Technical Indicators (the SOI Bulletin)

The technicals indicate what is wrong with our economy.

The latest Statistics of Income (the SOI Bulletin) issued by the IRS shows a disparity of income not seen since 1928.

Also, looking at charts from 1920-2008, there was an accumulation of income in the top one percent peaking in 1928 with a distribution to the 1980s when an accumulation again occured (Reaganomics). Accumulation continued through the 90s (a period of a more progressive tax code) and has now peaked to a level exceeding the previous 1928 level prior to the Great Depression (periods of a highly regressive tax code).

We will not see another Great Depression, but it is a highly negative, crisis-indicator and gives empirical evidence confirming the perils, the moral hazard, of "making the tax cuts permanent."

A more progressive tax code does not necessarily mean the rich do not get richer, it means that it is not at the expense of all other income classes because it expands the pie instead of depriving it (Pareto Optimality).

Understand that if you have money to burn, a politics of deprivation does not affect you negatively. Rather, it has a positive affect of feeling powerful--the ability to reward and deprive (a zero-sum)--and empirically confirms social status. It is a demonstration of power. It is much more difficult to demonstrate power and status in a meaningful and effective way if everyone is getting wealthy together (a non-zero-sum). Deprivation magnifies the meaning of being powerful whether it is feudalism, capitalism, socialism, or any other kind of "ism."

I am always hearing that the benefit of this current economic hardship, the deprivation, is that it will force people to save more. It will discourage the negative savings rate.

Again, understand, the negative savings rate is an indicator of some people having money to burn. It is a politics of deprivation to satisfy the conceit of power.

The savings rate is not negative, it is just not owned by you! Dividing total income by the number of positive gross income tax returns yields a savings rate that is far from negative.

Your savings has been consolidated into a surplus of capital and made the personal property of the top income classes. The evidence is clearly convincing, a matter of public record and being verified in the most up close and personal way when merely living is an exercise in going bankrupt! The average income is being told the economy is fundamentally sound when it clearly, obviously, is not. For an elite, that very ineptly magnifies the retributive value accumulated.

There's a good article on the income indicator published in 2007 at http://rawstory.com/news/2007/Wealthy_grabbing_larger_share_of_US_1012.html.