Tags: IMF | Rich | Debt | us

IMF: While Rich Get Richer, the Rest Sink Deeper in Debt

Thursday, 03 May 2012 10:38 AM

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The rich are getting richer these days whereas the bottom 95 percent in the U.S. are falling deeper in debt, a study by International Monetary Fund economists finds.

In 1983, the bottom 95 percent of the U.S. population owed 62 cents in debt for every dollar they earned, the economists find, CNNMoney reports.

By 2007, that number had risen to $1.48 of debt for every $1 in earnings.

Editor's Note: Google Banned This Video But You Can Watch it Here

Meanwhile the rich were paying off their debts, with their debt-to-income ratio dropping from 76 cents of debt for every dollar earned in 1983 to 64 cents in 2007, CNNMoney adds.

A good chunk of the wealthy Americans' money wound up back into the financial system, which did help everyone else.

"Rich people have more money to play with and there are only so many Armani suits they can buy. So they can lend money back to the majority," says Michael Kumhof, deputy division chief at the IMF who co-authored the report, CNNMoney reports.

Everyone else was "trying to maintain standards of living."

The bottom 95 percent earned $160,000 a year or less.

Calls have risen as of late for Congress and the White House to address fiscal issues to improve the economy, as the Federal Reserve has done all it can via interest rate cuts and liquidity injections.

One CEO with his finger on the pulse of the economy feels government is not in as much control as policymakers would like to believe.

"I fundamentally don’t believe that politicians have as much to do with the economy as they think they do," says General Motors Chairman Daniel Akerson.

"The big issue in the economy today is unemployment. I don’t think fixes around the edges will do," Akerson tells Newsmax.TV, noting that the housing sector was the main culprit.

"I think the recovery has been moderate to weak, and in order to get it to moderate to robust the housing industry has to bottom and ultimately recover. I don’t think it’ll happen in the next year. I think it will take a couple of more years.”

Editor's Note: Google Banned This Video But You Can Watch it Here

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