Unless you live off the interest of your interest, you’re poor. Got that? If you think you’re middle class, then you just think you have a shot at getting rich. In the USA, that’s in the past unless you’re ready to participate in some truly massive crimes. Born poor, you stay poor, because that’s the way it is and you can check the statistics on that for yourself. I’m here today to talk about how to calculate the rate of decrease of wealth among the poor in the USA.

It’s simple. Look at the interest rates they’re paying on credit cards, houses, cars, and other loans. The interest rate is money they are boxing up and shipping to the richest of the rich, because that’s who’s lending the money at interest. I’ll start with the credit cards. The average interest rate on credit cards in the USA is just short of 17% and the average credit card debt in the USA is $16,000 per household. Now, yes, I know those are averages: the poorest folks don’t have credit card debt and the folks that call themselves middle class have many times more than that in credit card debt, but they’ll serve for my illustration just fine. 17% of $16,000 is $2720 in interest paid by every household in the USA on credit cards. There are 114 million (and change) households, so that’s roughly 113 million households that aren’t in the top 1%, so they’ll be paying that interest… so that’s about $308 billion dollars a year that go from the bottom to the top in credit card interest. Money flows uphill, people.

Put another way, credit card debt provides over $300,000 in income every year for the top 1%. They don’t have to work for it: you do. That 6% of average household income going to pay only the interest on the credit cars is paying for a year-round vacation for those beautiful people at the top. But wait – there’s more!

College loans in the USA are at $1 trillion now. That’s more debt than what’s in the credit cards. The average interest rate on student loans is 7.9%. That’s an additional $79 billion flowing uphill. If we have the households average all this out again, that’s $700 per household per year. That average household income of $44,389 just got squeezed by another 1.5% What could we do with a 7.5% pay increase? Well, the richest folks certainly don’t want to end their gravy train, so you’re not having that.

Don’t believe me? Look at how real wages have been flat or declining for a very, very long time. At the same time, our banks made it possible to borrow money in ways that it’s never been borrowed before. That’s two sources of increased profits: making you borrow more and paying you less than what you’re worth.

Then there’s mortgages: if credit cards are #3 and student loans are #2, then mortgages are #1. While it was relatively easy to get numbers on the first two things, mortgages seem to be a good deal more obfuscated in terms of aggregate data. No surprise to me: This is an industry in which 20% of the professionals have a felony conviction and the main real estate lobbying group has made sure that property purchases are exempt from money laundering restrictions – which means that high-end property in the USA is the perfect sink for the profits of crime.

This helped, though: http://www.cnt.org/repository/heavy_load_10_06.pdf. Fun fact: people that spend less money on houses away from city centers, on average, pay considerably more for transportation. 48% of household income goes in that direction – money for the real estate people, mortgage banks, car finance companies, and big oil.

Working families – under $50,000 in annual household income – pay another 9% of income in transportation costs. They also pay 15% of their income for food and 7.7% for medical care. 57 + 15 + 7.7 + the 7.5 from above = 87.2% of income… that leaves $5800 per year for everything else in our average family of $44K income. Could be worse – and it is for those closer to the poverty line – but it could also be better, without those interest payments going up to the people that really don’t need more of our money.

It could be much, much better as well if we didn’t have banks being run as casinos for the benefit of those rich people that aren’t content to simply hit us up for our spare cash every year. No, they need to make massive gambles in which they gain all the profits but – thanks to their lobbyists and de facto ownership of Congress – have zero risk of paying out to cover any losses. Trillions of dollars of losses.

Each trillion a megabank loses means $8849 per non-rich household in America. The nine biggest banks in the USA are on the hook for over $228 trillion in derivatives that are on the razor’s edge of going bust – that would be over $2 million per household in the USA when the bill comes due.

Don’t worry: we won’t have to pay it all at once. I’m sure we can arrange a payment plan.