Debt Forgiveness May Be the Only Way Out for U.S.

by: Rolf Norfolk

Charles High Smith posts (as many times before) on the widening inequality of income and asset ownership in the USA. This time he uses it to explain the apparent recovery from recession: "The top 5% of Americans by income are responsible for 37% of all consumer spending-- about the same as the entire bottom 80% by income (39.5%)."

Among the useful links at the bottom of his post is one to an earlier article of his entitled "Why We Keep Getting Poorer: High-Cost Housing." Back in April, I took a graph (below, with some style additions by me) from Calculated Risk to illustrate that point.

Click to enlarge:

(adapted graph from Calculated Risk) - click on image to enlarge

It seems to me that if the U.S.A. (and the U.K., and Europe generally) wants to get competitive with the Far East, our wages will have to drop. But they can't until our debts are reduced.

Debt default, or debt forgiveness, may be the only way out.

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