it when it takes place.

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Response to mother earth (Original post)

Sun Mar 8, 2015, 06:03 PM

4. Economics is gobbledygook.

 

It always was.

It's primary aim is to lend legitimacy to its mathematical equations which are totally meaningless.

It is not a method of recounting and cataloging natural phenomena as astronomy or biology does.

Those are what ''sciences'' do -- observe and record natural processes.

But there's nothing ''natural'' about capitalism.

It's very nature is to metastasize like cancer while consuming everything in its path.

In fact, capitalism is the opposite of what is natural.

- The only corollary for it in nature are cancers, carbuncles and parasites.

K&R

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Response to DeSwiss (Reply #4)

Mon Mar 9, 2015, 01:55 AM

13. There are economic principles that explain how economies function.

However, you won't understand economics from listening to 95 percent of professional economists, nor will you learn how the middle class is purposely being destroyed by the wealthy class (the 1 percent).

The economic "measures", the charts and graphs, the meaningless terms and definitions, such as "free trade", and "free markets", and "global economy," are all designed, not to instruct and inform, but to confuse the masses and obscure the issues.

The U.S. is no longer a capitalist democracy, but a plutocracy with a centrally planned economy (by an oligarchy), where "competition", a key operating factor in a viable capitalist system, is quickly becoming irrelevant and nonexistent.

The first factor to understand is that merely increasing their wealth by stealing the assets of the middle class is not the primary goal of the wealthy. It is a means to an end, the goal being to crush and eliminate the middle class as an alternative center of power to the plutocracy. This is why the right wing is attacking the unions so vociferously.

The key to creating wealth is in manufacturing. The key to controlling wealth is in the control of trade.

The U.S. economy will NOT recover until a majority of the goods that Americans buy are made in the U.S. by American labor. Period!

This will only happen when Americans demand that American made goods are offered for sale in large quantities at competitive prices, and refuse to buy imported goods at artificially inflated prices.

Moreover, the stock market only measures how well the plutocracy is succeeding. It does not measure the well-being of the economy or the middle class. (The stock market as a measure of the economy only has meaning if you accept "trickle-down economics" as valid -- which it is NOT.)

The public welfare also must account for inflation of which there has been a significant amount. Prices of necessities, such as food, have increased significantly in the past 10 years. For example, tomatoes, which used to be priced at around 49 cents a pound, now cost about $2.00 a pound, and they are imported from Mexico.

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Response to AdHocSolver (Reply #13)

Mon Mar 9, 2015, 02:31 AM

14. I agree with all you say, except.....

 

...I would add that ''economic principles that explain how economies function'' is like putting together a manual and blueprints for the below machine. You can do it. You can make it all up. You can put it together. You can make it function for your personal desires.

- But when you're done, what the hell good is it to everybody else on the planet? It only benefits a group of weird, greedy people.

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Response to mother earth (Original post)

Sun Mar 8, 2015, 06:59 PM

8. Unions

I don't care which party is running our government. The present economic mess the middle class faces will not change until union power returns and levels the scales. Unions created the middle and without them we will lose the middle class

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Response to The Jungle 1 (Reply #8)

Sun Mar 8, 2015, 07:19 PM

10. Exactly, TY for bringing up the unions.

Every safeguard that's been dismantled along the way has brought us to this point in time. With all of the suffering and sacrifice of those who desperately fought for labor laws in this country, it seems we have learned nothing.

There is a real effort to kill off unions in this country. Why? It is one of the last protections of a middle class. If we let the unions die, we let our middle class die. The oligarchy demands slave wages and will take the work wherever that demand is met, and it is being delivered by our hijacked gov't, who would like to see every citizen in this country be made to compete with third world wages.

There's a reason why there's a drive to privatize everything, to deregulate and to kill off the labor unions. It serves the l%.

Welcome to DU.

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Response to mother earth (Original post)

Sun Mar 8, 2015, 07:12 PM

9. Thanks

Thanks for posting

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Response to HatTrick (Reply #9)

Sun Mar 8, 2015, 07:24 PM

11. It is my absolute pleasure to bring these OP's here, I applaud Prof. Wolff's work and intend to

help share the message he brings.

TY for being here, welcome to DU.

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Response to mother earth (Original post)

Mon Mar 9, 2015, 05:17 AM

15. ,

 

,

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Response to mother earth (Original post)

Mon Mar 9, 2015, 11:53 AM

16. Prof. Wolff's advice about how the Fed should deal with interest rates is wrong.

The low interest rates on bank deposits is depleting the assets of middle class savers due to the relatively high, but purposely hidden, inflation rate.

Meanwhile, the high interest rates charged to middle class borrowers, especially the 14 percent and more charged on credit card balances, is destroying the purchasing power of the same middle class.

To help the middle class and boost the economy, what the Fed should be doing is raising the interest rates paid to depositors and substantially reducing the rates charged on credit card balances and student loans, so that the middle class can have more money to spend on goods and services and can afford more education. This is basic economics logic.

The Fed's policy is taking money away from the middle class and giving it to the banks. This does not help the middle class or the economy.

The Federal Reserve is NOT an unbiased third party working for the benefit of the country. It is owned by the banks and works entirely for the benefit of the banks. and Wall Street

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Response to AdHocSolver (Reply #16)

Mon Mar 9, 2015, 07:39 PM

17. Which part of the interview are you referring to, I reread and didn't zero in on it. Is your

info from elsewhere? I'm thinking you are confusing what he is saying conservatives want.

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Response to mother earth (Reply #17)

Mon Mar 9, 2015, 11:56 PM

18. There are two sets of interest rates involved here.

There is the interest paid to savers, that is, interest paid to depositors who put money into interest bearing accounts.

The bank pays depositors for the use of the depositors' money, which is then used to lend to borrowers.

On the other hand, there is the interest charged by the bank to borrowers. The banks don't lend "their own money" to borrowers, but in fact are lending depositors' money to borrowers. The diffence between what the bank pays to depositors for the use of the depositors' money, and what the bank charges borrowers that they lend it to is essentially a fee to borrowers and provides the bank with its profits.

The Federal Reserve sets both types of interest rates through a jumble of arcane monetary manipulations. Currently, the interest rates on deposits is around 0.1 percent (or .001), while interest on credit card balances is around 14 percent. This constitutes a "spread" of 14 percent / 0.1 percent = .14 / .001 = 140 times. Not too many years ago, bank savings deposits were paid 2 or 3 percent interest for a spread of, for example, .14 / .02 = 7 times.

In effect, these days, if middle class credit card users aren't paying off their credit card balances quickly, they are paying the banks usurious rates to borrow their own money.

The interest rates that the Fed traditionally raised were the rates charged to borrowers. They used to allow interest rates paid on deposits to rise as an excuse for raising the rates on borrowers, but recent history has shown that there is no penalty for cheating depositors.

The real reason for the Fed raising interest rates on borrowers was to strangle the economy when it approached full, or near full, employment. Full employment means that employers have to offer higher wages and better working conditions to attract a smaller pool of unemployed people.

With governments promoting higher minimum wages, and a smaller pool of desperate job seekers, the plutocrats are looking to the Fed to perform its traditional role of strangling the economy.

To improve the economy, two interest rates should be adjusted. Interest paid to depositors (savers) should be raised so at least to approximate inflation, and interest charged on credit card balances and student loans should be lowered so that the middle class can afford to spend more on goods and services, thereby contributing to the economy, rather than just providing the banks with huge profits.

Professor Wolff is referring to the interest rates charged to borrowers. My comments referred to both sets of interest rates. However, I didn't explain with enough detail. I hope this post helps.

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Response to AdHocSolver (Reply #18)

Tue Mar 10, 2015, 12:48 PM

19. I've heard him speak about interest rates on savings accounts and he also calls out this practice of

low interest (almost none) paid on savings accounts, just as you do. It is putting yet another squeeze, on an already squeezed populace. This really is about class and catering to the l%. We get it.

Everywhere we look we are being fed the lie that the economy is improving, and time and time again, we see it deteriorating in other ways, and any "improvement" is, more realistically, about painting the illusion of improvement, so that the Fed will raise interest rates for loans and mortgages, etc.

You are absolutely right, the middle class are the buyers and purchasers of goods and services, and everyone thinks they are middle class, but the shameful truth is the middle class continues to decline. While the masses slip into poverty, wealth has increased exponentially for the l% and continues to do so, see:

http://www.theguardian.com/business/2015/jan/19/global-wealth-oxfam-inequality-davos-economic-summit-switzerland:

Oxfam added that on current trends the richest 1% would own more than 50% of the world’s wealth by 2016.

Winnie Byanyima, executive director of Oxfam International and one of the six co-chairs at this year’s WEF, said the increased concentration of wealth seen since the deep recession of 2008-09 was dangerous and needed to be reversed.

In an interview with the Guardian, Byanyima said: “We want to bring a message from the people in the poorest countries in the world to the forum of the most powerful business and political leaders.

“The message is that rising inequality is dangerous. It’s bad for growth and it’s bad for governance. We see a concentration of wealth capturing power and leaving ordinary people voiceless and their interests uncared for.”

Oxfam made headlines at Davos last year with a study showing that the 85 richest people on the planet have the same wealth as the poorest 50% (3.5 billion people). The charity said this year that the comparison was now even more stark, with just 80 people owning the same amount of wealth as more than 3.5 billion people, down from 388 in 2010.

Byanyima said: “Do we really want to live in a world where the 1% own more than the rest of us combined? The scale of global inequality is quite simply staggering and despite the issues shooting up the global agenda, the gap between the richest and the rest is widening fast.”

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