Here is the moral decay of America’s ruling elites boiled down to a single word. There are many reasons why Imperial Rome declined, but two primary causes that get relatively little attention are moral decay and soaring wealth inequality. The two are of course intimately connected: once the morals of the ruling Elites degrade, what’s mine is … Read moreFollowing in Rome’s Footsteps: Moral Decay, Rising Inequality
According to the BLS, inflation in the category of “New Vehicles” has been practically non-existent the past 21 years. Longtime readers know I’ve long turned a skeptical gaze at official calculations of inflation, offering real-world analyses such as The Burrito Index: Consumer Prices Have Soared 160% Since 2001 (August 1, 2016) and Burrito Index Update: Burrito Cost Triples, … Read moreNo, Autos Are Not "Cheaper Now"
Will bitcoin appear on this chart of global reserve currencies in the future? Could a non-state cryptocurrency like bitcoin become a global reserve currency? I first proposed the idea back in November 2013, long before bitcoin’s rise to $19,000, decline to $3,200, recent ascent to $13,000 and current retrace. The idea is intriguing on a number … Read moreCould a Cryptocurrency Become a Global Reserve Currency?
Insolvency isn’t restricted to private enterprise; governments go broke, too. One reason the economy is so much more precarious than advertised is inflation has pushed households and small businesses to the edge–and one engine of that inflation is local government. This is not to dump on local government, which is facing essentially unlimited demands from the … Read moreLocal Government Is an Engine of Inflation
The asymmetries are piling up and we’re cracking under the weight. Judging by the record-high stock market and the record-low unemployment rate, the “recovery” has reached new heights of prosperity. Academics and think-tankers viewing the global economy from 40,000 feet are brimming with policies to bring the remaining laggards into the booming economy. You can imagine … Read moreThe Human Cost of "Recovery": We’re Burning Out
Our society has a legal structure of self-rule and ownership of capital, but in reality it is a Neofeudal Oligarchy. The Inheritance of Rome: Illuminating the Dark Ages 400-1000 is not an easy, breezy read; its length and detail are daunting. The effort is well worth it, as the book helps us understand how the power structures … Read moreThe Lessons of Rome: Our Neofeudal Oligarchy
The rest of us eat our losses, either all at once or in bitter bites as we trudge through the financial wasteland left after bubbles burst. The news that the Federal Reserve Casino is giving away free gambling chips triggered a frenzied rush that trampled the bears, including poor Yogi: There’s just one catch to … Read moreThe Fed’s Casino Is Giving Away Free Gambling Chips (But Only to the Super-Rich)
The political moment when the “losers” connect their discontent and decline with central bankers is approaching. The Ruling Elites’ Chattering Classes still haven’t absorbed the key lesson of the 2016 U.S. presidential election: the percentage of the populace that’s becoming wealthier and more financially secure in the bloated, corrupt, self-serving Imperial status quo is declining and … Read moreDear Central Bankers: Prepare to be Swept Away in the Next Wave of Populism
The system is broken, and the managerial elite will keep it broken because it serves their interests to keep it broken. America’s managerial elite came to do good and stayed to do well–at the expense of everyone beneath them. Now that they’ve entrenched themselves at the top of the status quo, there’s no way to dislodge … Read moreAmerica’s Managerial Elite Has Failed, But We Can’t Get Rid of Them
All asset “wealth” in credit-asset bubble dependent economies is contingent and ephemeral. A funny thing happens to “wealth” in a bubble economy: it only remains “wealth” if the owner sells at the top of the bubble and invests the proceeds in an asset which isn’t losing purchasing power. Transferring “wealth” to another asset bubble that is … Read moreHow Much of Your "Wealth" Is Hostage to Bubbles and Impossible Promises?
If we look at these charts, it looks like only the top 10%, or perhaps the top 20% at best, might qualify as “middle class” by the metrics described below. The conventional definition of working class is based on income and education:the working class household earns between $30,000 and $69,000 annually, and the highest education credential in … Read moreMisplaced Pride: Most of the "Middle Class" Is Actually Working Class
It’s difficult not to see signs of this same trajectory in the U.S. since the fall of the Soviet Empire in 1990. A recent comment by my friend and colleague Davefairtex on the Roman Empire’s self-destructive civil wars that precipitated the Western Empire’s decline and fall made me rethink what I’ve learned about the Roman … Read moreThe Self-Destructive Trajectory of Overly Successful Empires
Herds get spooked and run. That’s the crash scenario in a nutshell. We have all been trained by a decade of central bank saves to expect any stock market swoon will soon be reversed by central bank sweet talk and/or rate cuts. As a result of such ever-present central bank willingness to intervene in the stock … Read moreA Stock Market Crash Scenario
Recent research supports the idea that this under-the-radar migration is already under way. The decline of rural regions and small towns is a global phenomenon, and the causes are many but boil down to two primary dynamics: 1. Cities and megalopolises (aggregations of cities, suburbs and exurbs) attract capital, infrastructure, markets and talent, and these … Read moreWhat Would It Take to Spark a Rural/Small-Town Revival?
There are two other trends that don’t attract quite the media attention that soaring profits do. Is the decade-long tech bubble finally popping? Tech bulls are overlooking the fundamental reality that the drivers of Big tech’s phenomenal growth–financialization and expansion into mobile telephony– are both losing momentum. A third dynamic–Big Tech monetizing privately owned assets such … Read moreIs the Tech Bubble Bursting?
Politics as practiced in a bygone era of stability no longer offers any solutions to these profound disruptions. I recently read a fascinating history of the social, political and economic context of the American Revolution: The Radicalism of the American Revolution by Gordon Wood. What is particularly striking is the critical role played by rapid social changes … Read moreA Quiet Revolution Is Brewing
As a society, we are ill-prepared for the end of “politics is the solution.” It’s fun to be a politician when there’s plenty of tax revenues and borrowed money to distribute, and when the goodies get bipartisan support. An economy that’s expanding all household incomes more or less equally is fun, fun, fun for politicians because … Read moreWhy Being a Politician Is No Longer Fun
That nothing is truly “free” will be another lesson of the S-Curve. I often refer to the S-Curve because Nature so often tracks this curve of ignition, rapid expansion, stagnation and decline. One lesson of the S-Curve is that the human bias to keep doing more of what worked so well in the past leads to doing … Read moreLesson of the S-Curve: Doing More of What’s Failed Will Fail Spectacularly
If you want to identify tomorrow’s superpowers, overlay maps of fresh water, energy, grain/cereal surpluses and arable land. The status quo measures wealth with “money,” but “money” is not what’s valuable. “Money” (in quotes because the global economy operates on intrinsically valueless fiat currencies being “money”) is wealth only if it can purchase what’s actually valuable. … Read moreForget "Money": What Will Matter Are Water, Energy, Soil and Food–and a Shared National Purpose
The food-exporting superpowers are easy to identify. As my esteemed colleague Michael Snyder chronicled in a recent Zero Hedge post, world agricultural production is under assault from extreme weather and diseases such as African swine fever. Floods & Drought Devastate Crops All Over The Planet; Is A Global Food Crisis Be Coming? Everyone understands extreme weather is a danger … Read moreSuperbugs and the Ultimate Economic Weapon: Food
If China wants superpower status, it will have to issue its currency in size and let the global FX market discover its price. Quick history quiz: in all of recorded history, how many superpowers pegged their currency to the currency of a rival superpower? Put another way: how many superpowers have made their own currency dependent … Read moreChina’s Insurmountable Global Weakness: Its Currency
Deflation eats credit-dependent, mass-consumption economies alive from the inside. While AI (artificial intelligence) garners the headlines, the next wave of disruptive technologies extend far beyond AI: as the chart of technologies rapidly being adopted shows, this wave includes new materials and processes as well as the “usual suspects” of machine learning, natural language processing, data mining … Read moreTechnology Is Not Just Disruptive, It’s Disastrously Deflationary
If you want to understand how the economy is being transformed, look at the intersection of Big Tech, financialization and the central state. The two dynamics transforming the economy–technology and financialization–are intertwined yet widely viewed as unrelated. Critics and proponents of each largely ignore the other dynamic: critics of institutionalized fraud and other manifestations of financialization implicitly assume … Read moreTwo Intertwined Dynamics Are Transforming the Economy: Technology and Financialization
Normalizing and institutionalizing fraud undermines the foundations of the economy and the financial system. I am indebted to Manoj Samanta (twitter: @flation_debate) for the insightful concept the commoditization of fraud. The first step in the commoditization of fraud is to normalize fraud as Business as Usual (BAU) to the point that it’s no longer viewed as “wrong,” destructive or an aberration … Read moreThe Normalization and Institutionalization of Fraud
The real heresy here is the American economy is now rigged for downward mobility. In the conventional narrative, one’s economic class is overshadowed by one’s political belief structure: liberal, conservative, libertarian, etc. In terms of economic class, the conventional narrative divides people into their ideological beliefs about economic ideologies: free market capitalism, socialism, etc. Economic class … Read moreDownward Mobility Matters More Than Liberal-Conservative Labels
The net result is we have an economy that’s supposedly expanding smartly while our well-being and financial security are collapsing. Gross Domestic Product (GDP) and other metrics of economic activity don’t measure either broad-based prosperity or well-being. Elites skimming financialization profits by expanding corporate debt and issuing more loans to commoners while spending more on their … Read moreThe Economy Has Fundamentally Changed in the 21st Century–and Not for the Better
The economic and financial stresses will exceed the workforce’s carrying capacity in the next recession. A number of recent surveys reflect a widespread sense of financial stress and symptoms of poor health in America’s workers, particularly the younger generations. There’s no real mystery as to the cause of this economic anxiety: — competition for secure, well-paid … Read moreBurnout Nation
The world appears to be tiring of globalization and hegemons, and that trend may doom the Belt & Road to irrelevancy. The conventional narrative holds that China’s Belt & Road Initiative is cementing China’s global superpower status. There’s an alternative narrative, however: it’s a decade too late. From this perspective, global trade has reached the top … Read moreIs China’s Belt & Road a Decade Too Late?
Our expectations have continued ever higher even as the pie is shrinking.. Let’s see if we can tie together four social dynamics: the elite college admissions scandal, the decline in social mobility, the rising sense of entitlement and the unrealistically ‘great expectations’ of many Americans. As many have noted, the nation’s financial and status rewards are … Read moreUnrealistically Great Expectations
The good news is renewal becomes possible when the entire rotten status quo collapses in a putrid heap. There are two basic pathways to systemic collapse: external shocks or internal decay. The two are not mutually exclusive, of course; it can be argued that the most common path is internal decay weakens the empire/state and an … Read moreThe Great Unraveling Begins: Distraction, Lies, Infighting, Betrayal
There are many historical models in which the spending/investing of wealthy families drives the expansion of local economies. The increase in farm debt while farm income declines is putting unbearable financial pressure on American farmers, who must be differentiated from giant agri-business corporations. This is placing immense pressure on farmers, pressure which manifests in rising suicide … Read moreWhat Would It Take to Spark a Rural/Small-Town Revival?
China has expanded its domestic debt to fund its growth, much of which qualifies as malinvestment, creating financial vulnerabilities its government is anxious to mask. As I noted in Trade Deal Follies: The U.S. Has Embraced the World’s Worst Negotiating Tactics (April 8, 2019), the trade deal was a Nothing-Burger for the U.S. Without any consequences for violating … Read moreGood Riddance to a "Nothing-Burger" Trade Deal
Now look at the middle quintiles–the middle class: their income has gone nowhere in the past decade. These two charts of average incomes of U.S. households by quintile (bottom 20%, middle 60% (20%+20%+20%) and top 20%) have both good news and bad news. (Charts are from the non-partisan Congressional Budget Office — CBO). These charts depict … Read moreIncome Inequality and the Decline of the Middle Class in Two Charts
Ironically, their ample compensation allows them to avoid the poor-quality services they’ve designed for everyone below them. If we define middle class by the security of household income and what that income can buy rather than by an income level, what do we conclude? We have little choice but to conclude the middle class is decaying, both in the percentage of the … Read moreThe Accelerating Decay of the Middle Class
It’s the list of workarounds – always growing, never shrinking – that’s telling us the true story of inflation in America. Today I’m publishing a guest post by writer Bill Rice, Jr., on “real inflation,”which as everyone knows far exceeds the “official” inflation rate of 2%. Bill and I corresponded earlier this year when he … Read more‘Workarounds’ Galore: How Real Americans Deal with ‘Real’ Inflation
Working hard and doing what you’re told is no longer yielding the promised American Dream of security, agency and liberty. Volume One of Fernand Braudel’s oft-recommended (by me) trilogy Civilization & Capitalism, 15th to 18th Century is titled The Structures of Everyday Life. The book describes how life slowly became better and freer as the roots of modern … Read moreThe Erosion of Everyday Life
No super-wealthy individual or household is going to pay billions in additional taxes when $10 to $20 million will purchase political adjustments. The 2020 election cycle has begun, and a popular campaign promise is “free everything” paid for by new taxes on the super-wealthy. Who doesn’t like free stuff? Who will vote for whomever offers them free … Read moreThere Are Two Little Problems with "Taxing the Rich" to Pay for "Free Everything"
Both new households and new businesses are in secular decline. Goosing the stock market and GDP doesn’t change this reality. Everyone wants every cycle of expansion to last forever, but alas every cycle ends. The growth cycle that began in 2009 is finally coming to an end. The signs are everywhere, notwithstanding the torrid 3.2% GDP … Read moreThis Is the End of the Cycle
People love their big paychecks, but they also value their sanity. One of the most astonishing manifestations of disconnected-from-reality hubris is public authorities’ sublime confidence that employers and entrepreneurs will continue starting and operating enterprises no matter how difficult and costly it becomes to keep the doors open, much less net a profit. The average employee … Read morePush Them Hard Enough and the Productive Class Will Opt Out of Servitude
When the 4% who generate the jobs and tax revenues have had enough and leave, the effects quickly impact the 64%. At the end of any trend, everyone’s a true believer: this trend is so enduring, so broad-based, so based on unchanging fundamentals that it will never ever reverse. One such trend is the white-hot growth … Read moreThe Feedback Loop of Doom: When Mobile Creatives and Capital Abandon Unaffordable, Dysfunctional Cities