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The Financial Dismantling Of The American Middle Class

During the crazy debt era of securitization we were hearing stories of cats being issued credit cards with $5,000 limits. It was a massive debt bubble. Many average American families have relied on credit cards to give them the impression that they were keeping up with a middle class lifestyle but instead were simply borrowing time on expensive shiny plastic. With stagnant incomes over a decade the piper is now calling. The above chart clearly shows the contraction in outstanding credit card debt in the U.S. Much of this debt is being discharged in bankruptcy if you are wondering how the chart is moving lower so quickly. Chart 2 – Growing financial sector versus manufacturing The above chart shows the financialization of the American economy. Since 1970s the U.S. manufacturing sector has contracted. Over 19 million workers were employed in manufacturing during the 1970s. Today we have slightly above 11 million workers with many more living in the country. Over 40 years later and our manufacturing workforce has been cut nearly in half. But look at the financial sector. This part of the economy has been adding jobs almost nonstop. It seems that the U.S. economy was largely built on debt production and collection; credit cards, mortgages, student loans, and auto debt. Someone needs to collect the interest right? Yet how useful is it to have giant parts of your economy developed to make nothing and suck away actual real wealth from the productive side of the market? That is what Wall Street investment banks have done for many decades and it coalesced with our current Great Recession.

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