When the illusion that the Status Quo can fulfill all its promises to everybody dies, the Status Quo starts the terminal slide to effective collapse.
The policy of safeguarding Boomer benefits with asset bubbles will lead to the destruction of the unprepared, the unwary and those who foolishly trusted our "leadership" and central bank to tell them the truth.
The vice will close on some cities and states sooner than others, but it will eventually squeeze every city and state with declining revenues and rising fixed costs into default.
If the top 1/100th of 1% crowding airports with their private jets isn't afraid of impoverished, disenchanted debt-serfs with pitchforks, they should be.
The way to preserve great wealth is to buy political protection of that wealth. The way to protect great political leverage is to grease the machinery of governance with cash.
If you want to pinpoint the one dynamic pushing the global economy into not just a prolonged recession but a parallel period of massive social instability, look no farther than the social and financial stagnation that results from optimizing the system to benefit the Elites and the entrenched incumbents who protect them from competition and the dispossessed debt-serf classes below. The incestuous embrace of privilege and power by entrenched, socially isolated Elites characterizes failed states and brittle, doomed regimes throughout history.
The problem in representative democracy is that every instance of waste, graft, fraud and monopolistic racket is somebody's fat paycheck or government contract. Promising good governance guarantees a losing campaign for public office. To avoid the political pain that would result from trimming waste/fraud/ rackets, the state prints money to keep the swag flowing. Since the state can't create real wealth, it prints claims on wealth and passes off the paper as "money." The only thing that is infinite about the state is the hubris of those at the controls and the narrow self-interest of those at its capacious feeding trough.
The essence of the U.S. economy is make it look good: never mind quality or long-term consequences, just make it look good today, this week, this month, this quarter: make the pink slime look like meat, make the company look profitable, make the low-quality product look good enough to close the sale, make the unemployment rate low enough to justify re-electing the toadies currently in power, make the body count of bad guys look good, and on and on--just makes the numbers look good now, the future will take care of itself. When rigged numbers are the basis of our success, we have failed.
The destructive consequences of a parasitic Tyranny of the Wealthy and Majority have yet to play out, but they will, and sooner than most believe possible.
There are many ways to slice and dice America's power/wealth hierarchy. The conventional class structure is divided along the lines of income, i.e. the wealthy, upper middle class, middle class, lower middle class and the poor. We suggest that a more useful scheme is to view America through the lens not just of income but of political power and state dependency. Sadly, eight of the nine classes are hidebound by conventions, neofeudal and neocolonial arrangements and a variety of false choices.
This is how empires collapse: one complicit participant at a time.
Combine diminishing returns with the political dominance of vested interests and you get a system incapable of reforming itself and incapable of stopping the slide off the cliff. Vested interests have no concern for the unintended consequences of their self-aggrandizement; the entire poilitical structure is based on the faith that there is always more money to feed the insatiable hunger of entrenched interests for more funding, more protection and more power. And so the only possible "solution" left is collapse.
The ideal system for middlemen is the exact opposite of an open competitive market: low-risk fat profits flow to monopolies or cartels that obscure costs, and turn sellers and buyers into involuntary participants who have no other choice but to give money to the middlemen. The Internet is enabling sellers and buyers to bypass the predatory State and the parasitic middlemen the State enforces. Banks--no longer needed. Sickcare cartels--no longer needed. Higher education cartel--no longer needed.