The Federal Government tells those of us in the United States that our economy is steadily growing and that all of us have grown much more prosperous than our parents and grandparents were—that in fact our standard of living has improved.
The problem is, our increased relative prosperity is nothing more than illusion created by the government’s gaming of the statistics.
In this video blog, Michael Maloney takes a look at Gross Domestic Product (GDP) per capita, which is the measure of the prosperity of the United States per person, and how it has grown over the years since he was a boy, compared to the real standard of living we enjoy today.
In a span of a hundred years or so during the 1800s, human quality of life improved immensely. Indoor plumbing, electricity and indoor lighting, the telegraph, the telephone, refrigeration, radio and television were all invented within the span of a century or so. Since then a few improvements have been made—most notably computers, the Internet and cell phones. But aside from those technological improvements, our standard of living is not much better today than it was a generation ago.
In 1956, when Maloney was born, his father, then a manager of an auto parts store, was making about $9,600 a year, and paying of taxes of about $1,100, or about 12%. On that salary he was able to buy a single-family home valued at around $7,500 or $8,000. Today, in Los Angeles, a median-priced single-family home goes for something like $250,000 or $300,000. In order to buy that home today, an auto parts store manager would need to be making about $350,000 or $400,000 a year. How many store managers do you know who are earning that type of money?
But if a worker is making so many thousands of dollars more these days with no real increase in purchasing power, you may ask, but he doesn’t have anything more to show for it than his Dad and Granddad did, where is all that wealth going? It is being steadily transferred, via inflation and taxation, from your personal wealth into the clutches of the financial sector and the government—who are indeed much better off than they were a generation earlier.
The key to preserving your wealth is to see through the illusion and to plan your financial strategy in order to take advantage of the immense wealth transfer that will take place when the currency, debt and stock cycles come to their end.
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