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Yves Smith gets a look at the infamous “plutonomy” reports from Citigroup that were highlighted by Michael Moore in Capitalism: A Love Story, and notes that the authors blame low savings rates in the U.S. on growing income inequality. As the rich get wealthier, they feel comfortable spending more and more of their income, and “They just account for too large a part of the national economy; even a small fall in their savings rate overwhelms the decisions of all the rest.” Yves comments:

But behaviors on both ends of the income spectrum no doubt played into the low-savings dynamic: wealthy who spend heavily, and struggling average consumers who increasingly came to rely on borrowings to improve or merely maintain their lifestyle. And let us not forget: were encouraged to monetize their home equity, so they actually aped the behavior of their betters, treating appreciated assets as savings. Before you chide people who did that as profligate (naive might be a better characterization), recall that no one less than Ben Bernanke was untroubled by rising consumer debt levels because they also showed rising asset levels. Bernanke ignored the fact that debt needs to be serviced out of incomes, and households for the most part were not borrowing to acquire income-producing assets. So unless the rising tide of consumer debt was matched by rising incomes, this process was bound to come to an ugly end.

Italics mine. This is the great contradiction at the heart of American capitalism: the rich want to keep middle class incomes stagnant so there’s more money left over for them, but they also want to encourage the middle class to consume ever more, for more or less the same reason. Needless to say, this doesn’t work in the long run. America’s merchant princes need to make up their minds: do they want strong economic growth that benefits everyone (including the rich) or do they want crappy economic growth but with the extra money reserved all for them? Decisions, decisions…..

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is the first thing despots go after. An unwavering commitment to it is probably what draws you to Mother Jones' journalism. And as we're seeing in the US and the world around, authoritarians seek to poison the discourse and the way we relate to each other because they can't stand people coming together around a shared sense of the truth—it's a huge threat to them.

Which is also a pretty great way to describe Mother Jones' mission: People coming together around the truth to hold power accountable.

And right now, we need to raise about $400,000 from our online readers over the next two months to hit our annual goal and make good on that mission. Read more about the information war we find ourselves in and how people-powered, independent reporting can and must rise to the challenge—and please support our team's truth-telling journalism with a donation if you can right now.

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