Extremes Become More Extreme, Then Revert to the Mean

A fatal bout of runaway instability becomes inevitable when "extraordinary emergency measures" become permanently essential to keep the bubbles from popping.

A funny thing happens as policies intended to fill financial potholes transition from "temporary emergency measures" to "we need to keep doing this to stabilize the status quo": extremes get more extreme as what were once viewed as extraordinary policy measures required to keep the rickety system from collapsing become the "New Normal."

Of course the Federal Reserve continues suppressing interest and mortgage rates even after the financial crisis has passed, because if they stopped, the system would revert to crisis and collapse.

I've assembled a few charts of extremes becoming more extreme as a consequence of "emergency policies" becoming not just normalized but the keystone of the entire economy. What were desperate expediencies at first are now the lifeblood of the economy: withdraw them and the economy collapses in a heap.

I discussed these extremes in a podcast with Richard Bonugli (26 minutes), with the following charts providing context.

What's extraordinary is the systemic nature of the current extremes. New heights of precarity are being reached across the entire spectrum of the economy, not just in stock market bubbles but in the concentration of "wealth" in risk-on speculative assets--the very assets most prone to destabilization and reversion to the mean, the statistical dynamic in which outlier metrics eventually return to their starting point.

The causes of this reversion don't matter; after the fact, pinpointing the cause becomes a popular parlor game, but the reality is systems revert without any specific cause: suppressing instability with extreme policies creates a temporary illusion of stability, but the extreme policies actually increase instability.

Credit-asset bubbles are a manifestation of extremes generating an illusory euphoria of stability while beneath the surface, these extremes are ramping up instability to the point that sudden breakdown / collapse is the only possible outcome.

When the economy becomes dependent on ever more extreme financial trickery to maintain the illusion of stability, a death loop becomes normalized: as instability leaks through the extreme policies, then even more extreme measures are instituted, generally behind the scenes. Obscure methods of expanding liquidity are normalized, bank credit and other mechanisms (repos, etc.) are jacked up, all of which serve the goal of duct-taping the system to appear stable to unknowing eyes.

The problem with this financial fentanyl is that it's impossible to detect the lethality of the dose until it's too late. That's the current situation in American and global markets.

Let's go through a few of the many extremes flashing red warning signs of systemic precarity.

A handful of Big Tech stocks are holding up not just the S&P 500, but the entire global stock market. The Mag 7 (or top 10, it's basically the same) dominate the market capitalization of the entire S&P 500 to a dizzying degree. Everyone knows this extreme is not a sign of ruddy economic health, but they're forced to chase the mega-cap stocks lest they be fired for underperformance: another example of a death-loop feedback.



Stock valuations in relation to GDP have reached new extremes, with stocks being valued at more that 200% of the nation's GDP.



U.S. stocks--concentrated in a mere 7 stocks--are now 67% of the entire global stock market. For context, China's stock market has a 3% share of the global stock market, the American populace is about 4% of the global population, and America's GDP is 26% of the global GDP in nominal terms and around 15% when adjusted for PPP (purchase price parity).



Since ownership of stocks and other financial assets is concentrated in the top 10%, the concentration of "wealth" in stocks has greatly increased wealth inequality. The ownership of stocks is not just concentrated in the top 10%, it's also a core asset of the Boomer generation. According to Jim Bianco of Bianco Research (@biancoresearch on X), "The share of equities held by people who are at or near retirement age (55+) has climbed to about 80%, up from 60% two decades ago, according to an analysis of Federal Reserve data by Rosenberg Research. And Americans 70 and older now have an "astonishing" 30% share."

Other sources indicate that 52% of people aged 60-65 have 70% of their savings in stocks.



Stock ownership across the board has also reached historical extremes.



Given the extreme concentration of stock market gains in a handful of mega-cap tech companies, it's little wonder that the Nasdaq index has reached extremes of valuation compared to the the small-cap Russell 2000 index.



Lest we imagine that the extreme policy distortions that have been normalized to "stabilize the system" only manifest in the stock market, consider the extreme low of housing affordability. Lots of finger-pointing here, but few seem to notice that the Federal Reserve and the quasi-governmental mortgage agencies have effectively socialized the entire U.S. mortgage market. The only analog of such state control might be, well, um, Communist governments.



Here is how reversion to the mean worked in 2000 to 2003: The Nasdaq stock index fell 80% in 2.5 years. I can assure you that very few observers in March 2000 thought such a mean reversion was possible, much less inevitable, and the few Cassandras who warned of this were dismissed as losers who'd missed out on the greatest expansion of "wealth" in history.

Yes, well, "wealth" is also a funny thing, if you measure it solely by bubbles inflated with financial fentanyl: a fatal bout of runaway instability becomes inevitable when "extraordinary emergency measures" become permanently essential to keep the bubbles from popping.



New podcast:
Charles Hugh Smith on the Extremes in the U.S. Economy and Markets. (26 min)

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My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

The Mythology of Progress, Anti-Progress and a Mythology for the 21st Century print $18, (Kindle $8.95, Hardcover $24 (215 pages, 2024) Read the Introduction and first chapter for free (PDF)

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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Is Placing a Wager in a Casino an "Investment"?

Producing quality goods that aren't addictive or obsoleted in a few years--there's no money in that, fool. Get real. You want to get rich, "invest" in a bet in the casino.

Is placing a bet in a casino an "investment"? Absolutely! An "investment" is now defined as a wager, often leveraged, at a gaming table in the casino. Anything that offers a gain is an "investment."

This is of course at odds with the classic understanding of "investing in new productive assets" that is core to classical capitalism in which the open market for goods, services, labor, risk and capital allocates capital to the highest and best use, i.e. the most profitable use, via the maximization of self-interest by all participants.

Once upon a time, increasing productivity was the most profitable deployment of capital. Now financial trickery in the casino is the source of outlandishly large gains. For example, buying back shares of the corporation's outstanding stock, reducing the number of shares "sharing" the company's earnings, cash flow and valuation.

So management creates a million new shares as compensation to managers and employees, and then uses surplus capital to buy back two million shares, jacking up the value of the newly created shares that are now mostly in the hands of senior management. $10 million for you, $100 million for me: easy-peasy.

What risk-laden investment in higher productivity could possibly match the gains generated by this low-risk financial mechanism? There is none, hence the rise of stock buybacks as a core use of surplus capital and borrowing power, for it's even smarter to borrow vast sums to fund buybacks and then service this debt with earnings, as borrowing vast sums to fund huge buybacks boosts shares prices far more than a trickle of net earnings.

What makes sense is offloading the risks and low profit margins of production to overseas companies and using the gains from this transfer of risk to fund more stock buybacks and other financial tricks in the casino.

In the happy story, the money investors buy shares with is invested in new equipment that boosts productivity. But this describes a tiny sliver of the financial realm: yes, a new start-up company will issue shares to raise capital to fund its expansion. But this is approximately 0.1% of the transactions in the casino, which is all about trading existing shares--and financialized derivatives of those shares--of companies.

None of the money being wagered in the casino goes to the corporation that issued the shares--none. So what are "investors" "investing" in? Wagers on whether shares will rise or decline in value, based not on increasing productivity but on the skillful deployment of financial tricks, planned obsolescence and addiction.

The gains reaped in the casino are now the measure of the economy as a whole, and the primary source of "wealth." Producing quality goods that aren't addictive or obsoleted in a few years--there's no money in that, fool. Get real. You want to get rich, "invest" in a bet in the casino.

---

My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

The Mythology of Progress, Anti-Progress and a Mythology for the 21st Century print $18, (Kindle $8.95, Hardcover $24 (215 pages, 2024) Read the Introduction and first chapter for free (PDF)

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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Catch-20: The 20 Dynamics That Will Shape the Next Decade

From low-Earth orbit, we see only the mighty sprawl of immense power. The internal gearing driving contradictory dynamics is buried beneath the grandeur and the euphoria.

The consensus holds that things are looking up as the mighty forces of technology, political change and the market are all in confluence, reinforcing each other in a New Roaring 20s that will remake America and the world for the better.

The potential is certainly present, and so the question boils down to: is the system that's in place able to accomplish all these transformative changes--including transforming itself along the way? For this is the catch in euphoric expectations--let's call it Catch-20, in a nod to Joseph Heller's Catch-22, in which the request to be relieved of duty due to insanity is proof of sanity.

Catch-20 is the system has to first transform itself as the means to accomplish all the wonderful things, but it's incapable of transforming itself due to the vested interests who will move heaven and earth to keep it locked in its current configuration. The euphoric expectations are based on the belief that the system as it is today is perfectly capable of transforming the economy, society and daily life.

But if we examine the system as a system, stripped of ideology and other belief structures, we find a system of contradictory dynamics that are largely impervious to political change, technology or the market. In other words, the forces that are aligned to transform life have little purchase on the system dynamics that are operating beneath the surface euphoria.

I've presented this list of the dynamics that will shape the next decade to subscribers, with the goal being to elucidate each dynamic in depth as the year unfolds.

In my analysis, these are the engrenages, the gearing that is irreversible due to the design and mechanics of the system. This gearing can be understood as a metaphor for addiction: the system is addicted to its own continuity, yet it's blind to the destructive consequences of this gearing.

Each of these points can be understood as one of the gearings in the machine, a machine as complex as the Antikythera mechanism. Together, these 20 gearings make up Catch-20: the system is incapable of transforming itself, which is the essential first step in transforming the world.

1. The system is optimized for infinite growth / expansion. If expansion falters, the system crashes.

2. The system is optimized for infinite substitution of whatever becomes scarce as the means to continue expanding. Each substitution is inferior / not equivalent to the original resource.

3. These optimizations only function in a narrow envelope. Should the system stray outside this envelope, it crashes.

4. The fundamental principle of the system is "no limits": there are no limits on human ingenuity, and so there are no limits on technology and growth.

5. There are intrinsically contradictory dynamics in the system.

6. Scale and asymmetry are the core contradictory dynamics.

7. The system's optimizations mis-diagnose problems, so it selects "solutions" that accelerate its own dysfunction.

8. The system lacks the means--the values, feedback and institutional structures--to adapt to changing conditions. The solutions offered are based on misdiagnoses of the actual problems, so the problems only become more intractable.

9. As a result, the preferred "solutions" are all forms of play-acting, i.e. the notion that controlling the narrative / framing the "problem" as solvable with existing policies is actually solving the problem.

10. The system's core mythology is Technological Progress is unlimited and unstoppable and so it will solve all problems by its very nature. We can remain comfortably seated and watch as Technology solves whatever problems arise.

11. This belief blinds us to the fact that technology also generates Anti-Progress. Since accepting Anti-Progress undermines our core faith in Technological Progress, we deny the existence of Anti-Progress, just as we deny being addicted. This denial renders us incapable of correctly diagnosing problems and choosing actual solutions rather than play-acting "solutions."

12. Due to these conditions, the system is involuted: no matter what option we choose, nothing changes systemically. Real change is only possible at the micro-level of our own lives, by creating our own adaptable "life-system."

13. Over-Optimization renders the system fragile and vulnerable to breakdown. In our hubris, we believe we control all variables.

14. Cycles of War and Debt Renunciation are aligned and mutually reinforcing.

15. The Logic of Planned Obsolescence and Addiction: these are the drivers of new sales / profits.

16. Jevon's Paradox: new sources of energy are consumed rather than substituted for existing sources.

17. Tacit loyalties / "tribes" that no longer align with traditional political / ideological boundaries are emerging; these are as yet "unbranded" and unrecognized: akin to objects invisible to our eyes because they're radiating infrared energy.

18. Under-competence: we have just enough knowledge / experience to keep the machine running but not enough to rebuild it or adapt it.

19. The critical keystones in the system are not visible until they crumble, bringing down what was presumed to be rock-solid and permanent.

20. The relentless increase in the cost of essentials fuels a decline in the quality of goods and services, to the point that we have lost any sense of quality.

It's not popular to view the system from a great distance. From low-Earth orbit, we see only the mighty sprawl of immense power. The internal gearing driving contradictory dynamics is buried beneath the grandeur and the euphoria.

---

My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

The Mythology of Progress, Anti-Progress and a Mythology for the 21st Century print $18, (Kindle $8.95, Hardcover $24 (215 pages, 2024) Read the Introduction and first chapter for free (PDF)

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


Become a $3/month patron of my work via patreon.com.

Subscribe to my Substack for free

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What If Tech, the Market and the State Are No Longer Solutions?

If we study the problems outside the force-field of mythological beliefs, we find that there are no systemic solutions, there are only partial, local solutions.

The status quo rests on a foundational belief that all problems, regardless of their nature, can be solved by technology, the market or the government (i.e. the state), or some combination of these three.

Which one is the paramount solution depends on the specifics of the problem, of course, but what's proposed as a solution also depends on which of the three has gained our primary loyalty: to true believers in technology, there's always a tech fix. To true believers in the market, unleashing the market will fix any problem. To true believers in the power of the state, the Savior State is always the go-to solution.

These solutions transform from practical toolboxes into mythologies when they become simplified belief structures, in effect articles of faith populated with heathens, heretics, true believers, taboos and excommunication. The limits of each toolbox are set aside in favor of a belief in the unlimited magical powers of the tools.

We know we've entered the realm of mythologies when expressing doubts about the efficacy of tech, the market or the state unleashes an infuriated indignation that the gods of tech, the market and the state are being questioned, even as the proof of their powers are everywhere.

The difference between a toolbox and a mythology is every tool has limits, where mythology has no limits. If we're trying to drive nails with a handsaw, we're not going to find much success. We're forced to admit the tool isn't going to solve the problem.

But once we're embedded in a mythological structure, then we see play-acting as a legitimate solution. So a diesel-fueled robot that roams the fields zapping weeds with lasers is the "solution" to food insecurity. See, there's a tech solution to every problem. But the robot--AI!--can't make it rain, or stop the windstorm that destroyed the harvest, or nurture the depleted soil. The robot is a phantom solution, a "solution" that meets the requirements of the mythology--there must be a tech solution--but doesn't actually solve the problem of food insecurity, which is complex, structural and systemic.

Here is a Venn diagram of the status quo understanding of problems and solutions all problems exist within the loving embrace of tech, the market and the state, and therefore all problems can be solved by applying various mixtures of these three elixirs.



Here is the real-world situation, stripped of mythology and play-acting: the majority of the core problems are either made worse by tech, the market and the state--Anti-Progress writ large-- or they're beyond the reach of these conventional tools.



This Venn diagram causes howls of protest and shrieks of agony: how dare you! Of course there are tech solutions, market solutions and government solutions to every problem under the sun. What else is there?

What's missing from this faith in mythologies is the recognition that the conventional solutions must comply with implicit rules that limit their efficacy. Any "solution" must not disrupt the status quo's power structure, which has been over-optimized to the point of extreme fragility, a dynamic I discussed in Six Dynamics That Will Shape Our Future.

In other words, any "solution" must leave existing profit streams untouched and the power pyramid as-is. Given this constraint, and the fragility created by over-optimization, the only "solutions" that are acceptable to those at the top of the pyramid are play-acting "solutions", proposals presented as magical fixes that actually fix nothing, or create new problems--the definition of Anti-Progress.

To state this out loud is deeply offensive, for we've been trained to worship at the altars of technology, the market and the state. It's considered good sport to deride the limits of state solutions, but it's anathema to question the limits of technology or the market.

Markets only "solve problems" via infinite substitution of scarcities. OK, so we wiped out wild fisheries, the fix is fish farms. We bulldozed the native forests, the solution is tree farms. That each substitution isn't actually a functional substitute, and is a much lower quality that the original, is taboo.

That "the market solution" to declining profitability is monopoly (eliminating competition and transparency), addiction and reducing quality is also taboo.

What "problem" did social media solve? Or is social media now another "problem" that has no solution? But now that social media has created trillion-dollar enterprises, it can't be questioned as a "good thing." There are tech solutions, market solutions, state regulations--of course we can "fix" social media's Anti-Progress.

As with all "solutions" satisfactory to the system, all these "solutions" are play-acting: they sound good, everyone can click "like" or "heart" the "solution," but nothing actually changes.

If we study the problems outside the force-field of mythological beliefs, we find that there are no systemic solutions, there are only partial, local solutions that we put in place ourselves. Rather then expect tech, the market and the state to "fix" healthcare, we're better off accepting the system has no solutions because the profit streams and power structure are sacrosanct and cannot be touched, even though they're the source of the problem.

The only real, non-play-acting solution is to get healthy and reduce our dependence on "healthcare" to an absolute minimum. This approach applies to every problem in the red circle in the diagram above.

---

My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

The Mythology of Progress, Anti-Progress and a Mythology for the 21st Century print $18, (Kindle $8.95, Hardcover $24 (215 pages, 2024) Read the Introduction and first chapter for free (PDF)

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


Become a $3/month patron of my work via patreon.com.

Subscribe to my Substack for free

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The Easy Credit, High Interest Rate Swindle

When 21% interest rate credit cards are the only thing keeping the lid on awakening and revolt, that's not a sustainable fix.

The easy credit, high interest rate swindle has been a financial feature of the landscape for so long it's rarely examined for what it is: not just a reliably profitable swindle, but as a safety valve for a broken system. We all know how it works, either from experience or observation: credit cards are distributed like candy on Holloween, with one little kicker: a dose of financial fentanyl is included: insanely high rates of interest, i.e. 21% and up, and rapacious late fees.

The credit card issuers know most of the uncreditworthy creditors they sent cards to will eventually default, but this is fine because the high interest rates and stiff penalties will extract enough wealth from the debt-serfs to make the game profitable. This foreknowledge is what makes it a swindle: we know you want credit, we know you'll quickly get over your head and owe us a balance, and we know the exorbitant monthly interest on that ballooning balance will eat you alive, and you'll default.

But we also know enough of you will struggle on, paying the interest and penalties, for long enough to make the swindle profitable: the writedowns of defaults will be more than offset by the interest and penalties.

All this is obvious, and dismissed as "the free market in action:" nobody forced folks to accept the credit card, or forced the company to issue the cards, everyone knew the interest rate was 21%, and so high interest and defaults are just desserts to all involved.

All this is certainly true: nobody was coerced into agreeing to those terms. But like everything else in our broken system, this isn't the whole story.

The untold story is the decades-long decay of the purchasing power of wages has put the "American lifestyle" out of reach for many. In a consumer economy, only four things are valued: profits, wealth, power and attention. These provide status, i.e. a sense of selfhood in the social hierarchy.

A consumer economy greases the gears of commerce with infinite desire: there's always a new "must have" novelty that grants status, a new experience that begs to be ticket-punched with a selfie, and in the Attention Economy created by social media platforms, another "like" or "heart" to seek for self-validation: look at me! I'm worthy of attention!

Viewed through the lens of decaying purchasing power, credit is now necessary to fill the gap between earnings and expenses. Second and third gig jobs help fill the gap, but all the goodies of the "American lifestyle" are still out of reach without the plastic fantastic of credit. OK, so the take-home pay is $1,800, and the rent is $1,800, the gig jobs buy food and pay utilities, but what about the trip to Vegas and the tickets to the "must see" concert tour? Isn't this what credit cards are for?

Indeed. At first, the gamers in the credit-casino see a way to win: pay off the balance at 21% with a 0% interest new card dangled oh so compellingly, and then repeat this more or less forever. But the swindlers know the game all too well, and after the third or fourth such offer, all the cards revert to 21%.

Filling the gap between what wages once funded and what they no longer fund now with credit doesn't work because the interest soon consumes the income needed to pay for essentials.

This widening gap between earnings and expenses must be filled, or those who can no longer afford the "American lifestyle" become a political wrecking ball. Imagine if credit card interest rates were capped at conventional 30-year mortgage rates plus 1%, so 7% plus 1% = 8% as the top rate for credit card balances. And imagine late fees were capped at $20.

Credit card lenders would immediately stop issuing cards to uncreditworthy households, as the losses would no longer be covered by sky-high interest rates and penalties. Absent the 21+% interest rates, credit is no longer profitable except to those with very high credit scores--the type of people who pay off the cards every month, paying the issuers zero interest or penalties. Oh boo-hoo, there goes our fat profits.

The reality is easy credit is the safety valve for a system that is no longer affordable to the masses depending on wages for their livelihood. Without easy credit, people would be forced to wake up to the reality that the "American lifestyle" they desire is out of reach, and this will eventually anger them as they see the top 10% enjoying the riches bestowed by asset bubbles, and the next 10% enjoying the professional salaries and benefits of top earners.

When the essentials are no longer affordable, people start doing things like tearing down the Bastille, and authorities respond by suppressing the rage with a whiff of grapeshot, and then things unravel faster than anyone believed possible.

It's increasingly common to promote a debt jubilee as the solution, but this doesn't address the core issue, which is the widening gap between earnings and the cost of essentials. A debt jubilee is just another flavor of an expedient stopgap measure intended to keep the broken, corrupt system glued together for another year or two, to make it seem as if the system isn't fundamentally broken and soaring inequality isn't its primary dynamic.

When 21% interest rate credit cards are the only thing keeping the lid on awakening and revolt, that's not a sustainable fix. As noted here recently, the problem with using financial fentanyl as the "solution" is no one can tell if the dose is fatal until it's too late.

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My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

The Mythology of Progress, Anti-Progress and a Mythology for the 21st Century print $18, (Kindle $8.95, Hardcover $24 (215 pages, 2024) Read the Introduction and first chapter for free (PDF)

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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