Post 342: Wealth Disparity in the Special K Economy – Even the Fed is Noticing

• Americans are dining out less often.
• Traffic has been down eight months in a row.
• Yet Darden, owner of Olive Garden, is seeing same store sales accelerate.
• But not Wendy’s:
• US same store sales are accelerating downwards.
• They said that lower income consumers remain under pressure.
• And we take a look back.
• As financing costs go up, used car sales go down and loan losses go up.
• CarMax, the largest used car dealer in the US, is struggling.
• Car repossessions in the US could hit a new record this year.
• Penniless: The US stops minting pennies.
• And why this is a sad indictment of monetary policy in developed economies.
• Older Americans have a much higher delinquency rate on student loans than younger ones.
• The US government is proposing 50-year mortgages:
• This is a really bad idea.
• But it didn’t stop the Canadian government from also going down that path back in 2006.
• After a year of declining sales, Caterpillar turns things around.
• Government spending is helping.
• In Financial Ructions:
  • The establishment is finally waking up (or admitting) to the fact that the US is a two-tier economy.
  • This is what happens when one part of society benefits at the expense of the other.
  • This is the opposite of capitalism.
  • And we revisit when a former vice chairman of the Fed said people were too stupid to realise the economy was in great shape.
• In our book review of Where Keynes Went Wrong
  • Hunter Lewis and I address Keynes’s assertion that saving is bad for the economy during an economic slowdown.
  • And it’s related to what I consider to be the most dangerous word in economics.