BALTIMORE – “U.S. Lifespans Fall Again,” was the headline in The Wall Street Journal yesterday.

The accompanying reportage tells us that the average American now lives a month or two less than he did in 2015.

What to make of it? How could the greatest economy in history shorten its citizens’ lives? Where’s the payoff from Obamacare, miracle drugs, and medical science?

You can argue with economic growth figures… employment statistics… and inflation calculations. But lifespan? Isn’t this real news?

And if an economy is meant to give people what they want, isn’t declining life expectancy the ultimate failure?

Losing the War on Poverty

The story was on page 3. No mention was made of it in the editorial pages. Instead, the front page carried a big story about a big “victory for Trump,” in the form of the tax bill passage.

The two stories are related. The tax bill is supposed to rev up the economy. As far as we know, your wealth affects how long you live.

There are a few areas in the world where people tend to live longer than the average, unrelated to wealth.

Looking out from our house on the Pacific coast of Nicaragua, for example, we see Costa Rica in the distance.

“That peninsula has more centenarians than almost anywhere on Earth,” we were told. Is it true? We don’t know.

But except for exceptions – blessed by nature, genetics, or simply lying about their age – generally, the more peaceful and prosperous you are, the longer you can expect to live.

Where do people live the longest?

Monaco, Japan, Singapore, and Australia.

Where do they live the shortest lives? Can you guess? The leaders in the short-life contest are three desperately poor African nations – Swaziland, Lesotho, and Sierra Leone.

More interesting to us are the formerly rich nations whose economies have been sabotaged by politicians and economists.

Zimbabwe, for example, was once the richest nation in Africa. During the hyperinflation crisis of 2006, life expectancies fell to the lowest in the world; a newborn girl was expected to live only 34 years.

The statisticians haven’t caught up with Venezuela’s fast-evolving crisis. But with children dying from hunger and lack of sanitation, not to mention government goons killing thousands of people, life expectancy must be declining rapidly there.

The number of Americans officially in poverty is 41 million… about the same proportion as in the 1960s. Since then, Washington has spent $22 trillion in a fake war on poverty.

Killer ZIP Codes

Of those who are poor, about 11 million have no obvious means of supporting themselves.

Some live off relatives. Some hustle drugs or engage in other petty crimes.

Some recycle trash.

They get by as best they can.

Even those who have jobs are often way behind their fathers and grandfathers. From a report in the British newspaper The Guardian:

In West Virginia in particular, white families have a lot to feel sore about. Mechanization and the decline of coal mining have decimated the state, leading to high unemployment and stagnant wages.

The transfer of jobs from the mines and steel mills to Walmart has led to male workers earning on average $3.50 an hour less today than they did in 1979. 

As officially tallied, the U.S. economy is growing at about 2% a year. But that’s using the feds’ numbers. And it is a nationwide average.

As we’ve discussed in these pages, there’s a big difference between what happens in the rich ZIP codes and what goes down in the poorer ones. Our guess is that more people in more areas are poorer than the government’s numbers suggest.

Depressed Counties

Today, according to the 2016 federal Survey of Consumer Finances, the top 1% of American families owns 40% of the nation’s wealth.

That’s up from the 30% of the nation’s wealth they controlled in 1989.

These folks don’t live in the hollers of Kentucky… the rusty mill towns of the Monongahela… or the dirt plains of Alabama. They live in the wealthiest ZIP codes – in the Upper East Side, New York… in Aspen, Colorado… and in Beverly Hills, California.

So it is reasonable to assume that if the average rate of nationwide economic growth is about 2%… there must be plenty of places where it is negative.

We asked Joe Withrow, who heads up the Bonner & Partners research department, to look into it. Here is what he has found so far:

I haven’t determined the percentage of depressed counties yet according to my scoring system, but here’s the raw data:

  • 87% of U.S. counties have seen a rise in the poverty rate since 2000

  • 59% of U.S. counties have seen a fall in inflation-adjusted wages since 2000

  • 56% of U.S. counties have seen a rise in the number of job losses over the past 10 years

  • 59% of U.S. counties have seen a fall in the labor force participation rate over the past 10 years

And if you adjust wages using Shadow Stats data – which calculates consumer price inflation the way the government did back in the 1990s – 99% of U.S. counties have seen a decrease in wages since 2000.

Being poor is not the same as wanting to take drugs or kill yourself. But remember our axiom: People are neither always good, nor always bad, but always subject to influence.

Weighing on America’s poor and lower-middle class are record levels of debt and a growing suspicion that their own government has rigged the system against them.

Some fight it. Some take a fall.

Regards,

Signature

Bill

MARKET INSIGHT: AMERICA’S WEALTHY ARE RICHER THAN EVER

By Chris Lowe, Editor At Large, Bonner & Partners

It’s not just the richest 1% of American families – those earning more than $465,626 – who are cleaning up…

The richest 10% of families – those earning more than $295,845 – also owns a disproportionate percentage of the nation’s wealth.

Chart

Today’s chart uses figures from the Fed’s 2016 Survey of Consumer Finances.

As you can see, the top 10% of American families owns 77% of the wealth in the country.

That’s seven times more than the next highest decile, which owns 11% of the nation’s wealth.

The bottom 10% (those earning less than $10,500 a year) owns less than 0% of the nation’s wealth. They are net debtors, in other words.

Chris Lowe

FEATURED READS

2017: A Year In Money
2017 is almost over, and what a year it’s been. We’ve had record-breaking stock prices, historically low volatility, and a cryptocurrency mania, too, for good measure. Here are some of the highlights from 2017.

Bitcoin Plunges
It was just the other day that Chris Lowe reported that bitcoin had momentarily hit a high of $20,000. But the popular cryptocurrency took a dive this morning. At writing, it’s trading below $12,000, a 40% fall.

This Will Change How We Think About Healthcare
According to Bill’s top tech expert, Jeff Brown, we’re on the cusp of a medical revolution. It’s all thanks to this one piece of technology that could save millions of lives… and make early investors a fortune.

MAILBAG

Now that the GOP has passed its tax reform bill, readers are wondering who precisely this is a “win” for

Congress has just put its sledgehammer to the just-recovering home-building and real estate businesses with its wonderful tax “reform.” The limitation on mortgage deductions is the culprit. Locally, the governor, a Republican, says the state will refund money lost to the federal limitation, but that is the state tax, not the local or county tax, which is usually much larger. It will just hurt the state treasury, which is already in trouble.

Meanwhile, home lenders may become more selective, and builders are going to be hesitant to continue new projects if buyers can’t afford their mortgages. Many thousands of carpenters, electricians, and plumbers will be laid off jobs which they just began. Tax receipts will tumble, both federal and state. Retailers will find fewer sales. Recession, anyone?

– Charles B.

You said, “But as for the second question, there is little doubt. With rates so low, it is not for lack of capital that U.S. businesses do not invest more in the homeland.” Clever!! Obvious, once it’s pointed out.

– Anthony M.

Your assessment of the tax bill reminds me that more income is exempted from taxation than the IRS collects. Since it’s apparent that we don’t want to pay for the services we demand from our government, would a VAT (value-added tax) be the solution? It would result in a tax being paid every time a purchase occurred whether by a citizen, visiting tourist, or illegal alien. Best of all, it would mean no need to file a 1040, or hire a CPA to prepare one.

– Jim R.

You talk about businesses paying 14% less to the government, but then wonder who is going to pay 14% more. Consider that the combined effects of 14% less business tax, repatriation of offshore corporate stashes, and other collateral benefits will more than pay for the tax cut. It is not necessarily a zero sum equation.

– Robert E.

Meanwhile, readers continue to ponder Bill’s eight axioms for understanding the fake economy

I enjoy your writing. It is witty, entertaining, often educational, and thought provoking. But your eight-point axioms seem to contain contradictions. In point eight, you lament that the Fed is reversing its policy when you should welcome the reining in of the “fake money” that you deem to be at the root of all problems (point two). What is “real” money? You name gold and bitcoin. How do you use it to find true value?

Things measured in bitcoin, for instance, would see massive price declines as bitcoin keeps up its pace of appreciating. And what if it collapses? Real money? I find it hard to follow your flow of funny-money creation. My understanding is that the government issues bills and notes to cover deficit spending. The Fed essentially buys them for newly printed cash, then sells them to big banks for cash. Are you saying that the Fed then turns around and buys the bonds back again?

How exactly does that keep the Fed’s supply of cash flowing? That one could use a bit more clarity, wouldn’t you agree?

– Erich K.

I personally have very little money. Unlike you, I have not been lucky. I have no investments. I rent someone else’s house. I am working at age 70 because we did not (could not) prepare for retirement and raise six children in a failing economy. I dole out a third of my income for healthcare insurance that doesn’t care and doesn’t keep me healthy, and even more if I happen to actually need medical care.

I have read your Diary with much interest for some time now. But what, exactly, can I do about this information? I did not know about it when I was younger, but have a much better appreciation for it now. I am in great fear for my children and grandchildren who have inherited this fake economy, and have no clue what to do about it, either.

But I am in no position to change anything – including my own fortunes (or lack thereof). Voting for a different politician changes nothing. Speculating in cryptocurrencies or anything else is outside the possibilities for someone who lives paycheck to paycheck. Similarly, true investing is also outside those possibilities. Where does the breakdown of the financial system of our country, or the world, leave those of us who work hard and have done so their entire life to support this country/economy?

How can we protect our home (if we even own one), our ability to earn a living, or our ability to feed, shelter, clothe, and transport ourselves and our families when the economy tanks?

– Linda H.