Guest Post: Signs Of The Times

Submitted by Nicholas Bucheleres of NJB Deflator blog,
Retail stores are so 20th century.  Really, between Starbucks, McDonald's, and Facebook, who has time to walk around the block, let alone read a book?  Never read a book before?  Don't worry; Fifty Shades of Grey is on audiobook, so you can live Tweet your favorite sex quotes.  Amazon's got you covered.
 
Amazon (white), $SPX (purple), Staples (green), Barnes & Noble (yellow), and Best Buy (blue) over 5 years.
 
Best Buy, Barnes & Noble, and the likes are closing stores and slashing jobs like its 1929 in order to prevent bankruptcy like the barely profitable Circuit City (Rest In Peace).  The 21st century consumer is clearly choosing to stay at home and shop for perfectly demanded goods, so that they can prevent even the smallest amount of sunlight from hitting the waxy rolls in their arms.
 
I always thought that the perfect competition model in micro-economics was mental masturbation, but I suppose this is a perfect example of its application: US retailers carry such similar products and offer such homogenous services that eventually there is not enough demand to go around and businesses fail.  What the micro-economics model I learned failed to incorporate was technological progress--Amazon.  We should have been taught that not only will some businesses fail while others enter the low-barrier market, but that if one single business can offer a better product than every other, then they will usurp the entire marketplace.  We are currently witnessing this take place.
 
It's a Fat-Kid World
 
With nearly every form of media that we consume quickly becoming digitized, it is no surprise that the analogs are rapidly being replaced by the digital.  Today's youth are especially drawn to digital platforms because most of them don't know how to read anyway, and the grease from their sausage-fingers can be quickly wiped off the screen of their iDevice. 
 
This is all great preparation for their high school years: Wake up in pool of own urine, pop Zoloft, drive to McDonald's to eat two sausage McMuffins and two hash browns, pop large dose Adderall, drive to school, wipe nose with shirt while Facebooking in class, more McDonald's, get a couple good hours in on the Xbox while popping more Adderall, Starbucks Mocha Frap extra Whip for dinner, Ambien to fall asleep, then repeat.
 
...but wait! College gets even better:  Fatso gets to do everything above, but he doesn't have to go to class!  Talk about the sweet life; big boy gets his student loan through Education Management Corp., who partners with our friends at Goldman Sachs.  They will get you a student loan with a snap of a finger so long as you attend one of their prestigious for-profit online higher-learning institutions.  No need to worry about repaying those student loans; you've got a college degree, bro!  After 8 years of daily speed-balling on amphetamine and tranquilizers, this McStudent will have such chemically induced confidence that taking a job without a college degree prerequisite will be beneath him. 
 
Next stop: government dole.  The New American Golden Boy will collect not one, but two weekly checks from the government.  First he will get the well-deserved unemployment check, and on top of that he will receive his disability check simply for being a fat-ass.  Oh yeah, and government/US taxpayers pick up the tab when he defaults on his student loans, because Goldman and Education Management Corp. are backstopped by Congress.   TARP2.0 will be of spectacular proportions.
 
$SPX (green), Goldman Sachs (blue), McDonald's (red), Apollo Group (purple), Teva Pharmaceuticals (yellow),  Starbucks (orange), Apple (sea-foam green?) since 1999. 
 
 Looks like our man is making a pretty good name for himself.  Every company that he and his friends and family touch has beat the S&P over the past 13 years. 
 
But let's be real here: these are not rational consumers making rational consumptions decisions.  This is the new America that is being engineered by corporations that force mindless individuals to become addicted to their products with zero regard for health implications.  We are witnessing consumption for capitalism's sake.  This is clearly not a sustainable form of economy if not for the health implications, then for the student and credit-card debt that this cycle is founded upon. 
 
Is There a Pill For That?
 
Rate of change of population (blue), rate of change of GDP (red), and unemployment rate (green) since 1970.  Black line is roughly 1999.
 The corporate benefits of the New United States of Pill Poppers was made clear above: all industries connected to the engineering of the new consumer have been wildly profitable since the arbitrary date of 1999 that I chose.  The economic implications are much more dire: the US population is contracting, GDP growth rate is falling, and unemployment has risen rapidly.  The corporate/economic effects could not be more stark, but everyone is too busy consuming to realize what is going on.
 
An economy is the aggregate of its consumers, and just like its consumers, this economy is structurally sick.  The monetary policy pill that central planners and investors have been high on since 2008 has caused the economy to build up such a tolerance that it is no longer effective unless taken in doses that will kill the patient.