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The "American Dream" Is Over... And Voters Know It
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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The call it the American dream because you'd have to be asleep to believe it.
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."
If you know a Zerohedge commenter report a Zerohedge commenter.
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.
Does anyone know why when I up or downvote the page refreshes? Problem with javascript or an add blocker?
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.
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.
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.
If you're jealous of somebody making 60k you have moree probably than being "white" LMAO.....
..
George said it right.
https://www.youtube.com/watch?v=acLW1vFO-2Q
No need. The NSA already knows who all of us are.
Shouldn't even be worried about it. Good men do not fear death, they challenge it.
Did you have 25,000 updates today? I did.
fuck em
The American dream was over a long time back. The dot com bust marked the end of any dream left.
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.
Just about everyone I know is living well beyond their means.
Clinton era outsorcing was the begining, then flood the country with cheap labor.
Only 25 weeks on line--You have aquitted yourself well. Milestones
Viva la fuscion!
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.
What's the IP address for zerohedge.com URL?
"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
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.
A WASP is better than Semites of any variety.
Bye bye Sanders.
It IS all over, excpet for hte blood and gnashing of teeth. Get rigth with God.
It's all over but the sex and the crying.
I prefer the crying during the sex. But that's just me... ;-)
"Once we squeeze all we can out of the United States, it can dry up and blow away."
-- Bibi Nutsandyahoo
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.
Well, at least you're on the right side of the grass---for now. Milestones
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.
bring on the debt jubilee
The Shmurda was a few months back. The Social Security/Pension crowd didn't go for it.
Wait, let me load up a bunch of debt first!
Ain't that the fuckin' truth.
Revenge of the sheep ! .... driving the FICO to ZERO !
they live, we sleep
https://www.youtube.com/watch?v=JI8AMRbqY6w
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.
I see many youngsters who are wide awake to this shit now. Good for them.
Good ????? they think more fucking cowbell is the answer...... we need fodder i guess.
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.
Amen keep them informed.
Better buy your American dream now or you’ll be priced out of the American dream market forever!
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 !!
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?
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?
We are going to be fighting ourselves very soon. Bank on it.
They have priced that in already.....
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...
EBT vs no EBT.
The enemy is us, I just hope we stay alive. A change is coming, hard to see how we can be a part, no matter what we have.
Well, if anything, its more of a dream than it was previously.
So the answer is Trump?
He'll just be the Ringmaster for the 3-ring shit show for the next 4 years. If Hillary or Sanders gets the tophat, we go straight to the elephant squishing the spectators.
Well-stated, Sir. Truly sublime.
That guy is so dangerous...
To bad most Americans are so dumbed down that they actually think he's an option...
Of the list, he's the worst, followed by a hairline by Hillary.
And it will be one or the other.
America: You're FUBAR!
NOTHING is worse than Hitlarly, nothing.
Things happen, I hope your're wrong, hope springs eternal, otherwise shoot your self now
He can take the blame as well as any other. Most of us believe a real shit show is coming, and ANYONE who tries to do ANYTHING to prevent is will be portrayed as a nut job or worse. Trump stating the obvious is already grounds for calling him everything from a racist to the antichrist. Quite literally we are damned if we do try and save it and damned if we don't. Trump will be damned for sure, as the rest of them will simply set there and watch it burn down around us, avoiding any direct blame or fingerprints, while calculating their best profits from our demise.
I'm just a wee bit pessimistic at this point.
Trump is the only one saying screw common conventions. Media was never his friend.
It is very sad that he is the only one asking just some of the questions that need to be asked, and topics that need to be discussed.
He scares me with his naive perceptions sometimes. "Dancing Arabs" for example. His off the cuff manner with direction statements like "Hell ya I think we should water board"
Things like that make me nervous.
Why couldn't we have 4-5 candidates of the fiber of Ron Paul debating these subjects?
Apparently the RNC's boss doesn't want that, and I don't mean Reince Priebus.
If you are banker you only have one real product, debt, and you need to shift it.
Credit where its due, they have achieved excellent market penetration with their product.
How many comsumers will go out and spend money they don't have on presents this year? More than last year? I kinda don't think so. We'll see.
Long zero hope!
cha-ching!
During the Great Depression children of farmers watched in horror as bulldozers drove tens of thousands of head of cattle into huge mile long pits while government agents used machine guns to slaughter the livestock just so it could all go to waste as Americans starved. That’s when the American Nightmare began!
Nice post and very correct. The troop trains leaving during both world wars had blacked out windows so the troops couldn't see outside. Especially the "Great War" aka WW1. The depression was a bonus for government wmployees in many areas as they were paid in money while the rest were paid in Scrip. Where I came from those who worked for the Postal Service and other well connected persons became wealthy buying up all the foreclosed land as the banks would only accept dollars. A lot of current high ranking gov officials come from those families. A lot of them ran POW labor camps and made fortunes in the lumber business whils sending the children of the under class as cannon fodder.
I stand by this comment. LJ
Roosevelt, as they believe today, thought our problems were based on too low of prices and the solution was inflation, through money printing until that failed to "stimulate" and then direct commodity destruction to limit supply. Their math failed when it was discovered than when you are broke, it really doesn't matter how cheap it is. We are living in times of madness.
As a small business owner I get lots of solicitation calls daily, many wanting to loan me money. Just received one offering unsecured loans at ZERO interest rates. This is a cold call...zero rates on an unsecured small business loan. What the FUCK?
Farmers produced but couldn't find buyers. Dairies poured milk down the drain. No way to get product to someone with money to buy it.
Financialization is when you have two cows and pour their milk down the drain because you destroyed the productive economy with a manure bubble.
The land of the Free Blind !
Here I thought it was because the people kicked God out of society. I guess I was wrong
Nope you are correct, that's the main reason. When people here got obbessed with plastic and looked to man to solve his/her problems, it was all down here from there. Can't wait for the final act. We are almost there.
Credit expansion in excess of productivity dates from...guess when...about August, 1971!
The Real 2-party system is Us Vs. Them. So, with that said, lets Vote Outside the box for a change. Go Trump...
Right, and voting is us vs us ... box or no box.
I don't vote.
Outsome is exactly the same as those lot decades in which I did. Why bother?
http://i2.wp.com/regeneracy.org/wp-content/uploads/2015/09/trumpdream.png
"The Great Depression was the result of credit/borrowing (i.e. debt) outrunning the foundation that supports debt: productivity and income."
Simple and sweet. Wealth is created by productivity in the real economy. All the financial engineering in the world never produced a penny of wealth.
All the financial engineering in the world never produced a penny of wealth.
You mean like "investing"?
Are you telling me that I should not expect to be able to retire and live, not on my savings, but on the interest paid on my savings?
Depression is not just a financial condition but an actual mental one where when we are in a financial depression we are quite literally depressed, and as such in a non productive malaise. A self sustaining economic hole.
The somewhat sudden realization that there is no pot of gold at the end of the rainbow, that "something for nothing" really isn't a sustainable economic model, is when REAL depression will set in.
Financial engineering Transfers the wealth, the engineers of the transfer call it moral hazard.... A 70 year old "accident" called moral hazard, yeah thats it. SELL
Exactly what th author pointed out. Milestones
So we're trapped in the endless debt spiral of death living in sin. If we can get a cosigner maybe we wouldn't keep going off on a tangent. If you help me with your twelves I'll help you with my tens. Then maybe we could live in consonance instead of endless dissonance.
The dream died on 9/11 thanks to God's chosen assholes.
Anyone borrowing money above 4% is in poor financial position, and really anyone borrowing at all.
...All Is Well! All Is Well!
https://www.youtube.com/watch?v=zDAmPIq29ro
Local, city, county, and state governments are dead broke and in quasi-default. EBT is around 50 million strong as well?
Public sector workers enjoy benefits and pay much of the private sector can only dream about. Inequality is at all time highs by anyone's measure.
Then, Americans ring the bell with the hottest gun sales month in the history of guns.
If the ballot box enforced government accountability to the American People it would be illegal. In other words, the political parasites will never represent the American People. They will only represent the interests of the Oligarchs, Oligopolies, Wall Street Crominal, Banking Criminals, Federal Reserve Criminals, etc. Only direct action will make the government accountable to the American People.
• Abolish the Federal Reserve System;
• Hold banking stock and bond holders and banking executive officers completely responsible for the totality of losses even if it exceeds paid in capital and face value of bond holdings;
• Prosecute and severely punish the political parasites for accepting bribes (I.e., campaign contributions, honoraria, fees for speeches, free rides on Crony Capitalist Corporate jets, etc.),
• Prosecute Crony Capitalist Corporations and Oligarchs for offering and paying bribes to political parasites;
What does "earned income as a percentage of GDP " mean?
A nice looking line on a chart.
His central premise - that voters know it - is dubious at best. My sense is that the majority of voters are concentrating on getting by, football and the Khardashians. All that economy stuff is for somebody else.
Main stream American whites are about to go full on 14/88
I think the author did an excellent job on a difficult subject. One of the better I have read. Milestones
https://enronnext101.wordpress.com/
Three Truths
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