Income Growth For Bottom 90% In America Since 1966 Is... $59!

Tyler Durden's picture

Submitted by Michael Krieger of Liberty Blitzkrieg blog,

We’ve all seen these statistics before in one form or another, but David Cay Johnston does an excellent job going into more detail for us in an article he published late last month.  As he correctly notes, when things get extreme like this you ultimately end up with extreme social unrest.  Furthermore, as I have pointed out for years and years, this kind of disparity does not happen under free markets with rules and regulations applied equally to all.  It happens under totalitarian societies, whether fascism, communism or crony capitalist corporatism (which is the model in the USA).  It only happens when a very small oligarch class takes over the political process of a nation and then uses it to game the system.

However, I would take exception to Mr. Johnston’s conclusion that the root problem is the tax system.  While I do not for one moment deny that the oligarchs game the tax system to provide loopholes for themselves, this is not why the 1% of 1% has taken all the wealth of the nation.  This is much more related to the Federal Reserve and its policies of printing trillions of money out of thin air and distributing it to the oligarchs, either directly or through low interest loans.  If you tax the rich more, they will still make more because they will still have the access to the cheap money.  The Federal Reserve is the core cancer of the entire thing and they must be stopped.  Some excerpts below:

The average increase in real income reported by the bottom 90 percent of earners in 2011, compared with 1966, if measured at one inch, would extend almost five miles for the top 1 percent of the top 1 percent.


Remember, we got off the gold standard in 1971, after which the Federal Reserve could print as much as they wanted and distribute it wherever they wanted…and they have.


Incomes and tax revenues have grown from 2009 to 2011 as the economy recovered, but an astonishing 149 percent of the increased income went to the top 10 percent of earners.


If you wonder how that can happen, the answer is simple: Incomes fell for the bottom 90 percent.


Ponder that last fact for a moment — the top 1 percent of the top 1 percent, those making at least $7.97 million in 2011, enjoyed 39 percent of all the income gains in America. In a nation of 158.4 million households, just 15,837 of them received 39 cents out of every dollar of increased income.


In 2011 the average AGI of the vast majority fell to $30,437 per taxpayer, its lowest level since 1966 when measured in 2011 dollars. The vast majority averaged a mere $59 more in 2011 than in 1966. For the top 10 percent, by the same measures, average income rose by $116,071 to $254,864, an increase of 84 percent over 1966.


Between 1980 and 2005, more than 80 percent of the total increase in income went to the top 1 percent of American households.


The median wage has been stuck since 1999 at a bit more than $500 per week in real terms and job growth has lagged far beyond population growth. But capital gains and dividends have soared, a new Congressional Research Service study shows. And, of course, the rich get most of that income. Thomas Hungerford concluded:


That is a lot of stress being placed on people between the bottom rung and the top. I think it is more stress than the social ladder can bear, although when and how it will break no one will know until it happens.


Tax policy is driving these trends.

As I mentioned before, I disagree with the statement above.  He correctly points out that the super rich make their money from capital gains and dividends, but why have those grown so much?  It’s all Federal Reserve policy, which targets increases in assets prices that the oligarchs own.  It’s not a secret that Ben Bernanke is actively targeting the stock market with his money printing and not the real economy.  So who does that benefit?  That’s not tax policy, that’s monetary policy.

Full article here.

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Dr Paul Krugman's picture

This just isn't true.

Supernova Born's picture

What's the answer to "extreme social unrest"?

1.7 billion hollowpoints, why thank you!

DJ Happy Ending's picture

The incentive is either get rich, join the welfare-class or work for cash.

TwoShortPlanks's picture

Doesn't matter coz we're all savers....right?!

WayBehind's picture

59 bucks? Better than 59 Euros in Cyprus bank :)

Angus McHugepenis's picture

Doesn't matter coz we're all savers....right?!

Can you recommend a good bank?

Angus McHugepenis's picture

Yes... I've heard of that bank. Apparently only REAL MONEY is kept there.

TruthInSunshine's picture

Bill McBride of Calculated Risk (a Hope & Change production)& Paul Krugman should collaborate and produce an awesome work of fiction. Those two have some extreme talent in that genre.

In the interim, it will all work out because we have legislators such as Maxine Waters, Harry Reid, John Boehner, Nancy Pelosi, Max Baucus, Dianne Feinstein, John McCainus, Lindsey Graham, Spencer Bachus, et al., along with a President as highly competent as Barack "I don’t know what the [national debt] is" Obama.

We also have The Federal Reserve, the SEC, the CFTC, The Treasury Department, the DHS, and the SCOTUS.

All is well.


p.s. - At least Obamacare will reduce health care costs. Errr...I mean massively inflate them...

Study: Obamacare to Raise Average Claims Cost 32 Percent (and as much as 80% in certain states)

ABC News ‎- 4 hours ago By RICARDO ALONSO-ZALDIVAR Associated Press WASHINGTON March 26, 2013 (AP)

Insurance companies will have to pay out an average of 32 percent more for medical claims on individual health policies under President Barack Obama's overhaul, the nation's leading group of financial risk analysts has estimated.


The report by the Society of Actuaries could turn into a big headache for the Obama administration at a time when many parts of the country remain skeptical about the Affordable Care Act.


The disparities are striking. By 2017, the estimated increase would be 62 percent for California, about 80 percent for Ohio, more than 20 percent for Florida and 67 percent for Maryland. Much of the reason for the higher claims costs is that sicker people are expected to join the pool, the report said.

FieldingMellish's picture

But being rich is not enough, as Cyprus has shown. You must outrun the rich man next to you continuously until there is but one man standing. The top will now feed off themselves as there is no meat left on the bottom 90%.

LetThemEatRand's picture

  1. Hans:  "As Gandhi said...'An eye for an eye leaves the whole world blind'. I believe that whole heartedly.
  2. Bill:  "No it doesn't. There'll be one guy left with one eye. How's the last blind guy going to take out the eye of the last guy left whose still got one eye left? All that guy has to do is run away and hide behind a bush. Ghandi was wrong. It's just that nobody's got the balls to come out and say it."

-Seven Psychopaths

Debt-Is-Not-Money's picture

"The top will now feed off themselves..."

Yes, in the end there can be only one!

Now where have I heard that before?

HowardBeale's picture

'What's the answer to 'extreme social unrest'?"

Whatever the required number is of hollow bankster heads--hollow because they have had one side of their heads blown off due to a point blank encounter with one of their victims, aka, Inhabitants of planet Earth.

lolmao500's picture

Krug, take out the banksters cocks out of your mouth before speaking, it's impolite.

lotsoffun's picture

krug was cooking socks.  he thought it was a roast beef sandwich.

but - on a relative basis - he's really rich.  and get's lots of attention.  if only he could get richer.

why do you think bernake has such a shiny head?  think jamie and lloyd have the shamy cloth on there when they meet?

McMolotov's picture

Here in Krugoslavia, the land of make-believe, we don't need no stinkin' facts.

JenkinsLane's picture

And Scruffy don't need no stinkin' trial.

MayIMommaDogFace2theBananaPatch's picture

Krugoslavia and the Blank 'Czech' would make nice punk band name.  Give Pussy Riot a run for their rubles.

Tinky's picture

That might be your most incisive analysis yet.

alien-IQ's picture

A room full of children that cannot do simple math is a tragedy.

A room full of adults that cannot do simple math is a meeting of PHD Economists.

calltoaccount's picture

they can do the math.  they just get paid not to.

thewayitis's picture


     Whats not true Mr. Krugman? Speak to us ....Do you have the kahunnas...



       That's what I expected........No response 

Meat Hammer's picture

I picture you pouting, arms folded, kicking the wall, like my toddler.

Angus McHugepenis's picture

Meat Hammer: You didn't name your kid "Kruggers" by any chance?...

ziggy59's picture

Whats not true? The 2 next to your UP arrow? Oh, its true, man.

teolawki's picture

Yes. From his two ZH accounts.

PrDtR's picture

You're wasting your time.. anything vaguely intelligent which requires THINKING, will scare Krug off!!!

Pairadimes's picture

Alright. I've had enough. I'll bite. What part of 'this' 'just isn't true'? And is it just not true from an 'in possession of irrefutable factual proof of a falsehood' kind of perspective, or from a 'Luke Skywalker clinging to a railing, reacting to Darth Vader's revelation' kind of perspective?

People like you make your living on the temporal and evidentiary disconnect between misguided policy and it's inevitable consequences. You wallpaper your monument to self with the accolades of the hopeful who are incapable of the kind of root cause analysis it requires to identify the truth in this clouded world, and believe this is proof of a life well-lived.

So let's ignore the fact that the vast majority of commenters on this site are registered under something other than their given names, and what conclusion some might draw about the ego needs of the one well-known individual on the site (do not assume there are no such others) that does not do so, and assume that you are Dr. K. Please share the meaning of your remark. Please prove to me and others here that you are something other than the uber useful idiot; the Jack Kevorkian of free enterprise in the 21st century.

AnAnonymous's picture

What part of 'this' 'just isn't true'?

Probably the stuff with the free markets in it...

akak's picture

I'm sure it's nothing that some good old-fashioned ground "dragon bones" and fried tiger penis in bear gallbladder sauce cannot cure.  The efficacy of the cure, of course, being proportional to the degree of endangered status of the exploited species in question.  But do not look for self-indictment of overconsumption and exploitation from hypocritical Chinese Citizenism, for you will never find it.

Angus McHugepenis's picture

Somebody round off Krugger's for 60 junks. I got him at 59.

DollarMenu's picture

If I remember correctly, there was a time in ZH days past when 50 'junks' would get a post pulled.

PrDtR's picture

You, SIR, are someone w/a THICK INFLATED HEAD.. but NO BRAINS!

YOU DON'T THINK.. almost robotic in your transmissions..

YOU PROGNOSTICATE, but do not show your reasoning!

All Risk No Reward's picture

Hi Paul,

What are your thoughts on Big Business leveraging dictator controlled slave labor camps over in China to maximize profits?

What are your thoughts on a government that provides tax incentives to do so?


You might have missed this question the last 5 times I asked it, so here we go for try number 6 (and yes, I will continue to increment the numbers until you answer the question):

If growth is defined in monetary terms and money is debt (interest bearing), please explain how exponential growth of debt is sustainable into eternity.

If money (debt) exponential growth is not sustainable into eternity, then WHAT HAPPENS WHEN THE EXPONENTIAL MONEY (DEBT) GROWTH FAILS?


Freewheelin Franklin's picture

This just isn't true.


Why yes, it is true. One of those bastard children you had with that Austrian hottie, also known as the "Chicago Boys", showed, empirically, that in a monetary regime of intentional creeping inflation, real wages NEVER keep pace with real inflation. His name was Melchior Palyi. 

XRAYD's picture

The best income democracy can buy!

LetThemEatRand's picture

You mean trickle down doesn't work?  Who knew?

lolmao500's picture

But... I'm told even the poorest in America aren't real poors... whatever that means.

nmewn's picture

"It only happens when a very small oligarch class takes over the political process of a nation and then uses it to game the system."

Like Buffet's railroads hauling while pipelines are blocked by regulatory capture or picking basketball brackets instead producing a budget request?

LetThemEatRand's picture

"While I do not for one moment deny that the oligarchs game the tax system to provide loopholes for themselves, this is not why the 1% of 1% has taken all the wealth of the nation.  This is much more related to the Federal Reserve and its policies of printing trillions of money out of thin air and distributing it to the oligarchs, either directly or through low interest loans."

And remind me who runs the Fed?

nmewn's picture

Yes, its extraordinary isn't it?

The executives of A123, Solyndra, GM, FNM, FRE, GE, C, BAC, GS, Fisker etal make off like bandits and no one on the face of the planet saw it coming and NOW everyone wants to bitch about it.

Remarkable, the feeling of guilt without any association ;-)

Shizzmoney's picture

Do you ever think Bernanke or any other of the Fed Reserve heads ever just print money for themselves, like $100 or $500 whenever they want, so they'll have money to go out drinking with after helping oligarchs game the system?

You gotta feel like a God when you print that money, man. 

Papasmurf's picture

He wouldn't need to print money to go drinking.  Drinks are free for him as a professional courtesy.

ZerOhead's picture

$100 or $500? Not a chance...

Now $100 to $500 billion in free loans  and "currency swaps" (where no swapping takes place) to banks and foreign CB's who lend it on to other banks that Bernanke says he doesn't even know about for free?

Yes... that they do.

Watch Grayson ask Benny where the 500 bill went...

Now if I were a recipient of that free Bank Of God largess I would be more than happy to throw a couple of bills Benny's way...

Henry Chinaski's picture

Debt slavery courtesy of the federal reserve and your friendly neighborhood federal government.


Pseudo Anonym's picture

the federal reserve is not  the problem.  the problem are the greedy hofjuden that own the fed and run the fed not for the benefit of the nation, as the nation was led to believe in 1913, but the hofjuden run the fed to benefit themselves by enslaving individuals by debt and stealing the fruits of their labor by debasing the currency.