The "American Dream" Is Over... And Voters Know It

Tyler Durden's picture

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

If the American Dream depends on skyrocketing debt built on a weakening foundation of stagnant productivity and income, then it is indeed over.

Despite a ceaseless propaganda campaign declaring all is well with the U.S. economy, the Status Quo is fragile - and voters know it. Not only do they know the economy--and their financial security--is one crisis away from meltdown, they're also fed up with all the official gerrymandering of data to make the economy appear healthy.

The Economy Is Better — Why Don’t Voters Believe It?

The American Dream--characterized by plentiful jobs offering living wages, security and opportunities to get ahead--is over, and voters know this, too. People are realizing the U.S. economy has changed qualitatively in the past 20 years, and claims that it's stronger then ever ring hollow to people outside Washington D.C., academic ivory-towers and ideologically driven think-tanks.

Many econo-gurus lay the blame for the Great Depression on the Federal Reserve tightening too soon, or not loosening credit enough, but this is nonsense: The Great Depression was the result of credit/borrowing (i.e. debt) outrunning the foundation that supports debt: productivity and income.

Piling more debt on a base that isn't expanding fast enough to support skyrocketing debt leads to a collapse of the feebly supported debt: borrowers default, asset prices crash as buyers vanish and lenders go bankrupt as the assets held as collateral are repriced.

To suggest that policy tweaks could have averted the collapse of unsupportable debt is absurd. Farmers were leveraging farmland that was already mortgaged to the hilt to buy more land to increase production. When grain prices softened, the debt bubble burst. No policy tweak could reverse the supply-demand imbalance or magically force marginal farmland to suddenly be worth a fortune.

When credit expansion gets ahead of productivity and the production of goods, services and income that support all borrowing, the only possible result is a repricing of debt, risk, collateral and assets--that is, a crash. The global central banks have pushed that repricing forward seven years by lowering interest rates to near-zero (or less than zero), enabling borrowers to add more debt even though their incomes have stagnated or declined.

But enabling more debt does not reverse supply-demand imbalances or create income out of thin air. As a result, piling on more debt is not a solution; it's simply a politically expedient method to forestall the crisis, while guaranteeing the eventual repricing will be even more severe because the debt load is now so much larger.

Unsurprisingly, adding more debt to a weakening base of real productivity and income yields diminishing returns. Seven years of strong, widely distributed global growth before the 2008 Global Financial meltdown required $15 trillion in additional non-financial global debt. Seven years of tepid, fragile expansion since 2008 required $40 trillion in additional debt.

That is the definition of diminishing returns:

In the U.S., debt has completely outpaced the expansion of goods, services and income for years: look how debt has soared while GDP has expanded only modestly:

GDP (not adjusted for inflation) is up 282% since 1990, while total credit skyrocketed 444%. The tiny decline in credit in the 2008 Global Financial Meltdown almost destroyed the entire credit-bubble dependent economy:

Meanwhile, earned income as a percentage of GDP has been falling for decades. How can an economy support additional debt if earned income is declining as a percentage of economic activity? It can't.

Here's another look at wage stagnation:

Does the trendline of federal debt look remotely sustainable to you? if so, I strongly recommend reducing your dosage of Delusionol. The New Drug of Choice in the White House, Federal Reserve and Treasury: Delusionol

At long last, credit growth is rolling over. The trick of enabling more debt by weakening lending standards and lowering interest rates has now reached diminishing returns.

If the American Dream depends on skyrocketing debt built on a weakening foundation of stagnant productivity and income, then it is indeed over. Voters sense this fragile, debt-dependent economy is one repricing away from implosion, and they're uneasy for good reason. Voters are rightly angry that the official statistics mask or manipulate this reality, for if we can't face reality then we have zero hope of solving any problems.

*  *  *

My new book is in the top 10 of Amazon's category of international economics: A Radically Beneficial World: Automation, Technology and Creating Jobs for All. The Kindle edition is $8.45, a 15% discount from its list price of $9.95.

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One And Only's picture

The call it the American dream because you'd have to be asleep to believe it.

junction's picture

Wait until Obama takes off his friendly mask and becomes a homicidal jihadist maniac.  Then the American Nightmare will really begin.  Loudspeaker on Homeland Security APC driving down your street:  "All Zerohedge commenters, report to Fusion Center Zero."

One And Only's picture

If you know a Zerohedge commenter report a Zerohedge commenter.

NidStyles's picture

We all know the tribe created this lie out of thin air, just like this debt they foistered up and conned you guys into thinking you owe.

 

Titus's picture

Does anyone know why when I up or downvote the page refreshes? Problem with javascript or an add blocker?

 

Baby Bladeface's picture

Sometimes noticed that happens if page loading not complete. Usually problem somehow related with a javascripts or ad pixel, browser takes a minute waiting and then on that element gives up.

Is not to worry on your part except the annoyance, and site page eventually fixed the element non-loading.

r00t61's picture

I had a similar problem a few weeks back.

I traced it to Noscript, which was blocking some temporary xxx.xxx.xxx.xxx IP that ZH sysadmin must have been using for site features.

I whitelisted it and the arrows worked again.

Currently, my Noscript whitelist for ZH includes only zerohedge.com, and it is working fine.

Chris Dakota's picture

Not if you are a member of the protected class.

Even if you are not connected you can get a good paying government job.

It's over for Whites.

Gays (now a race)

Jews

Muslims

Blacks

Hispanics

Asians

My friend said there is nowhere to work in San Bernadino except the State and County,  yet our Pakistani friend worked for the State and County. He was making 60K and a 2 bed apartment is $800 per month.

If you aren't white in the SF Bay Area you can work for BART transit as a station agent. GED only, heathcare free for life for entire family, retire at 55, free BART tickets, 100K per year and save 15% because no SSI witheld, but you can collect the min on the way out. Scam overtime which isn't real, just call in sick your days and work for a friend his days.15% raise over 3 yrs. And all you do is sit around in a glass booth and text your friends all day because the system is totally automated.

Whites need not apply.

And this is why Trump will win, its gonna be ugly if they try to Ron Paul him.

MrTown3's picture

If you're jealous of somebody making 60k you have moree probably than being "white" LMAO.....

Jethro's picture

No need. The NSA already knows who all of us are.

NidStyles's picture

Shouldn't even be worried about it. Good men do not fear death, they challenge it. 

Chris Dakota's picture

Did you have 25,000 updates today? I did.

fuck em

 

clooney_art's picture

The American dream was over a long time back. The dot com bust marked the end of any dream left.

glenlloyd's picture

By the time we got to the dot com bust it was already over. Things in the early to mid 90's didn't make a lot of sense either. I was working with people who were living way beyond their means then...hasn't changed a whole lot either.

NidStyles's picture

Just about everyone I know is living well beyond their means.

Chris Dakota's picture

Clinton era outsorcing was the begining, then flood the country with cheap labor.

Milestones's picture

Only 25 weeks on line--You have aquitted yourself well.             Milestones

Dinero D. Profit's picture

Because the ubiquitous mainstream media disseminates propaganda so effectively, the fascist goons couldn't care less about the 'back-porch' cranks on ZH.

 

Under martial law, ZH and all alternative news sources on the internet will be banned, censored, or contolled-opposition.

samsara's picture

What's the IP address for zerohedge.com URL?

Stroke's picture

 

"Loudspeaker on Homeland Security APC driving down your street:  "All Zerohedge commenters, report to Fusion Center Zero."

 

Fuck......They'll be at the front door

toady's picture

The voters know it... that's why they're reaching to the extreme, trump, sanders... they know shits going down,  they want their own kind of "hot mess" at the helm when it does. 

NidStyles's picture

A WASP is better than Semites of any variety.

 

 

Bye bye Sanders.

Hitlery_4_Dictator's picture

It IS all over, excpet for hte blood and gnashing of teeth. Get rigth with God. 

pods's picture

It's all over but the sex and the crying.

NihilistZero's picture

I prefer the crying during the sex.  But that's just me... ;-)

Hugh G Rection's picture

"Once we squeeze all we can out of the United States, it can dry up and blow away."

-- Bibi Nutsandyahoo

Solomonpal's picture

Did he really say that? Cause I teeter between innate bigotry for Jews and admiration and desire to call them Americas best friends. If he said that then I guess it's settled.

Milestones's picture

Well, at least you're on the right side of the grass---for now.              Milestones

doctor10's picture
"We'll know our disinformation program is complete when everything the American public believes is false."

 

Wm. Casey CIA Director 1980.  Pay attention to the date.  Its when the debt charade goes down full force.

The program only works as long as they control the narrative.  They no longer can.

corporatewhore's picture

bring on the debt jubilee

ToSoft4Truth's picture

 The Shmurda was a few months back.  The Social Security/Pension crowd didn't go for it.

toady's picture

Wait, let me load up a bunch of debt first!

MsCreant's picture

Ain't that the fuckin' truth.

Rainman's picture

Revenge of the sheep ! .... driving the FICO to ZERO !

Oldwood's picture

The American dream is something for nothing which endless credit has been providing for decades now. The balloon payment at the call is going to be a bitch.

Lumberjack's picture

I see many youngsters who are wide awake to this shit now. Good for them. 

Pabloallen's picture

Good ?????  they think more fucking cowbell is the answer...... we need fodder i guess.

Lumberjack's picture

Maybe cowbell gave them the timeout needed to digest this in the first place, It is expensive and they can't afford much of it anymore. Let alone anything else. Most of the up and coming adults have come to realize they were lied to and royally fucked. I would like to compare this to the so called hippies in the 60's who then had yuppies (babies) who are now called progressives. They are closet fascists who love capitalism and have an abject hate of the constitution as it doesn't serve their needs. The liberty bell is cracked but the cowbell seems to ring. Seems to me some folks need to chill.

 

moonmac's picture

Better buy your American dream now or you’ll be priced out of the American dream market forever!

lester1's picture

This is why Donald Trump as such a large support base. Many people on both sides of the political spectrum are upset at the status quo establishment like Hillary, Marco Rubio, Jeb Bush etc. We have witnessed our country deteriorate due to globalization and these horrible free trade deals.

 

Vast majority of Americans want our jobs back from overseas, and want the illegal immigrants gone.

 

Trump/Cruz 2016 !!

Ajax_USB_Port_Repair_Service_'s picture

Cruz/Trump even better. Let Cruz do the talking up front and let Trump do the 'dirty work'.

EDIT: Maybe that wouldn't work. Could Trump EVER shut up?

Sudden Debt's picture

THE DREAM IS OVER?????

so...

EVERYBODY WHO WAS SITTING ON THEIR COUCH WON'T BECOME MILLIONAIRES OVERNIGHT JUST BECAUSE????

what happenend??...

Who can we blame?

Who's kids send we to fight that enemy?

 

Hitlery_4_Dictator's picture

We are going to be fighting ourselves very soon. Bank on it. 

Pabloallen's picture

They have priced that in already.....  

Sudden Debt's picture

I'm not going to fight any war :)

If shit turns sour, I'm out.

I live 45 miles from Brussles, not exactly the safest place on the planet...