Annual Wealth Created: BIS Banker vs American Worker

The WealthCycles Staff

WealthCycles is all about measuring stuff with stuff, and taking the effects of the devaluing fiat currencies out of the equation. In an effort to paint a true picture of the well being of the average American worker, we took a look at real annual earnings to judge the extent to which the Main Street American family budget has come under pressure since the financial crisis began.

The results are startling (chart below).

From before the financial crisis began, the cost of what families need to buy has risen significantly, while nominal wages are rising at their slowest rate in recorded history. In other words, the rate at which wages are rising is far slower than the rate at which the purchasing power of the dollar wages are paid in is falling.

In fact, when measured in real money—gold—the real average annual private-sector wage has fallen from 66 ounces of gold in 2006 to just 28 ounces today.

Annual Wealth Created: BIS Banker vs American Worker

Then, just for fun, we threw in by comparison the annual profit each full-time banker at the Bank of International Settlements (BIS) “earned.” Of course, the profit figures are not banker take-home pay, but can be viewed as a rough measure of the value of work performed, just as wages are. Before we comment more on that last statement, one item we note is that coordinated action and inter-organizational communications made front-running the stimulus quite the bonus opportunity at banks.

Although we do not seek to deprive the 1% of their profits, we do suggest that there is something wrong with earnings extracted from a system that taxes the poorest the most as a percentage of income. There is no means by which the Main Street middle class, the poor worldwide, or even the rich and ignorant can save to better their standard of living unless they understand the persistent loss of purchasing power inherent to an ever-increasing pool of dollars.

The way a capitalist system is supposed to work, if we could simply give it a shot, is that money increases in value and purchasing power over time as goods and services persistently fall in price on average over time. This happens as the supply of goods and services becomes more abundant, competitive and efficient. Under a properly functioning capitalist system, a fixed amount saved grows in value naturally, and even the poor can afford to improve their standard of living because their savings are not secretly stolen, as they are under our modern economic system. Inflation, or printing in order to expand the supply of currency and credit, is simply taxation without representation… making the so-called “war on poverty” an ongoing joke at best.

Not suprising at all. This is the reason for central banks.

Michael, i am a 26 yr old waiter and front desk person at a gym. I've been following you for 5 or 6 yrs now and am quite disappointed to admit, i didnt buy silver when i finished reading your book "the guide to investing in silver/gold." Skeptical at 9$ an ounce, i went into stocks. I broke even pretty much, and was shocked to see silver at 33$/oz. So, seeing fundamentals havent changed much in our govt, i closed my position in stocks and bought silver in aug 2011. Its been a rough yr trying to stomach the ups and downs and relatively FLAT PRICE change, however, I find much comfort seeing the value of my decision with this upcoming fiscal cliff. If i see stocks plunge 40%+ and silver stay the same or even go up, my purchasing power has sky rocketed. Maybe my thinking is flawed, maybe 3 yrs down the road i will have wished i didnt sell. But this cliff to me (if we go over) looks like a great oppertunity. Thank you for your dedication to education, i hope it serves me, and every1 else who listens to you.

Thanks for writing.

Hang in there. Continue to save in physical silver and gold coin.

The pertinent fundamentals of precious metals are the inverse of the dollar's fundamentals -- as the dollar loses purchasing power due to more and more debt added by deficits and new programs, it will eventually take far more, weaker, dollars to buy an ounce of silver or gold.

If precious metals prices drop, excellent, we can then stack up that many more ounces for when all lose confidence in the currency's ability to maintain it's value.

At this new rate of printing, groceries will unfortunately start to cost more, and the process begins. This is a long-haul savings project that will change your life and Mike maintains that it remains the greatest opportunity in human history.

Silver earns interest (paid in silver)

"Certificate of Deposit" - style:

12-month GDF contract – 3.25% annual return
24-month GDF contract – 5.25% annual return
36-month GDF contract – 7.25% annual return

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