Recession Watch: Here's how it happened

piggy bankEveryone knows that money is getting tight. Everyone knows our economy is faltering. Everyone knows it's going to get worse before it gets better, but does everyone know how it happened?

A professional CPA who commented on a blog post at our sister blog, BloggingStocks really put the matter in perspective. It's so simple that even I can understand it and they'll tell you around here that I'm no one's statistical economist. The writer identified himself as Marty, and I'll attempt give you the benefit of his straight forward wisdom.

Marty stated: "...from 1976 to 1984 the (cost of living adjustment) increases in Social Security were 75% over that period. If you made 10k in '76, you were getting 17.5k in '84. Similarly, pensions and job incomes were inflated as well. By the end of the inflation cycle people had higher incomes to pay off their (mostly) fixed debts. Now, in the last eight years (cost of living adjustment) has been 25% total. This is way below how high prices have gone for the average person."

It seems simple doesn't it? Yet none of the main stream media outlets seem to want to address the real issue. The talking heads expect you to believe that inflation is running at an acceptable annual rate of 2.6%. Do you believe that? Are you paying just $2.60 more for every $100 worth of groceries you purchased last year? Are you paying just $2.60 more for every $100 worth of heating fuel? Is just $2.60 more being deducted from your paycheck for every $100 worth of health insurance premium you paid last year? I could go on and on, but I'm sure that you get the idea.

The lesson here is simple, and I know that all of you will understand it. Someone has been lying to you about the increases to your cost of living. I probably don't need to explain that to you, because you have a bank account and you pay your own bills. I'm sure that you're feeling the pressure all too well.

Even now, the major media outlets expect you to believe that the housing market is crashing because banks and borrowers all got together and did something stupid. The truth of the matter is that we're just plain running out of cash down here on the lower rungs of the ladder.

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