America was founded on a dream: the idea that everyone has the right to life, liberty, and the pursuit of happiness. For the vast majority of our country’s history, that “American Dream” held true, with a vibrant middle class. But in the final decades of the 21st century, everything started to change. It’s gotten harder and harder to get ahead. The signs are everywhere: student loan debt, higher-than-ever debt-to-income ratios, and explosive credit card debt. Here’s a quick primer on how we got to where we are today.
The Prosperity of the 1950’s
In the late 1950’s, veterans returning home after the war needed jobs and houses to accommodate their growing families. War industries quickly converted to making civilian products, including for war-ravaged Europe and Japan. That trade led to a golden age in which America had the largest middle class in world history. The US stock market held the vast majority of the world’s total stock.
In this prosperous era, a household could survive on one income alone. For the most part, families owned their home and a car, and typically enjoyed one vacation per year. People lived with cash, because the little credit that existed had market-level interest rates.
A Turning Point in the 1970’s
Things took a turn for the worse in 1971. On August 15th of that year, President Nixon removed America from the gold standard. Ever since, the dollar has been flat, with no intrinsic value. The Federal Reserve, the central bank of the United States, can print or create as many dollars as it wants, at any given time. As a result, the US money supply has exploded — up 2,075% since 1971.
The Widespread Debt of the Present Day
By regularly increasing the amount of currency in circulation, banks have created an economic climate in which debt actually appears to be beneficial. In stark contrast to the 1950’s, practically everyone in today’s world has some debt. What’s more, the majority of Americans think they need debt to improve their lives and well-being.
Look around you to see the decline of the middle class. Both spouses have to work whether they want to or not. It costs, on average, over $200,000 to raise a child. That’s not even accounting for higher education, which is typically financed by a lifetime of student loan debt.
Today, the median price of a home is $241,700 and the average teacher makes about $48,290 (a conservative estimate). In 1959, the median salary for a high school teacher was $5,276 and the median home value was $9,627. Auto and credit card debt has also exploded.
Banks learned that people will only tolerate so much taxation before they rebel, but they will not only tolerate but also welcome the hidden tax of inflation. The illusion of getting ahead gives them the false confidence to take on debt, which will, over time, ruin them.
There isn’t anyone caught in this system who can find a way out.
Where do we go from here?
It’s not a pretty outlook. The economic pressures show no sign of stopping, and the middle class will continue to hollow out. Tens of millions of middle-class families will be kicked further down the ladder, which will be economically and morally disastrous.
Consider Forging a New Path With Bankruptcy: Speak With a Memphis Bankruptcy Lawyer
As the numbers go to show, debt can happen to anyone, especially when you have a family to feed. But thankfully, there is a way out. Through bankruptcy, you can live without the burden of debt and finally have the financial freedom you deserve.
If you have questions or concerns, we are happy to sit down and discuss the process and your options at no cost. Call (901) 327-2100 or just contact us here to speak with a Memphis bankruptcy lawyer today.