A man used to be able to work at the local department store and provide for his family.
He made an honest living, owned a home, and believed that his generation would be better off than the generation before his.
Today, most households needs two jobs, if not more, just to make ends meet.
Fewer and fewer young people will ever own a home, and optimism seems to be going down while nihilism is going up. What changed?
Misinformation in the money
Broad proclamations about “society” and about how much has changed over the years never mention anything about the money or how it has changed with time.
These statements gloss over the base layer of the society — the money — and do not consider how distortions in society’s most foundational unit would result in distortions to develop elsewhere.
If money is the base layer of the economy, and there is misinformation in the money, then you can expect to see misinformation everywhere else.
In our institutions, our language, the way we treat one another, politics, etc.
Cantillionaires
The Cantillionaires are the people close to the money-creation spigot. They benefit tremendously from these distortions and encourage their continuance.
The Average Joe, who is far away from the money-creation spigot, is hurt by these distortions. With each passing year, he works harder and harder only to be worse off than the year prior — and he has no idea why.
If a system can be manipulated to benefit the few at the cost of the many, then it will be. That is what has happened to the current monetary system.
All the acronyms and financial programs are bankster-speak for money printing: QE, ZIRP, TARP, BTFP, the list goes on. They are digits in a computer, but they have very real impacts in the physical world.
These programs make the asset-owning rich richer and the poor poorer. Considering the way the system is designed — and the incentives of the system — this should not be a surprise.
These financial engineering schemes are effectively socialism for the rich, and have zero regard for what it does to those who do not own the majority of assets.
The Cantillionaires close to the spigot can borrow units at lower rates than the person without the existing wealth or political ties, thus creating more assets that more political currency units can be borrowed against in the future… so on and so forth.
This cycle is how wealth concentrates over time. The poor’s behavior doesn’t even have to change.
They earn the same amount of currency units, but it is able to purchase less and less as the currency loses value against scarce, desirable goods.
The poor individual exchanges his most scarce resource (his time) for a tool that can be created at zero physical cost and has a seemingly infinite supply.
As explained in Plumbers By Day, this is not an optimal exchange.
Widening gaps
The widening gap between the haves and have-nots is alarming.
In my view, this widening gap is mostly due to the manipulation of money.
As shown in the chart below, the wealth of the top one-tenth of 1% of the population is about equal to that of the bottom 90% of the population, which is the same sort of wealth gap that existed during the 1935-40 period.
The middle class — the most important class for overall societal stability — is eroding.
As is true throughout history, populism emerges as the gap between the haves and have-nots approaches a breaking point.
The have-nots do not know why they are increasingly worse off, and will listen to anyone that paints them a boogeyman who is responsible for all their problems.
These opportunistic leaders emerge — seemingly out of nowhere — and tap into the us-versus-them instincts of those who feel left behind. Then history happens.
The result? Zero-sum culture wars that are downstream of more foundational problems.
We are living through a Fourth Turning. At least it will be interesting.
Recommended reading:
The Fourth Turning: An American Prophecy - What The Cycles of History Tell Us About America’s Next Rendezvous with Destiny by William Strauss and Neil Howe
The Price of Tomorrow: Why Deflation Is The Key to an Abundant Future by Jeff Booth
Principles for Navigating Big Debt Crises by Ray Dalio (free PDF version)
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