It has been a few weeks, but the series by reader Michael K returns. Today’s topic is the Economy:
Tip #4: It’s the Economy, Stupid (Part 1)
Note: These tips are about action. But some theory is needed on this one, so it’s two installments.
Most people intuitively understand something is wrong with jobs, wages, and the economy today. The upper third is sometimes unaware of this. If this is you, wake up. Many of your fellow citizens are living “on the edge”. They are isolated, vulnerable, unprotected, and often ashamed. Family breakdown is omnipresent. Ignore this growing reality at your peril.
My claim: the US has been in a hidden depression since 2008. And many people are starting to agree; witness the dramatic political rise of Trump (a protectionist) and Sanders (a socialist) in a mere eight years.
This depression has its roots in the past Great Depression. The creation of the Fed, paper money, and the resultant Roaring ‘20s set that stage, and the resulting depression required a World War and a near government takeover of the economy (900% debt/GDP) to pull through. And once a nation has tasted debt and tax-and-spend economy, it can never fully let it go.
By 1964 total US credit reached $1 trillion. 44 years later, in 2008, it was 50 times higher. The only way this was possible without hyperinflation? A massive trade deficit to soak up these dollars. The US went from the world’s largest creditor to the world’s largest debtor in a single generation. This was a party to remember!
But why would other nations fund this debt? Jobs! We handed over our industrial capacity. This destroyed our working class families. But government welfare appeases the masses. And as a progressive bonus, generous welfare for women and children sans men makes male breadwinners unnecessary. Who’s your Daddy? Uncle Sam. Toss in unbridled immigration of the world’s desperately poor, and the progressive circle is complete. It’s a cognitive elite paradise. And a disaster for working-class, traditional families.
This American credit bubble has transformed the global economy. The world gratefully took our jobs (or became our slaves, depending on your viewpoint). But eventually the US hit the debt “wall” in 2008. For the first time since the Great Depression, total US credit contracted. We simply couldn’t take on any more debt with our shrinking middle class.
The panic was (and is) real. Without endless stimulus, this multi-generation debt bubble will collapse. This won’t be allowed to happen. Government will continue to own the commanding heights of the economy. It’s better to die tomorrow than die today. We will print as long as we possibly can.
It’s a catch22. Households cannot run up more private debt without living wage jobs and a more equitable distribution of wealth. But the 2015 median wage in China was $8.13 per DAY. And in three years, 2011–2013, China has mixed more cement than the US did over the entire last century. Jobs! So US companies buy back their stocks to create even more jobs overseas and less here. Stock owners are in heaven. We are now Mexico, a land of the Haves and the Have Nots. It’s Yale or Jail. Male breadwinners (outside of the professional class) are now endangered and persecuted.
So we will continue to print. Only a few paths are left to stimulate the economy: Welfare. War. Pork-barrel government spending. Take your pick. Just remember the latter two actually create jobs, and are thus far more likely.
But America remains wealthy and moderately free, at least for now, and therefore remains the cleanest shirt in a very dirty laundry pile. For those who can adjust their mindset, look through the injustice to the other side, and take action, real opportunity exists. And that’s for Part 2.