Day 910 – Poverty and The Inverted Yield Curve

Sunday, July 16, 2023

An Inverted Yield Curve is when an investor can make more money buying short term treasury bonds than long term, which is kind of nuts. Why would you invest your money locked up for a longer period of time than a shorter period and make less? 

This is typically taken as a sign that the economy is headed for a recession.

However, economic signs for regular people suggest otherwise. Like jobs (up), inflation (down), etc.

Many of the conservative economic elite seem to want a recession.

Meanwhile in real America there are problems. Here’s one:

Most financial advisors recommend spending no more that 1/3 to 1/4 of what you make into your housing. That means rent or mortgage payments.

So let’s do a little fun with math, two examples:

The Federal minimum wage is $7.25 an hour. 

There are 13 weeks in a quarter. If you work 40 hours a week that’s 520 hours.

520 x $7.25 = $3,770.00 per quarter 

(there are 13 weeks in a quarter. this makes calculating a monthly average more accurately than taking 4 weeks a month.)

Or $1,257 a month.

$15,084 a year.

That means, according to financial planners, 

In the U.S, a person can only afford to spend between $314 and $419.00 on rent.

That is if the 1/3 to 1/4 of their money is to be spent on housing.

In Maryland the minimum wage is $13.25.

Or $6890 per quarter, 

$2,297 per month

$27,560 a year.

In Maryland rent should be between $573 and $765 a month.

An 897 square foot apartment costs $1,706 per month in the U.S. according to Google.

And that they say that is the average apartment.

A general rule of thumb for determining poverty is when you have to choose between buying food or paying your rent.

If you are making the Federal minimum wage you are falling behind every month by $449.00. ($1,257 – $1,706 = -$449.00)

If you are in Maryland and making $13.25 you have $591 left over for food.  ($2,297 – $1,706 = $591)

None of these calculations include money for medicine, doctors, car payment, gas, phone, entertainment, or shoes.

Additionally, you can’t rent an apartment unless you can show paystubs for the last year. You have to prove you have had the means to pay for said apartment for the last year! What if you can’t? Too bad.

So where do those people go? The people who can’t pay $1,706 a month? They go somewhere cheaper. If you look at cheap rents on Zillow, you find $1,600; or maybe $1,500, but it’s the same problem. You have to prove you can pay, and there’s an application fee.

And some people wonder why we have folks living under bridges in tents?

Let’s say you are living week to week, and then something happens. You get hurt at work or the company you work for goes bankrupt or the contractor refuses to pay you, or you get thrown in jail. It doesn’t matter what it is – the fact is the money stops coming in but the bills don’t.

The landlord demands rent, the car is threatened to be repossessed, the phone is about to get cut off. What can you do? Nothing.

If this goes on for a month you are broke, homeless, with no phone you have no way to contact anybody, nothing to eat. What do you do?

A long time ago, we used to try to solve these problems. Now we either bitch about them or point fingers at the person in trouble and move on. But those people have nowhere to move to. They are stuck. Too bad. Next.

When FDR was President he was worried about putting people “on the dole.” It was his Secretary of Labor, Frances Perkins who created programs to help people create jobs and give people dignity,

It wasn’t a dole, but a necessity. 

She was aided by Roosevelt’s wife, Eleanor, who traveled the country and looked at conditions and made personal appeals to her husband to do something about whatever the problem was. Ken Burns in his documentary about Roosevelt read a letter from a woman addressed to the President that said if he didn’t fix whatever it was she’d have to write to Mrs. Roosevelt. Where’s our Eleanor now?

Teddy Roosevelt was the same way. He was constantly replying to people who needed help and dictating letters to instruct others to take action based on his authority. His most famous action was in the coal strike. Previous presidents had used armed troops to put down strikes. Roosevelt on behalf of the government acted as a third party arbiter. When the coal bosses refused to negotiate on working conditions Roosevelt said he’d send in the army to operate the mines. The bosses said, “You can’t do that.” Roosevelt said, “Watch me.” That was the beginning of labor negotiations in this country.

(Actually the quote was more pointed than that but I didn’t find the exact quote.)

We use to solve problems. We use to have people in Congress who recognized the problems and talked about how to solve them. Now, we only have one party doing that while the other is chasing rabbits down conspiracy holes.

And trying to destroy the very fabric of our country and society.

I had someone I knew from grade school. I ran into her at a reunion. We traded emails and became Facebook friends. She warned anyone who came near her that she had extreme political views. She spent a lot of time posting stuff from “Prager University.” It was economic nonsense mostly. I spent a month pointing out the flaws and asking questions of her. Like, “why is a right wing conservative commentator pretending to be a university?” Her answers were of two types, “Everyone knows he’s not,” and some kind of economic idea that involved 501Ks or monetary policy (a la Ron Paul “we are all Austrians” ) etc. I spent a month pointing out the fallacies of the arguments. (No, everyone does not know Prager is a fat blowhard. And 501Ks are nice if you have money, What if you don’t? etc.)

It was like trying to blow out candles on a birthday cake that had those candles that appeared to go out then light up again.

It’s a wack-a-mole game: Hunter Biden’s laptop, Hillary’s emails, immigrants, people don’t want to work, why are we paying taxes so they can go to college for free?, secure the southern border, remember when …

If you ask for a solution it’s either pixie dust or it’s shut up you don’t understand.

Yeah?

So here’s a simple one. If you’re broke and you need to spend $30 or $40 to put in an application for a job or rent – where are you going to get that money?

And then your application gets refused and you don’t get that money back, now what?

John Oliver last season had a show about rental increases. When housing got cheap, big money bought it up. Now, they are increasing the rental rates. They say, it’s a real opportunity. Well, yeah. With no choice what will people do?

Live in a cardboard box under a bridge.

This is America.

This is what it has become.

We used to solve problems.

We have some really big problems.

Yeah, but what about …?

PS I think it mandatory that we mention poor besieged Donnie. He asked, “Why isn’t Biden being charged with The Insurrection Act?”

Why indeed.

Well, maybe he didn’t insurrect? How’s that?

So, I have to ask, as others have, why would DJT ask the question?

Hum. Maybe somebody else will get charged with insurrection, huh?

Stuart Rose, head of the Oathkeepers got 18 years  for sedition, and DOJ protested saying that’s not enough.

How much is insurrection? Seems worse than sedition.

I think it’s hanging. Yeah. Hanging. Trust me on this. (No, I haven’t looked it up. should I? Wonder what Prager has to say about that?)