The Social (Security) State

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Zerohedge reports that the US social security bill would make it the 6th largest economy in the world at around $2.8 trillion. 110mn people are on some form of means-tested hand outs.

There are currently 126 million prime working age persons in the US between 25 -54 years of age (+5mn since turn of Century) but the 77.1mn FT employees has dropped 1.2mn over the same period. Only 61% of employees are full time ( from 66%) At the same time consumption has leapt $3.1tn (+38%) a lot of it thanks to the government transfer payments at nearly 2X the 3.3% growth of nominal wage and salary disbursements.

With US GDP in 2Q coming in at half expectations and 1Q revised down below 1% not to mention a softening Europe and a China in trouble things do not look sustainable.

I’ve also argued for some time that the quality of employment is declining regardless of what the headline unemployment rate might show. Poverty is a growing phenomenon worldwide  but with central banks losing the battle and government and private sector indebtedness growing policy options are too scary for incumbent governments to face. Hence the rise of the antiestablishment forces.

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