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The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (
TheStreet) -- There is a bona fide reason for the protests on Wall Street. Of course, the egalitarian socialists in the crowd offer a cure that would be worse than the disease. Namely, to divide the nation's wealth by the number of people in the country. But their anger emanates from a genuine realization that there is a growing wealth gap in the U.S.
The Census Bureau recently indicated that real incomes have dropped 9.8% since the start of the Great Recession in December of 2007. And an OECD study found that the gap between the rich and the poor widened by 20% since the mid-1980s. In other words, the
American middle class is slowly being wiped out.
The main culprit behind the devastation of the middle class is the inflationary policies of the
Federal Reserve, which has steadily eroded the purchasing power of the dollar. Those who can afford to hedge against its destruction have fared far better than those who live on a fixed income and unable to own assets that appreciate in an inflationary environment. In addition, the destruction of the U.S. manufacturing base has turned erstwhile high-paying assembly line workers into
Wal-Mart greeters. The fact that manufacturing as a percentage of GDP dropped from 28% to 11% since 1953 is because of uncompetitive wage, tax and regulatory policies.
The latest read on the employment condition of the U.S. offered little solace. Not only did the unemployment rate remain at a lofty 9.1%, but the number of persons marginally attached to the labor force, plus total employed part time for economic reasons as a percentage of the labor force (U6 unemployment rate), shot up to 16.5% from 16.1%. But the most discouraging news in this latest read on the American workforce is that manufacturing employment changed little in September (-13,000) and has been essentially flat for the past two months.
What's also noteworthy is that
Verizon workers returning from their organized strike boosted the total number of jobs reported. Stripping out the 45,000 workers from Verizon returning to work, the number of jobs added to the U.S. economy falls closer to the consensus estimate of 55,000 jobs.
Few new jobs, falling incomes and rising prices are what faces the middle class. The only condition holding the country together is the teaser interest rate we are paying on our national debt. Thanks to the dollar's status as the world's reserve currency, we now pay just about 2% on our $10.1 trillion publicly traded debt. Once rates normalize -- as they must due to inflation and massive supply issuance of Treasuries -- it will be game over. And the number of those protesters will increase exponentially.