“Free Ride for the Rogue Nation is Over”; Inflation Outpaces Wages

weak dollar cliffThe world is saying no more to US dollars. Thanks to the abrasive foreign policies of the Bush administration, the Federal Reserve pumping billions of dollars into the economy and Congress’s uninhibited spending spree, the world is shying away from US investments. Many investors view America as being a “rogue nation” saying that “the free ride is over.” More from the Forbes editorial U.S. Rogue Nation Image Hurts Dollar in Asia:

And is all this negativity manifesting itself economically? Yes, argues Joseph Quinlan, chief market strategist of Banc of America Capital Management in New York. It won’t make him many friends in Middle America, but Quinlan thinks the U.S. image as a “rogue nation” is a key force behind the dollar’s decline.

But things are getting worse at home, too.

The National Low Income Housing Coaliton (NLIHC) released it’s 2004 report on state-by-state housing costs. The data shows a growing gap between minimum wages and living wages, with the average minimum wage worker having to put in 72 hours of work per week just to make a livable wage and afford a zero bedroom apartment (ie a studio or effiency where the living area is also the bedroom).

While the minimum wage varies for each state, across the board it was far lower than livable wages. This shows two things: 1)minimum wage is a failure and does not keep up with livable wages; 2) inflation is growing and it’s causing more “working poor.”

This is about to reach epidemic proportions, as people who have been using credit to create an unrealistic buffer between actual wages and livable wages will continue to feel the squeeze. With the value of the dollar showing that inflation is indeed occuring, how long until this becomes a crisis?

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