Wolf Richter www.testosteronepit.com www.amazon.com/author/wolfrichter
It was a
very basic question: “Have there been times in the past 12 months when
you did not have enough money to buy the food that you or your family
needed?” In wealthy countries, the percentage of those answering “yes”
should be very small, and given all the money-printing, it should be
zero, you’d think.
But when Gallup surveyed families in the 34 member countries of the OECD,
the richest countries in the world, it found a reality on the ground
that turned out to be an indictment of the Fed, other central banks,
their policies, and bailouts in general.
Topping
the list of the 10 countries with the highest incidence of families
reporting difficulty in buying food over the past 12 months are, as
you’d expect, the OECD’s poorest members. Turkey, with the second lowest
per-capita GDP in the group, is number one: 50% of the families with
children and 40% of the families without children reported difficulties
buying food. It’s followed by Hungary, which has been hit by all sorts
of economic and currency crises, self-inflicted or not, and multiple
recessions over the past few years. So 47% of the families with children
and 35% of those without had trouble buying food. Mexico is in third
place, with 33% and 30% respectively.
And
then come two of the formerly wealthy countries in the Eurozone that
were felled by the debt crisis. The solution was to bail out the holders
of sovereign bonds and investors in the hopelessly hollowed-out banks.
To make that work, incomes, social services, pensions, health care
services, and a million other things were slashed, and taxes on the
masses were raised, all under direction of the bailout Troika (IMF, ECB,
and the EU). Unemployment shot into the sky. And that more and more
families would have trouble buying food surprised no one. So number four
and five on the list are Greece (28% and 26%) and Portugal (25% and
16%).
You’d
also expect Spain to be next in line. It has been wracked by the same
problems, and has been prescribed the same medicine, leading to sky-high
unemployment, reduced social services, pensions, health care services,
etc. [read.... Wreckonomics: Troika Accelerates Demolition of Spain’s Economy].
But no.
The next country in line isn’t Spain. Nor another Eurozone debt-sinner
country, nor some former East-Bloc country, but the country where the
central-bank money printing binge since 2008 has been taken to new
heights, from which benefitted a small number of people enormously, a
country whose central bank defined the “wealth effect”: the USA.
In
2013, as the S&P 500 index, including dividends, shot up 32.4% –
after an already blistering 16% in 2012 – and as the Fed’s trillions
inflated just about every asset class, from modernist paintings to
farmland, well just then, 23% of the families with kids and 19% of the
families without kids in America reported difficulties buying food.
In
Spain, by the way, “only” 18% of the families with kids reported having
these basic problems; and Spain didn’t even make the list of the top 10
for families without children.
Starting
with 2008, the fate of poor families has gotten worse in most of these
34 countries, though considered the richest in the world. It was the
kickoff of the money-printing campaigns and the enormous gifts that the
Fed and other central banks handed to banks and to the largest
corporations – including such luminaries as GE – and even, more or less
indirectly, to individuals such as Warren Buffett to keep them and their
financial empires from toppling under their reckless bets. Big
investors were bailed out. The poor not so much.
By the
time 2013 rolled around, Hungary’s families had seen the worst setbacks:
in 2007, 15% had trouble buying food. In 2013, 47% did. A 32-point
jump! Turkey was in second place with a 22-point jump, Greece in third
place with a 20-point jump. Families in some other countries were hit
less hard: the incidence increased 5 points in France, 3 points in Japan
(despite the horrific earthquake and tsunami that struck in 2011), and decreased 1 point in Germany.
On
average, this is what happened to the difficulties families in the 34
OECD countries faced in buying food once central banks took over running
the economy and bailing out the wealthy who owned the largest portion
of the assets:
The
country with the fourth largest increase over the past seven years? The
USA, with a 12-point jump for families with children. The Fed has chosen
the winners. It printed nearly $4 trillion and repressed interest rates
to near zero, allowing Wall Street to borrow short-term for free to
wager this newly created money by buying up all sorts of assets,
inflating their prices in the process, and enriching those who own them.
And the Fed has designated the losers. This too is the “wealth effect”
in all its untarnished glory.
This is
precisely what shouldn’t have happened but was destined to happen: as
prices are soaring, only luxury home sales are growing … 1% of the
market! Something has to give. Read…. Housing Bubble 2 Already Collapsing for the 99%
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