The Fading Scent Of The American Dream

Tyler Durden's picture

Authored by Charles Hugh Smith via The Daily Reckoning,

This is the reality: the American Dream is now reserved for the top 0.5%, with some shreds falling to the top 5% who are tasked with generating a credible illusion of prosperity for the bottom 95%.

The question about who still has access to the American Dream is starkly answered by this disturbing chart:

Super Rich

If you talk to young people struggling to make ends meet and raise children, or read articles about retirees who can’t afford to retire, you can’t help but detect the fading scent of prosperity.

It has steadily been lost to stagnation, under-reported inflation and soaring inequality, a substitution of illusion for reality bolstered by the systemic corruption of authentic measures of prosperity and well-being.

In other words, the American-Dream idea that life should get easier and more prosperous as the natural course of progress is still embedded in our collective memory, even though the collective reality has changed.

For the bottom 95%, life is typically getting harder and less prosperous as the cost of living rises, wages are stagnant and the demands on workers increase.

Meanwhile, the asset bubbles inflated by central banks have enriched the top 10% of households, which own over 75% of all assets and take home over 50% of all household income.

The vast majority of household wealth is held by the top few households: the top .1% own roughly 25% of all US household wealth, the top 1% around 40%, and so on. So the households between 80% and and 95% own a very modest percentage of what the top 96%-99% own.

Median household income (using the Consumer Price Index measure of inflation, which grossly under-estimates real inflation) has gone nowhere since 2000. If income were adjusted by real inflation, it would show a 20% decline in purchasing power for all but the top 5%.

Clearly, our political-financial system and the policies of central banks have combined to concentrate wealth and income in the top of the wealth/income pyramid.

The average person knows the scent of the American Dream is fading, and many have lost hope of what was once taken for granted: home ownership, increasing income, and an easier life as household income and wealth slowly but surely increased with time.

But the collective memory of the American Dream remains; people feel they should be able to take a vacation, should be able to buy a starter home, should be free of constant worry about paying the bills, and so on.

With this collective memory still in place, people naturally start feeling a pervasive sense of betrayal: the system implicitly promised everyone who worked a lifetime security and increasing prosperity.

Official claims of prosperity are out of alignment with reality, and so expectations are out of alignment with reality. This creates a highly combustible and dangerous dynamic, as the emotions of betrayal and despair are volatile.

In other words, if 90% of the work force expects to be poor their entire lives, has no thought of ever owning a house, anticipates scraping by in their senior years, etc., then their expectations are aligned with the realities of a hierarchical power-law economy and social structure.

Low expectations are difficult to dash.

A sense of injustice and betrayal arise, along with a sense that something has gone profoundly wrong with the society and the economy.

This dynamic has yet to fully play out, but it will. Whatever you think of Trump, his election isn’t the problem; it’s merely a symptom of much deeper forces that will sweep our corrupt and rotten-to-the-core status quo into the dustbin of history.

But what can be done if you want to build a financial future?

Almost every asset class is in a bubble right now. So the question of where to invest one’s capital has become particularly vexing. Buying assets at nosebleed valuations in the hopes of earning another 5% aren’t very compelling to anyone pursuing common-sense risk management.

As it happens, I wrote a whole book on this vexing question, An Unconventional Guide to Investing in Troubled Times.

I can’t summarize all the ideas presented in the book in one brief article. But some basic principles will serve us well when bubbles abound.

1. Risk cannot be disappeared, it can only be masked or transferred to others. When anyone claims an investment is low-risk, they’re actually claiming either A) the risk has been obscured by fancy footwork or false claims, or B) the risk has been transferred to some mark, chump or bagholder — nowadays, that usually means the taxpayer, as profits are private and losses are socialized.

2. Value flows to what’s scarce. As economist Michael Spence and his colleagues have noted, conventional capital — the kind issued by central banks and private banks — is not scarce and therefore has little value. Ditto for conventional labor. This is why the returns on conventional capital and labor are so low.

Spence et al. suggest that what’s scarce in today’s global economy are ideas that create new business models, new productivity tools and new goods/services: labor, capital, and ideas in the power law economy.

This suggests an investment strategy of identifying what’s scarce, or what will soon be scarce, before everyone else.

3. Many things that are scarce and thus valuable cannot be bought on the global marketplace. The number one example of this is of course health, which is priceless because even having millions won’t buy your health back when it’s been lost.

Yes, you can get patched up with stents or costly meds or maybe score a black-market organ harvested from some unfortunate prisoner somewhere. But all this sort of thing merely keeps you alive; it doesn’t actually restore health.

So any investment in health will pay extremely high dividends. It doesn’t take a ton of cash to invest in one’s health; most of the investment is behavioral.

Other examples of what can’t be bought in the same way stocks, bonds and housing can be purchased: meaningful work, communities with a collective memory of how to get things done in the real world, a functioning community economy, etc.

Investing in work you find fulfilling and meaningful pays dividends that can’t be bought on the marketplace. Once again, investing in one’s skills and social/intellectual capital doesn’t require much cash. Thanks to YouTube University and many other free or low-cost sources, anyone can start acquiring the eight essential skills I lay out in my book Get a Job, Build a Real Career and Defy a Bewildering Economy.

The basic idea is to learn how to build your own career and job.

4. Comparing the relative value of various assets helps identify what’s relatively overvalued and undervalued. The key word here is relative: to say something is absolutely undervalued is trickier than concluding something is undervalued compared to other asset classes.

For example, compare housing in the U.S. and global commodities. Based on the national Case-Shiller Index, house prices have reached new bubblicious levels. Thanks, Federal Reserve!

It’s not much of a stretch to reckon that, hmm, valuations are looking a bit more likely to be overvalued here rather than undervalued. Meanwhile, commodities look decidedly unbubblicious at today’s levels.

But overall, this remains one of the most challenging environments we’ve known.

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Omega_Man's picture

give the commies guns

peddling-fiction's picture
"The Fading Scent Of The American Dream"

(((mockingbird))) content

It started in earnest after 1913

Giant Meteor's picture

If we're counting , Santa Clara County v. Southern Pacific Railroad Company, 118 US 394 (1886)

curbjob's picture

Bingo, the start of corporate personhood ... all the protections, none of the responsibilities . 

BlindMonkey's picture

"Deferred prosecution" of a bank''s personhood is the ultimate joke.  The banks are a looting tool of American wealth.  

two hoots's picture

Let's shed the title "American Dream", it likely invites too many dreamers to our shores and is a dead idea anyway along with it being....well...not specific goal releated  or tailored to individuals and the environment they chose to operate in/from. 

Once one didn't have to put much thought in what future one would choose or the lifestyle one could expect.  If factory work usually a mediocre live on mediocre wages, salesman much the same, nurse, engineer, doctor up the ladder it goes as does the quality of life.  Now, these days, nothing is certain, nothing is clear.  A degree means little without the right attributes attached, you know the list.  This didn't sneak up on us, surely it did not sneak up on colleges/counselors etc.  If it did, well there you have it.  

It's a different world, different everything and althouth there is plenty of work there is not plenty of careers.  It will be a painful adjustment for today's young as it is for all that get caught in change whether it's the ice age, meteorites, wars, or today's social and tech evolutions.  It will eventually work itself out but at the cost of today's workforce. 

Justin Case's picture

Neoliberal capitalism has failed

It is only because these facts are simply off-limits in the American media and its discussions of socialism and capitalism that the distorted narrative about Venezuela’s current hardships are believed.
When discussing the merits of capitalism and socialism, American media usually restricts the conversation to pointing out that socialist countries in the third world have lower living standards than the United States, a country widely identified with capitalism. Without any context or fair comparison, this alone is supposed to prove the inherent superiority of U.S.-style capitalism.

If the kind of neoliberal “free trade” advocated by U.S. corporations was the solution to global poverty, Mexico, a country long ago penetrated with the North American Free Trade Agreement, would be a shining example of development, not a mess of drug cartels and poverty. The same can be said for oil-rich countries like Nigeria, where exports are massive but the population remains in dire conditions.

Capitalism is a society where billionaire capitalists own vast companies, banks, shares, and much of the land as well. Elected governments are bent to the will of the big corporations which the capitalists own. To achieve genuine socialism, this ownership of the world's wealth by the 1% must be ended. Capitalism means that a great deal of our society's resources, needed to produce the things we need, are privately owned.

Capitalism is based on the private ownership of the productive forces (factories, offices, science and technique)

The bosses of the big corporate enterprises always threaten that if wages and conditions are not worsened, they will take their business to another country where wages are lower.

Escrava Isaura's picture

Ohh gosh.

Capitalism has not failed. The contrary is true.

The problem with capitalism, as well as with birth, is that we built both on a finite energy source.

The Jews and Persians understand and accept it. The Christians and Muslim don’t. Most are not even aware or refuse to accept.


shovelhead's picture

We should have run out of that finite energy 3,000 years ago.

What happened?

Escrava Isaura's picture

Because we didn’t know how to back then.


Justin Case's picture

Capitalism? Think Not ...
We cannot attribute the failings of the system to "Capitalism" as it is classically defined. Capitalism does not, for example, require a pure fiat system to function. Nor can the current international monetary and financial system (IMFS) be described as Capitalism. It is much closer to Fascism under a fiat regime of a more Imperialist nature.

True Capitalism does not allow for TBTF, with financial failure rewarded (and trillions in losses "socialized"). Risk is not systemically protected by an unwitting collective. Clearly this cannot be argued against. It can be said that Capitalism helped to foster this development, but importantly, it could not have been accomplished under a free market gold standard.

thatthingcanfly's picture

No Justin.

Socialism/communism/egalitarianism always fails, inevitably, because it flies in face of human nature. It is in a man's nature to better himself and his socio-economic status/situation through hard work, education, the acquisition of lucrative skill sets, social networking, etc., so as to be able to take his wife out to a nice dinner every once in a while, save for retirement, and leave his kids in a better situation than that in which his parents left him. When socialist goverments attempt to "level the playing field" by force, making it impossible for a man to do the things that are in his nature by taking away the personal profitability aspect, relegating his own desires to a distant second place behind contributing to some "collective good," one of two things will happen: he will find some way to cheat the system, or he will quit working altogether. This is why socialism has to be forced on populations by the point of a gun, ultimately. And it's no wonder why Marx's ideology led to the government sponsored murders of upwards of 100 million people during the 20th century. The common man, by natural design, resists socialism, "genuine" or otherwise.

Capitalism takes into account the nature of man. Some men, owing to their superior attributes, will be more successful than others, building very successful companies and amassing personal fortunes. At the same time, as Jesus told us, the poor shall always be with us. This is normal. Capitalism in the US worked fine until the time of Lincoln the Destroyer. The "internal improvements' agenda of the old Whig party, which became the new Republican party, once implemented during and after Mr. Lincoln's War, ensured that the government would put its metaphorical finger on the scale representing free market capitalism. The government subsidies always favor friends of government officials (the UP railroad subsidies were a particularly egregious case); and this trend continues to this day with the governmental enterwtinement with the extremely lucrative MIC.

Don't think that this means capitalism is evil, per se. The current economic model is cronyism. And if you want to see something worse, try socialism.

Escrava Isaura's picture

You really should stop writing nonsense.

Capitalism core is to maximize personal gains at the expenses of others. Now try to run a family under these values. The family will self-destruct.


thatthingcanfly's picture

Gross oversimplification.

...and what part of my writing was nonsensical?

Escrava Isaura's picture

“If you can't explain it simply, you don't understand it well enough.” Albert Einstein

Pernicious Gold Phallusy's picture

Einstein was not able to explain relativity simply. He certainly understood it.

El Vaquero's picture

Socialism and communism rely on people being blank slates at birth, which is 100% false. 

Escrava Isaura's picture

Core of Socialism: The workers, the craftsmen, the artists own their production, meaning, they are not hourly wage slave of people with capital.

Core of Capitalism: You, and your government, work for the owners of capital, the bankers/investors.

Core of Communism: Means of production and money issuance reside within the state, meaning, communism is super-capitalism.

Core of Religion: You don’t need proof (high faculty brain), you need faith.

Core of Fascism: When both capitalism and communism structures fail. Fascism has different flavors, but, basically, it boils down to nationalism and race.

Fascism is a by-product of power structures, it comes from the right. Fascism could never be implemented in a socialist/anarchist system because those don’t come with power structures —with bosses.

Socialism doesn't’ exist in America but in ones brain.

America is state-capitalism, a system of private/centralized power run by ‘the smart’ class with lots of cronyism.


thatthingcanfly's picture

You have officially entered orbit around Pluto.

peddling-fiction's picture

"You have officially entered orbit around Pluto."

Now Nibiru finally exists. LOTFL


El Vaquero's picture

Core of Capitalism:  Enforcement of private property rights and private contracts.  Get it straight.  You characterize it incorrectly over and over.  That does not make you right. 


And FYI, communism is supposed to end as a stateless, classless society where the community (i.e. commune) owns the means of production.  It fits under the umbrella of socialism.  It always fails and gets stuck in a state that, sans private property rights, is like fascism on steroids.  But the assumption under communism is equality of outcome, which fails to take into account that, even under the best of conditions, there are inherent differences between individuals.  That is to say, it assumes that we are all blank slates at birth, which is 100% false.   And fascism, BTW, has a core where the individual is subjugated to the state.  Everything is encompassed by the state. 


You are starting with premises which are not just indeterminate, but outright  false.  Your conclusions are most likely going to be false. 

Escrava Isaura's picture

Do you want to connect the dots?

Do you want to be able to explain it to a 12 years old?

So then, free yourself from the left and right propaganda ‘indoctrination’ and pay attention to the facts.


El Vaquero's picture

Your reliance on patronizing me as opposed to addressing the points tells me that you lack a coherent response to my post.  If you think that the core of capitalism is anything other than the enforcement of private property rights and private contracts, you are 100% wrong.  Period.  You cannot even get the definitions correct, much less the facts. 

Escrava Isaura's picture

So try this:

....(Bakunin) predicted (50 years before the Russia Revolution that should be called a coup) that there would be two forms of modern intellectuals, what he called the ‘Red Bureaucracy’, who would use popular struggles to try to take control of state power and institute the most vicious and ruthless dictatorships in history, and the other group, who would see that there isn’t going to be an access to power that way and would therefore become the servants of private power and the state capitalist democracy, where they would, as Bakunin put it, ‘beat the people with the people’s stick,’ talk about democracy but beat the people with it. That’s actually one of the few predictions in the social sciences that’s come true, to my knowledge, and a pretty perceptive one.” 



thatthingcanfly's picture

Oh boy, now he's quoting Noam Chomsky.


LittleGreenMan's picture

The problem isn't Capitalism vs Communism - or Capitalism/Communism vs any other political/econimic system.  The problem is that a small percentage of the world population that is rich and corrupt beyong imagination (Power Elite, Deep State, TPTB) rigs every system to their advantage.  Until we fix that, it's pointless to debate the pros and cons of various systems.  And fighting each other is exactly what they want, b/c it allows them to continue their fraud.


Escrava Isaura's picture


So, what is the new social order that we should implement?


Pernicious Gold Phallusy's picture

Those are not the definitions taught in economics classes. Your definitions are distorted in the manner political propagandists distort things to advance socialist political arguments. Brazil has been a corrupt tyranny for centuries, so it is not likely Brazilians would be exposed to any political theory not favoring political socialism. Almost nobody uses the economic terms communism - socialism - capitalism - fascism correctly, due to the influence of politics. People use the formal names of various economic systems as insults or religious charms, depending on the audience.

Socialism is an economic system in which all property, and the means of production, are owned and directed by the state. All economic decisions are made by state officials, or those to whome state officials have delegated the decisions. There is no private property. There is no private business. Every economic actor is employed by the state, and all economic output goes to the state. State officials decides who gets what. Socialism implies the existence of a ruling class, the state. Rulers under socialism are not equal to the common people because ruling is said to be more difficult than working. The state exists to direct the economy and provide for the populace. The Soviet Union and China pre Deng had this economic system.

Communism is an economic system in which all private property, and the means of production, are owned collectively, by everybody in the polity. There are no officials telling individuals what to do on their jobs, unless the collective has empowered those individuals. Bosses owe their position to the collective, and may be replaced. Economic output is pooled, and allocated to individuals according to the will of the collective citizens. Communism implies there is no ruling class, since all citizens are equal. There is no state. The Pilgrims had this system for their first year year in North America. After more than half starved, they dropped this economic system.

Capitalism is an economic system in which private individuals own property and resources individually. Individuals exchange their resources and labor with other economic actors, and receive payment for their labor individually, without economic interference from the state. The state exists only to enforce the law. Individuals must provide for their own sustenance, and that of their families. The United States had this system from the late 1700s to sometime in the 1800s. Some aspects of the US, Japanese, Swiss and Chinese economies are capitalistic. Hong Kong had this system before it was returned to China. Singapore has this economic system today.

Fascism is an economic system in which private individuals own property and the means of production, similarly to capitalism. But in fascism the government controls or directs the economy, and economic success depends on private individuals carrying out the aims of the government. The upper class consists of rulers, and business owners who curry favor with, and support, the rulers. The lower class consists of individuals not in government and not owning businesses. Some of these are workers, who work to enrich the owners.  Others are not employed. The state supports these in exchange for their support. The state exists to enrich rulers and business owners. Most countries in the world now function under this system. Mussolini's Italy was fascist. Nazi Germany was fascist, not socialist. Modern Europe is primarily fascist, especially the EU states, and Switzerland has fascist features (UBS.) The United States, Japan, South Korea and China are largely fascist.

Religion is not an economic system. Religion can be used by governments to try and enforce economic systems. We see this in the US, Japan, India and other places.

El Vaquero's picture

I'll say it again:  Capitalism is the enforcement of private property rights and private contracts.  You attribute many things to capitalism that aren't necessary for it.  Fiat money, which is a real problem, can exist under capitalism, fascism, mercantilism, communism, imperialism, etc... 

two hoots's picture

The U.S. of America is a hybrid mix of capitalism and socialism.   Like may socialist leaning countries, the poor part of the U.S. lives in our socialist/government supported percentage,which questions the advantage of socialism vs the part living in capitalism.   Those that can't/won't compete always lean to support to better their lifestyles at the cost of the capitalist who must pay that bill.......why should they?    And  neither should the working class have to pay the tax bill for public servants and elected officials to live better than those they are serving, the tax paying ones, not the non tax paying others.

Need to get a way from titles and the limited thoughts of only two choices of capitalism/socialism (dems/repubs etc).    

Xena fobe's picture

When they threaten to send jobs overseas, we should tell them good riddance.  Globalism is evil.

The problem with capitalism is corruption.  It is easier for small states to be watchful against it. 

Killdo's picture

Every time I go to so called poorer countries I see people living in much nicer houses than we do here, they often inherit them (for free), they have more friends, they meet often, cook dinners, laugh, create art together or play soccer. 

They are all married to great wives (much nicer then the American fake faminist, fake boob, fake everything women). And they have great, happy, socially-integrated (white) kids

They eat better, they drink better, they make useful things, most know how to cook very well - these are societies where social contract still exists and the society is able to self-repair (unlike our dysstopia here in the USSA - far beyond repair, going faster and faster to shit every day in every possible way). 

This is a marketing trick used on Anglosheeple to make them feel a bit better about their pathetic lives- glorifying Anglosheeple's submission, poverty etc while tricking them into borrowing even more fake money to buy shit they don't need. 

Pernicious Gold Phallusy's picture

They also haven't been inundated with 3rd world immigration for the past 300+ years.

waspwench's picture

Capitalism does work.   What we have in the US, right now, is not capitalism.

Pernicious Gold Phallusy's picture

The United States has had a fascist economy for many decades. Maybe Eisenhower was the first to bring it to the attention of the general public - I don't know. Compare government buildings constructed during FDR's, Hitler's and Mussolini's terms. Those rulers were three fascists in a pod.

Katos's picture

We have an entrenched political elitist parasite MAFIA IN Washington! Most of our current 535 REPRESENTATIVES In Washington HAVE 20+ YEARS, with many HAVING 30+ years.  Our leaders have created a classic " CIRCLE JERK " WHERE THEY grab the JUNK OF THE billionaire closest to them and agree to pass laws BENEFITTING THAT billionaire at the cost to TAXPAYERS! The 50 YEAR "NON PROFIT " STATUS of the NFL is a classic example! JUNK in Hand , THIS MAFIA has completely destroyed americas MIDDLE class with TRADE agreements that SHIPPED TENS of millions of good paying manufacturing jobs offshore! Inheritance taxes for the wealthy used to be 95%.  Today there is zero tax on 5 MILLION dollars?? THE mafia that's been created HAS used their positions and knowledge to trade INSIDER information, to start wars and have tremendous investment insight! While the american people have been legislated OUT OF THEIR homes, their jobs? And their futures by charlatans in washington WHO only have their own interests at heart! THE current observation of OBAMA AND CLINTON making hundreds of millions of dollars SELLING uranium TO OUR enemies, while the entire congress, FBI , justice DEPARTMENT, AND MEDIA SAID NOTHING?? THEIR ALL IN THIS TOGETHER AND WERE PAYING THE BILLS FOR ALL F THEM TO LIVE LIVES OF THE RICH AND FAMOUS WHIKE WE SINK INTO A 3RD WORLD SHITHOLE!

Xena fobe's picture

In fact, it is legal for congress to trade on insider info. 

Pernicious Gold Phallusy's picture

Don't just ignore paragraphs... stop inserting spaces between your words. That should make it ever easier to read.

HRClinton's picture

"The Fading Scent Of The American Dream"

And "The Rising Crescendo of the American Scream"

That Tree Of Liberty is looking awfully parched. (((They))) have been abusing it for too long.

ZOG, what goes around...

Giant Meteor's picture

"But overall, this remains one of the most challenging environments we’ve known .."

We've only just begun ..

Solio's picture

Stolen organs and people because that's where the real money is.

serotonindumptruck's picture

Don't forget about international child sex trafficking.

It's a highly lucrative market for the elite and their lackey ghouls to leverage their social and political status so as to gain access to the world's unwanted orphaned children.

These "elite" pedophiles have the means to exploit this market as they satiate their own disgusting and criminal perversions.

Xena fobe's picture

Don't give Mr. Ludwig VonMises, above any ideas.

tmosley's picture

The American Dream is reappearing in the form of crypto. Once we have reached full adoption, the speculative gains will be over, but inflation will no longer rob the people of their savings. The growth in the purchasing power of the lower and middle classes will again outpace that of the upper class as it did under the gold standard.

It's going to be glorious.

GoyimUprising's picture

Until they cut the fiber.

roddy6667's picture

"a shining city on the hill, with streets paved with gold"

I want some of what you're smoking.

GooseShtepping Moron's picture

Nobody would be buying crypto if it weren't for the speculative gains.

Consuelo's picture



I want to believe - for sake of nothing else but what Crypto might bring back in terms of Liberty.   I am just not quite as sanguine about the situation as my fellow compatriots here are.

Time will tell.