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I see that my local Walmart is bringing back those inexpensive Mexican TV dinners they dropped from the inventory a few months ago. They sell for about a buck fifty. No, they may not be healthy, but you can feed a family of 4 dinner for around $7 with them.
Why is this significant and what does it have to do with the economy?
Just this: When Walmart eliminated those TV dinners, they also removed about 4000 other inexpensive products. The objective was to make the stores look less cluttered and to make room for higher costing goods in the expectation of an easing of the recessionary pressures on their consumers.
But, a funny thing happened along the way: A good many of their customers left and went to the dollar stores, such as Family Dollar and Dollar General. Those stores "same store" sales, a measure of returning customers, went up about 10% during the past few months, while Walmart's fell by 7%.
Why? Because the dollar stores have been aggressively courting their base, what they call "value customers," a euphemism for "poor." They discovered that a lot of their customers are running out of money before the end of the month and have been working with their suppliers to provide less and less expensive items, including items which they did not sell before but which are no longer found at Walmart.
To do this, they've encouraged their suppliers to provide less goods in smaller packages which can be sold for less. For instance, you can now buy trash bags in boxes of 5, rather than 20 or 30. While those bags are more expensive per bag, the per box selling price is low enough to satisfy those families who are down to their last $20 of the month. Of course, it should go without saying that the stores are reaping greater profits from all this, but without such downsizing of packaging, the customer simply could not buy trash bags until they get paid again.
Walmart has seen the light and is bringing back those items they dropped. In other words, they're admitting that banking on the economy improving was a mistake, in spite of what the President and all the talking heads are saying and here's what's about to happen:
Walmart must match the dollar stores offerings or lose those customers permanently. That means, in the first place, that you'd better keep an eye on product volume or count in that box of whatever it is you're buying. The likelihood that you'll be getting less for more money is high. While the actual retail price will be lower, the cost per ounce or per unit will go up which really isn't a savings for you in the long run. However, with millions unemployed or under-employed (a group of people nobody talks about any more), final retail price is what's driving sales.
Secondly, all of this increases pressure on the manufacturers to off-shore their production. Cheaper and cheaper is the rule of the day and foreign countries like China, Bangladesh and Honduras offer relaxed environmental rules and cheaper labor, so what's to keep them from moving more production out of the country?
Nothing, and they will. End result? More American's out of work, which increases the demand for lower prices. It's an endless cycle of loss of a job resulting in less income, which increases the pressure on prices, which results in the loss of more jobs and the cycle begins again. Ultimately, goods are manufactured and sold at the lowest possible price, but nobody here has the money to buy it.
Enter the federal government. It has no other alternative than to spend tax dollars putting money in consumers pockets, one way or the other, to sustain the economy. No money means no shoppers which means no economy, so what else can it do?
However, that money must be borrowed. Even by soaking the "well off" for more taxes (well-off is a term with an perpetually lowering definition) it can't bring in enough money to meet peoples needs, so it must borrow it from someone.
That someone is foreign countries which have seen our jobs go to them and are making a hefty profit off of them, so they have to invest that money somewhere. They have been investing it in our debt. But, those other countries are now unwilling to take on what looks like a shakey investment, so the Fed is prepared to buy all that debt.
But, what do they buy it with? Dollars which are already owed to someone. In a fiat currency system, no dollar has any value whatsoever until it's loaned out, so debt is being bought with dollars already indebted, several times over. It's debt piled upon debt piled upon debt. In reality, it's a giant ponzy scheme which is slowly piling up more debt than can ever be paid, but what's the alternative?
End game? A complete, total collapse of the economy. As more jobs are lost and the pressure for lower prices results in the loss of more jobs, government must step in to provide the basic, minimum resources to keep our citizens from being homeless and starving but, with declining tax revenues and its other expenses, it must borrow and then borrow more. There is no other alternative.
But, we're not finished yet!
Economic difficulty always results in threats to the social order as people being perpetually squeezed look for answers and something different. We already see it happening with the angst of the Tea Parties. This time, though, there is literally no solution and nothing "different" can be found, so the social unrest grows and grows. The space between the haves and have not's increases (because the "haves" are making a mint off the stock market while the "have nots" lose more jobs), and that merely feeds the unrest. The dissatisfied, the unhappy, the people who are losing their jobs or are concerned about the future, are fair game for profiteers and charlatan's, who have already appeared to lead them to whatever "promise land" they can dream up, but the cycle of joblessness, poverty, lower prices, more joblessness and increased government borrowing to compensate for all that goes on unabated.
And, it will go on until a spark is lit over something, probably trivial, and the social order will collapse as surely as the economic order, which also means the collapse of the political order.
Neither political party, neither philosophical side of the aisle, conservative or progressive, no individual candidate or savior has any more to offer than temporary band-aids as the world comes down around our ears.
A lot of people thought the country was going to collapse in the 1970's when unemployment and inflation were far higher than we are experiencing today.
Doomsday fantasies are very popular in economic hard times.
A lot of people thought the country was going to collapse in the 1970's when unemployment and inflation were far higher than we are experiencing today.
Doomsday fantasies are very popular in economic hard times.
yeah, i have to agree with you on that one. check out the 'self-sufficiency and preparedness' section of this forum sometime to find out how it will all end.
A lot of people thought the country was going to collapse in the 1970's when unemployment and inflation were far higher than we are experiencing today.
Doomsday fantasies are very popular in economic hard times.
In the 1970's, and during previous recessions, depressions and panic's, we had the industrial base to pull ourselves out. All that was needed was government spending to "prime the pump" and put people back to work.
Now, with our industries gone overseas in the relentless search for lower production costs, there is no pump left to prime. All that money being spent is not resulting in factories re-hiring laid off workers this time because they're shuttered and jobs aren't coming back. It's sustaining a work force with no prospect for gainful employment, even in the long term. In other words, instead of government assistance being of a temporary nature, as it was in the past, it is now the defacto way of our citizens "making" a permanent living.
Additionally, we still had a currency backed by something substantial back then, but now have a currency which is worthless until loaned out.
The result is just what you see happening right before your eyes. The combination of promoting a global economy, coupled with the short-sighted focus on short-term profitability and stock value (rather than the welfare of our workers), plus the fiat currency chickens coming home to roost makes this a perfect storm of economic madness.
But, nobody is talking about that. Those who really know what's going on are frightened of the future and aren't telling us the whole story. They'd rather we believe that everything will be just fine so long as we raise/lower taxes, spend more/less, do this or that to buy them enough time to secure their own wealth and move it to Dubai.
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