When Shelter Becomes a Speculative Asset, Society Unravels

Does anyone really believe that the renunciation of massive, sustained stimulus of speculation in housing would leave housing valuations unchanged because valuations are solely the result of "shortages"?

Let's begin by stipulating that speculation (i.e. gambling) is part of human nature. The role of regulations and policy is to limit the damage that gambling inevitably inflicts when "sure things" cliff-dive into losses.

In other words, where the speculative frenzy and money flows matters. When the South Sea Bubble expanded circa 1713-1720, this flood tide of speculative capital did not distort the cost of shelter and bread in England; it was limited to a purely financial marketplace of shares in the company. When the bubble imploded in 1720, the losses fell mostly on wealthy investors like Isaac Newton.

The same can be said of the speculative mania of the dot-com era: the bubble and collapse were limited to the tech sector and those participating in the sector and the speculative frenzy. The cost of rent and bread did not double due to the speculative bubble's inflation or bursting.

In contrast, when speculation floods into shelter / housing, it fatally distorts the cost of housing non-speculators must pay. I say fatally because shelter, along with food, energy and water (the FEW resources), are essential to life. These are not discretionary things we can decide not to have. When the price of essentials soars due to speculation that only rewards the speculators at the expense of non-speculators, the fuse of social disorder is lit.

Anyone who believes policies that encourage the wealthy to hoard housing to the point that the bottom 80% (or the bottom 95% in some areas) cannot afford to buy a home are just peachy is overdosing Delusionol. The social consequences are severe and uncontainable once the worm turns.

Exhibit #1 in Shelter Becoming a Speculative Asset is a modest house in the San Francisco Bay Area that sold for $135,000 in mid-1996. By modest I mean small, old, and on a small lot in a neighborhood of other small lots and homes. (A screenshot of the Zillow history is below.)

Today the home's value is estimated to be about ten times higher: $1.35 million. Let's do some basic math to understand just how distorted this market has become.

The median household income in 1996 was about $39,000. For a house costing $135,000, this represents 3.5 ratio of income to housing, well within the traditional ratio of 4 to 1 (4 X income = cost of the home).

Median household income has almost doubled to $75,000, roughly in line with inflation according to the Bureau of Labor Statistics. According to the BLS, the house that cost $135,000 in July 1996 would now cost $264,000 when adjusted for inflation, and the $39,000 median income would be $76,000.

Let's say the house appreciated above the rate of inflation to $300,000 today. That's still within the 4 to 1 ratio of income to house cost (4 X $75,000 = $300,000.) So even though the house rose 2.2X in cost, it would still be affordable to a median household.

At a value of $1.35 million, a household would need to make $337,500 annually--an income that is in the top 5% of households--to buy the house today. In other words, an income that is 4.5 times the median household income is the minimum needed to buy this modest house.

The house is now worth 4.5 times what it would have been worth if it had appreciated well above inflation.





The conventional argument holds that this four-fold increase in housing costs is due solely to a shortage of housing. Let's consider some data before concluding this is the only dynamic in play.

Chart #1: Case Shiller housing index: this chart shows two massive housing bubbles in the past 20 years.



Chart #2: Federal Reserve's purchases of mortgage backed securities (MBS) to goose the housing market. The "housing shortage" argument claims the unprecedented Fed purchases of trillions of dollars of MBS is not correlated to the housing bubble, but this claim makes no sense: dropping mortgage rates to unprecedented lows while soaking up trillions of dollars in securitized mortgages was like injecting speculative crack cocaine into the housing market. Gosh, how did we survive without the Fed buying $2.5 trillion in mortgages?



Chart #3: the current housing bubble compared to the 2000-2006 housing bubble: today's bubble is even more extreme than housing bubble #1.



Chart #4: housing per capita (per person) has reached a new high: if there's such a severe shortage of housing, how can the housing per capita be at an all-time high? Population rose 4 million in the past 4 years while 5 million housing units were added--plus a pig-in-a-python of housing in the pipeline.



Chart #5: household net worth is $50 trillion above trend, the direct result of massive monetary and fiscal stimulus. Tens of trillions of dollars were borrowed into existence and pumped into so-called risk assets--assets such as housing that the wealthy buy for speculative appreciation.



Chart #6: total debt--private and public--soared from $20 trillion in 1996 to $95 trillion now. Is it merely coincidental that this is $55 trillion above the trendline of inflation, which would have placed total debt at $40 trillion today?



Chart #7: net worth of the top 1% households, which soared from 23% of all net worth to 32%: this 9% gain in the percentage of all household net worth represents a gain of $14 trillion above and beyond the $28.7 trillion in gains registered by the 23% they owned in 1990.

1990 total net worth: $21 trillion, 23% = $4.8 trillion; 2023 total net worth: $146 trillion, 23% = $33.5 trillion; $33.5 trillion - $4.8 trillion = $28.7 trillion.



This unprecedented bubble in housing valuations is due not to shortages but to decades of massive financial stimulus that incentivized speculative capital to flood into housing as a low-risk way to skim stupendous gains for creating zero gains in productivity. If you doubt this, then run this scenario and tell us what happens:

The Fed dumps its entire portfolio of mortgage backed securities and stipulates it will never buy any again. It also renounces all the other stimulus gimmicks that incentivized expansions of debt and speculation.

Does anyone really believe that the renunciation of massive, sustained stimulus of speculation in housing would leave housing valuations unchanged because valuations are solely the result of "shortages"? If so, there's a little shack under the Brooklyn Bridge I'll let you have for a couple of million. I'm sure the Airbnb rent will mint you millions.

---

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

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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)

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A Time Capsule from the 1930s: What's Different Now

If we compare health and endurance, well-being, security, general attitudes, family and community ties and values, we would conclude that it is we who are impoverished.

We're taking care of my 92-year old mother-in-law here at home. She has the usual aches and pains and infirmities of advanced age but her mind and memory are still sharp. Her memories of her childhood are like a time capsule from the 1930s.

My mom-in-law has always lived in the same general community here in Hawaii. She's never lived more than about 10 miles from the house where she was born (long since torn down) in 1931. Listening to her memories (and asking for more details) is to be transported back to the 1930s, an era of widespread poverty unrelated to the Great Depression. Many people were poor before the Depression. They were working hard but their incomes were low.

Prior to the tourist boom initiated by statehood and affordable airfare, Hawaii's economy was classically colonial: large plantations owned by a handful of wealthy families and/or corporations (known as The Big Five) employed thousands of laborers to raise and harvest sugar cane and pineapple. Pearl Harbor, Hickam air base and Schofield Barracks were large military bases on Oahu. Travel between islands was expensive (ferries) and each island was largely self-sufficient.

Even taking a bus for the 12-mile ride to the island's sole city was a rare luxury, an excursion that occurred a few times a year.

Plantation workers were not yet unionized in the 1930s, and wages were around $20 a month for backbreaking field labor--work performed by both men and women. Typical of first and second-generation immigrant communities of the time, families were generally large. Six or seven children was common and nine or ten children per family was not uncommon. Many families lived in modest plantation-provided camps of two bedroom houses.

Gardens were not a hobby, they were an essential source of food to feed a table of hungry kids and adults. Candy, snacks, sodas, etc. were treats rserved for special occasions and holidays. Kids usually went barefoot because shoes were outside the household's limited budget.

Staples were bought at the company store (or one of the few privately owned groceries) on credit and paid off when the plantation paid wages.

Credit issued by banks was unknown. Neighborhoods (kumiai) might pool a few dollars from each family every year and offer the sum to the highest secret bidder or by lottery. Those households that scraped up enough to open a small business often worked 12 hours a day, 7 days a week (or equivalent: 14 hours 6 days a week).

Neighbors helped with births and deaths.

Since no one could even dream of owning a car, transport was limited. Children and adults walked or biked miles to school or work. Many sole proprietors made a living delivering vegetables, meat and fish around the neighborhoods. (This distribution system is still present in rural France where my brother and sister-in-law lived for many years). Each vendor would arrive on a set day / time and housewives could gather to buy from the proprietor's jitney or truck. Children could eye the few candies longingly, and if they were lucky, a few pennies would be given to them to buy a candy.

Locally baked bread was delivered by boys. Milk was delivered by small local dairies.

Nostalgia is a powerful force, but I don't think we can dismiss the general happiness of my Mom-in-law's childhood as airbrushed impoverishment. The poverty seems obvious to us now, but at the time it was normal life. Everyone was in the same general socio-economic class. The plantation manager lived in a mansion with servants, but those with wealth were few and far between. In other words, wealth and income inequality was extreme but the class structure was flat: the 99% had very similar incomes and opportunities--both were limited.

Employment was stable, community ties and values were strong without anyone even noticing, and everyone had enough to eat (though not as much as they might have wanted, of course).

This secure plantation structure of work and community was still firmly in place in 1969-1970 when I lived on the pineapple plantation of Lanai (and picked pineapple with my high school classmates in the summer), and so I was fortunate to experience it first-hand. My Lanai classmates speak fondly and with a sense of loss when they recall their youth. Life was secure and protected, and with unionization of the workforce, the wages sufficient enough for frugal households to save enough to send their children to college off-island.

I can personally attest that fond memories of 1970s plantation life are not distorted by nostalgia. These memories are accurate recollections of a far more secure, safe and nourishing place and time.

Compared to today, the typical 1930s diet was locally grown / raised and therefore rich in micro-nutrients. Grains such as rice and flour came from afar, but other than canned fish and similar goods, food was local and fresh. Little if any was wasted.

People typically worked physically demanding jobs that burned a lot of calories.

There are many people 90+ years of age in our neighborhood. My Mom-in-law's brother--like many of the men in this age bracket, he was a World War II veteran of the famed 442nd unit--died last year at 96, despite smoking a half-pack of cigarettes daily until the end. A neighbor/friend just passed away at 99 (he was also a 442nd veteran). Our neighbor (cared for by her daughter and son-in-law, just like us) just turned 100. These people are generally healthy and active until the end of their lives.

If we look for causal factors in their advanced age and generally good health, we cannot ignore the high-quality, near-zero-processed foods diets of their youth and their strong foundations in community ties and values.

If we compare the financial and material wealth most enjoy today with the limited income and assets of the pre-war era, we would conclude they lived in extreme poverty and their lives must have been wretched as a consequence.

But if we compare health and endurance, well-being, security, general attitudes, family and community ties and values, we would conclude that it is we who are impoverished and it was their lives that were rich in these essentials of human life.

The world has changed since the 1930s, of course. Materially, our wealth and options of what to do with our lives are off the charts compared to the 1930s. But if we look at health, security, well-being, community ties, social cohesion and civic virtue, our era seems insecure, disordered and deranging.

The irony is that those who have grown weary of our divisive, rage-inducing socio-economic system yearn for all that's been lost in the rise to material wealth and opportunities to spend that wealth. Those who grasp the emptiness of spectacle and material wealth and who have the means to do so are seeking the few enclaves that still have a few shreds of community and social cohesion left.

These enclaves then get listed on "best small towns in America" or "best places in the world to retire" and the resulting influx of wealthy outsiders destroys the last remaining shreds of what everyone came for.

I recently harvested some of our homegrown green tomatoes, and my Mom-in-law gave me a handwritten recipe for Fried Green Tomatoes from her collection. The first ingredient was "two tablespoons of bacon drippings." Um, okay, if we were all working 10-hour days hauling 80-pound loads of sugar cane on our backs, no problem, but we're a household of three seniors, 69, 70 and 92. I think we'll substitute two teaspoons of olive oil for the bacon drippings...

---

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

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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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Six Reasons Why Corporate Profits Will Fall 50%

Should stock valuations track this same decline in profits, it's entirely reasonable to expect the stock market to lose 2/3 of its valuation premium.

All Six of the reasons corporate profits will decline by half are common sense:

1. Reversion to the mean: profits that are double the historical average as a percentage of Gross Domestic Product (GDP) are highly likely not to be a sustainable New Normal. The far more likely track is a reversion to the historical average, which is about 50% below corporate profits' current 12% of GDP. Permanently elevated plateaus of stock valuations and corporate profits are both compelling chimera. (see chart below)

2. The Boost phase of Globalization has ended. The era of hyper-globalization is clearly visible on the charts of corporate profits and corporate profits as a percentage of GDP: right after China was accepted into the WTO in 2001, US corporate profits skyrocketed in both nominal dollars and as a percentage of the US economy (GDP).

Globalization's boost phase that sent corporate profits into orbit has rounded the S-Curve and is now in the stagnation / decline phase. (see chart below)

The reasons why hyper-globalization rocketed corporate profits to unprecedented heights are both well-known and terribly inconvenient to the happy story that globalization will magically generate unprecedented profits forever.

The primary drivers were global labor and environmental arbitrage, a.k.a. exploit cheap labor in sweatshops and dump all the toxic waste of industrialization in developing nations with lax environmental standards and enforcement. As the chart below shows, wages in China are no longer low, and China has begun improving its environmental standards.

3. Quality and durability have been gutted and there's no more profit to pluck from buying lower-quality components and inputs, as the cheapest, lowest-quality components and inputs have already been standardized.

Hyper-globalization provided the ideal cover for the systemic collapse of quality and durability. This corporate institutionalization of planned obsolescence, abysmal quality and shrinkflation all boosted profits enormously, but there's nothing left at the bottom of the barrel; corporations have licked the profitable slop of planned obsolescence, abysmal quality and shrinkflation clean.

The super-efficient global supply chains are also breaking under the strain of geopolitical and national security priorities, and the difficulties of replacing existing supply chains, which depend on cheap energy and transport and a massive infrastructure to serve trade that non-industrialized developing nations cannot duplicate.

4. Hyper-financialization has also entered the decay-collapse phase. Hyper-financialization drove corporate profits in two ways:

A. As borrowing costs dropped to unprecedented lows, corporations could borrow vast sums at near-zero rates to scoop up other companies with positive cash flow, gut the quality and staff and scoop up the resulting cost reductions as profits.

B. Consumers could borrow vast sums at low rates to buy products that they would not have been able to afford at historically average interest rates. For example, with 1.9% (or even zero) financing, new autos and trucks became more affordable. With demand strong, corporations could keep prices high and reap the gains of stronger sales.

Now that zero-interest rate policy (ZIRP) has ended its disruptive reign, the tailwinds of zero rates have reversed into the headwinds of structurally higher rates.

5. The asymmetric distribution of the economy's output favoring corporations at the expense of labor is finally shifting. After 45 years of capital skimming $50 trillion from labor, rising rates of disability, unfavorable demographics, systemic healthcare inflation and social dynamics are pushing labor costs higher.

6. Debt saturation. Corporate profits soared from $800 billion annually to $3.5 trillion in 2022 on the tailwinds of public and private debt skyrocketing from $30 trillion in 2000 to $95 trillion today. With the era of zero cost of debt over, we've entered an era of debt saturation: households, government and enterprises can no longer afford to take on more debt without triggering unintended consequences or slashing discretionary spending to service the higher costs of new and existing debts.

Since growth depends on the ceaseless expansion of debt and the discretionary spending it enables, growth reverses along with discretionary spending. Corporations will find it impossible to keep prices at nosebleed levels as consumer demand plummets while costs remain sticky.

Rather than being the New Normal, corporations skimming 11% of GDP as profits was a one-time outlier resulting from the one-time boost of hyper-financialization, hyper-globalization and ZIRP. US GDP is around $26 trillion according to the Bureau of Economic Analysis (BEA). Corporate profits sagged a bit to $3.2 trillion in Q1 2023, roughly 12.3% of GDP.

Should profits decline to 5% of GDP ($1.3 trillion), this would be in the middle of the historic range. In a real recession, they could dip to 3% of GDP ($800 billion). At 5% of GDP ($1.3 trillion), corporations would still be making money but not at rates that would justify today's absurdly overvalued stock valuations.

The $2 trillion haircut equates to a 2/3 decline. Should stock valuations track this same decline in profits, it's entirely reasonable to expect the stock market to lose 2/3 of its valuation premium--a premium based not on anything remotely sustainable, but on a one-off of hyper-financialization, hyper-globalization and zero interest rates.

There's nothing wrong with a 5% of GDP run-rate for coporate profits. That's still a very healthy return. It's only a disaster in a highly distorted funhouse whose players have lost touch with reality.

---

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

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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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The Peculiar Power of Denial

We'd rather risk societal collapse than face the sacrifices and challenges of revolutionizing our unsustainably neofeudal economy and broken gears of governance.

Denial is scale-invariant and universal--we've all experienced in some way or another. By scale-invariant, we mean the individual, household, enterprise, city, state and empire all experience denial.

Denial has several signature characteristics:

1. The more profound and consequential the issue, the more stubborn our denial. When a minor cut reddens, we don't go into denial that it's infected, we simply treat it with greater care. But when the unmistakable signs of heart disease appear, we find ways to deny the reality because it's too upsetting and frightening. We want very desperately to think it will go away on its own and we'll be fine, and nothing in our life will change.

2. The strength of our denial flows from the tacit understanding that if we let even a tiny bit of doubt break through our dam of denial, the whole foundation will give way. The power of denial originates in the impermeability of the barrier blocking warning signs that all is not well. If the enterprise, relationship, policy, investment, etc. is no longer sustainable or viable, we must shut out all doubt and evidence because even a rivulet of doubt and evidence will quickly erode the dam of our denial and collapse our sense of security, control and predictability.

And so we hold fast to the idea that these chest pains are merely indigestion, and inflation is already receding. We fiddle with data ("ex-food, fuel, used cars, shelter, healthcare, childcare, hospitality and dining out, inflation is trending down!") to conjure up an alternative reality in which everything is fine, under control, progress and growth are still positive and unstoppable, and so on.

When challenged, we become defensive and angry, as if our security and identity are under attack. Since we've tied our identity and security to fixed, rigid standards, should those standards erode and decay, we deny the erosion because we feel our own security, identity and sense of control are giving way and might collapse. To avert this disaster, we shore up our dam of denial, making sure no shred of doubt or evidence gets through to threaten us.

This strategy is terribly misguided, of course, because denying reality doesn't make the threat go away, it magnifies the risk of collapse. Denial can be summarized as the stubborn inability to tell the truth because our fear of losing control as the foundations of our life crumble beneath us is so great that we're compelled to cling to denial and fantasy: debt doesn't matter, the government can print as much money as it needs, we'll just renovate all those empty office towers into housing, and so on.

Reality is only a threat if we've forsaken flexibility, adaptability, problem-solving, and the willingness to make sacrifices and accept failure--what I call Self-Reliance. The appeal of denial is uniquely powerful because it offers us a means to cling to our security, identity and sense of control without having to actually do anything.

Just as we'd rather risk expiring from a heart attack than face the sacrifices and challenges of revolutionizing our diet and fitness, we'd rather risk societal collapse than face the sacrifices and challenges of revolutionizing our unsustainably neofeudal economy and broken gears of governance.

And so all those who've benefited from the Bubble Economy look down on the decaying city center from their comfortable, smartly-appreciating homes and cling to the absurd fantasy that the rot won't reach them--indeed, the rot can't possibly reach us, it will stay safely far away and we'll be safe here in our enclave.

This is remarkably reminiscent of the wealthy Romans just before the collapse, complaining to each other in correspondence about the annoyances of decay seeping into their comfortable estates. They too reassured themselves that Rome was eternal, everything would right itself without any sacrifice on their part.

Their correspondence ended abruptly when the Imperial courier service ceased to function. The "Barbarians" (i.e. non-Italian residents of the Empire) who assumed power did not have the wherewithal to gather the taxes needed to support the immense Imperial infrastructure that made life comfortable for the landed wealthy, and so it went away.

So no worries, our neofeudal system, broken governance and all, is eternal and will fix itself without any sacrifices on our part. Maybe those chest pains are just indigestion. Let's just ignore them, they'll probably go away on their own.

Alternatively, we can relinquish fantasies and fear and accept that it's adapt or expire and we'll have to handle the adapting ourselves. This is the path of Self-Reliance, and if we're willing to take it, the path is wide open.

---

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

Read the first chapter for free (PDF)

Read excerpts of all three chapters

Podcast with Richard Bonugli: Self Reliance in the 21st Century (43 min)


My recent books:

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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How to Select a Town the Rich Won't Gentrify and Ruin

Let's review how to select a town that the rich won't ruin via gentrification / swarming in en masse and driving out locals who have to work for a living.

Yesterday I discussed how those enriched by two decades of Federal Reserve-inflated bubbles make housing unaffordable for the bottom 90% by gentrifying previously affordable neighborhoods and towns. Once the truly wealthy have snapped up all the most desirable properties in the most desirable enclaves, the merely millionaires start snapping up nearby properties, fueling a bidding war that soon pushes valuations out of reach of the working populace.

As I discussed in STVR/Airbnb Has Destroyed America's Resort Towns (8/30/23), the net result is the workforce of the gentrified town can no longer afford to buy or rent shelter near their work place. This forces them to commute long distances or give up and move away, leaving the town short of people to actually do the work of keeping the town operating.

Let's review how to select a town that the rich won't ruin via gentrification / swarming in en masse and driving out locals who have to work for a living. Let's start by dividing the wealthy seeking a nice place to live where we can park some of our excess capital into four very different classes:

1. The most desirable class of wealthy residents is old money, families with deep roots in the town who quietly fund needed improvements and services with their wealth and who are protective of what makes the town a nice place to live. They have the clout to protect the town from the entitled vultures seeking to make a quick buck off gentrification and low-quality development.

Recent arrivals (within the past 20 years) can qualify if they follow the same script of quietly donating large sums to local needs and quietly working to keep out the vultures of gentrification. This class of wealth isn't interested in scooping up all the land for their own mini-empire; they own enough for their own comfort but are not trying to own the whole area like the wealthiest, greediest vultures.

2. The second most desirable class is the entrepreneurial wealthy, those who earned their capital via hard work, thrift and building enterprises that add value--in other words, the opposite of the entitled wealthy whose money is the unearned spawn of Fed-inflated bubbles.

The entrepreneurial wealthy are less likely to be toxically entitled, more likely to be down to earth and more likely to invest for the long-term in local businesses that provide employment and services.

3. The least desirable class is the entitled bubble-wealthy who are cluelessly self-absorbed and demanding. They expect locals to be uncomplaining servants / serfs who will do whatever the entitled wealthy want done for low wages. They arrive with bloated self-importance and a toxic sense of entitlement, as if everything they want should be available to them wherever they are on the planet. They are ignorant of local history and culture and have little interest in fitting in and zero interest in contributing any real work to the community.

4. The most destructive class is the vulture-developer class who want to swoop in, build a bunch of low-quality strip malls and shoddy houses for the entitled bubble-wealthy that overburden the town's limited infrastructure of roads, water service, etc., ruining it for residents new and established alike.

Somewhat tongue in cheek, here is a list of attributes you want to look for to avoid, as they're magnets for the entitled bubble-wealthy and the the vulture-developer class:

The click-bait articles touting "the 25 best towns in America" serve one useful function: cross those towns off your list, as they've already been ruined by the influx of entitled, self-absorbed outsiders.

A more valuable use of time is to research what the entitled wealthy are looking for, and avoid those towns and small cities that check all the boxes the wealthy consider "must-haves."

This includes a nearby highly rated hospital, as the wealthy are anxious to access the same high-quality care they're entitled to, should anything untoward happen to their precious bodily fluids.

High-end healthy cuisine is also a must. If haute cuisine isn't available, there must be tony cafes and bistros offering fish tacos, fresh fusion-inspired sandwiches made with artisan bread and similar light fare, vegan and vegetarian options and an acceptable selection of wines, craft beers and other beverages.

The town must have a decent bakery and butcher, and a farmer's market, of course, as the wealthy are too busy day-trading, logging onto conference calls or jetting off for their next vacation-business meeting to actually grow any real food themselves.

A handful of cutsy shops for browsing is also essential, as is some live entertainment venue.

A cafe that grinds its own coffee and stocks luxury beans for grinding at home is also a must, a place expensive enough that locals will stay away, so the wealthy newcomers can gather to complain about the scarcity of quality "help" locally, as they're accustomed to hiring undocumented immigrants for scandalously low rates of pay.

The police or sheriff's department must be responsive to their calls, of course, as they're entitled to special consideration due to the taxes they pay (as if locals don't pay taxes, too...).

An absolute must is a nearby major airport, as the wealthy are always jetting around and it's terribly inconvenient to have to drive a tediously long way to a commercial airport.

Competent tradespeople, mechanics and techies are high on the priority list, as it's extremely annoying not to have someone who can fix the pool pump in summer, trim the hedges just so, maintain the fast Internet connection and do all that bothersome work keeping the short-term vacation rentals spiffy.

Fast Internet service is of course a must; spotty Starlink service will nix a locale immediately.

If you want to find some place the entitled wealthy are unlikely to ruin because they won't move there--or if you want to get there before the hordes of entitled but-not-quite-rich-enough-to-buy-an-elite-enclave arrive--find a town that lacks some or all of these essentials, a place the wealthy will turn up their noses to, a town with the few things you care about but not enough to spark the interest of the entitled wealthy.

A town with minimal tourism is a good start, as the wealthy are drawn to unspoiled rural idylls that they can "improve" (i.e. destroy) with their entitled demands for a neofeudal arrangement of locals serving their whims without complaint for low pay.

---

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

Read the first chapter for free (PDF)

Read excerpts of all three chapters

Podcast with Richard Bonugli: Self Reliance in the 21st Century (43 min)


My recent books:

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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Here's Why Housing Is Unaffordable for the Bottom 90%

This is the direct consequence of the Federal Reserve's decades of unprecedented stimulus: extremes of wealth and income inequality that gave the wealthiest households the means to bid up housing to the point it's no longer affordable to the bottom 90%.

The superficial conclusion that the reason why housing is unaffordable is a scarcity of housing misses a key dynamic in supply and demand: who has too much money and where do they park it??

The reality is obvious but conventional analysts don't see it, largely because it doesn't fit the approved narratives. Here's why housing is unaffordable to the bottom 90%:

1. The U.S. economy is a bubble economy that funnels the vast majority of gains into the top 10% who own 90% of all income producing assets. Bubbles create astounding sums of unearned wealth and distribute it very asymmetrically: the already-wealthy who inherited assets or acquired them when they were cheap reap most of the gains.

Please examine the first two charts below to see how this works. The first chart shows that the top 10% own between 85% and 95% of all income producing assets: business equity, stocks, bonds and other securities, and non-home real estate, i.e. second homes and income-generating properties.

The second chart shows that Household Net Worth--concentrated in the top 10%--soared far above GDP in the Bubble Economy, in effect creating $55 trillion out of thin air and handing 90% of it to the wealthy. Recall that net worth is assets minus liabilities such as debt, so this is what's left after subtracting liabilities/debts. The less wealthy tend to have fewer assets and more debts, so someone may hold title to a $1 million home, but if their mortgage is $900,000, their net worth is only $100,000.

Also note that the family home doesn't generate income, other than for the owner of the mortgage; to the homeowner, it is an expense, not an income source.

Turning to the second chart, we see that if Household Net Worth had tracked the general economy's expansion, i.e. Gross Domestic Product (GDP), it would be less than $90 trillion. Thanks to the Bubble Economy, it's $145.9 trillion, according the Federal Reserve's database. That $55 trillion above the real-world economy's actual expansion is an artifact of the Bubble Economy, an artificial construct of the Federal Reserve's decades of unprecedented manipulation of interest rates and monetary stimulus.

Note that in the previous housing and stock market bubble circa 2006-08, Household Net Worth only exceeded GDP by $5 trillion. A nice chunk of change, to be sure, but an order of magnitude smaller than the gargantuan $55 trillion in "bubble wealth" created in the current central bank Everything Bubble.

2. As the chart below of housing bubbles #1 and #2 shows, the Fed's unprecedented stimulus inflated Housing Bubbles # and #2. The stock market bubble took off around 1995 (with the introduction of the Netscape browser), and housing's ascent lagged a few years, beginning in the late 1990s. (The chart is the Case-Shiller National Home Price Index.)

But Housing Bubble #1 really only took off after the dot-com stock market bubble popped, and the Fed aggressively lowered interest rates: the Fed Funds Rate fell from 6.5% in summer 2000 to 1% in the summer of 2003.

It remained at a historically low 3% well into 2005, when the housing bubble entered its rocket booster phase of euphoria. The Fed eventually normalized rates, returning to 5% by mid-2007, but as the housing bubble began popping, the Fed quickly started cutting rates again, dropping the Fed Funds Rate to near-zero by December 2008 (0.16%).

3. The wealth created by the Fed's stock and bond bubbles flowed into housing. It is not a coincidence that the Housing Bubble #1 expanded rapidly from 2000 onward. As the stock market bubble deflated, those who had reaped the gains sought a new place to park their excess wealth, and with interest rates falling due to the Fed, housing was the place to put that bubble-generated capital to work: mortgage rates hit historic lows, and the resulting bubble was self-reinforcing: simply securing the purchase rights to an as-yet unbuilt house with a small down payment could generate astounding gains in a few months.

Financial fraud--oops, I mean "innovations"--added icing to the Fed's bubble cake: liar loans, zero down payment mortgages, adjustable rate mortgages, deceptive packaging of toxic mortgages into highly rated mortgage backed securities, etc., fueled the bubble's final blow-off top.

Massive, sustained Fed stimulus inflated Housing Bubble #2, a bubble that went ballistic in 2020 as the Fed engaged in unprecedented stimulus, doubling its balance sheet to $9 trillion, dropping the Fed Funds Rate from a meager 2.4% back to zero, and boosting its portfolio of mortgage-backed securities to $2.6 trillion.

Fed stimulus also inflated bubbles in stocks and bonds: as interest rate fell to near-zero, bonds soared in value, and the S&P 500 index of stocks rocketed from 666 in early 2009 to 3,380 in early 2020--a five-fold increase.

4. The vast majority of these massive gains accrued to the top 10%, roughly 13 million households. (There are 131 million households in the U.S.) The top 10% includes the Financial Nobility (billionaires and those worth hundreds of millions, the top 0.01%); the Financial Aristocracy (households worth tens of millions, the top 0.5%), the wealthy (net worth in the many millions, the top 1%), and the upper middle-class (the bottom 9% of the top 10%).

Historically speaking, the upper-middle class has often owned more than one property: a vacation cabin on the lake or beach, raw land held for investment, or a rental property. With interest rates locked by the Fed at unprecedented lows, the 12 million households in this class who had seen their stock, bond and property portfolios zoom to staggering heights, tapped their new-found wealth and ample credit to go on a housing / real estate buying spree.

Recall that housing was still affordable in the mid to late 1990s. Mechanics and librarians could still buy a modest home in a good neighborhood in the San Francisco Bay Area and many other now-unaffordable metro areas. When the Housing Bubble #1 finally popped, housing was very briefly affordable circa 2012.

5. Many frugal, investment-savvy upper-middle class households acquired properties when they were still affordable. It's not at all uncommon for families to own multiple income properties in addition to the family home. Vacation homes bought decades ago at low prices were converted to short-term vacation rentals for part of the year, generating income when the family wasn't using the home. Nearby cabins were snapped up for investment rentals.

The upper-middle class also inherited properties and other assets. Assets--for example, houses--bought decades ago for $30,000 or $40,000 have soared to $1 million valuations in many metro areas--or even $2 million in desirable neighborhoods. Selling a home for $1+ million leaves more than enough capital to buy multiple properties in less pricey regions.

6. Unfortunately for the upper-middle class, the Financial Aristocracy and the wealthy already own the most desirable properties in the most desirable areas. So the upper-middle class lowered their sights to what was still affordable, and this has driven gentrification: as those with excess capital and credit seek a place to park that wealth that will rise in value, neighborhoods that were once affordable quickly become unaffordable to the bottom 90% as the top 10% bid prices to the moon.

7. The immense wealth created by the Bubble Economy hasn't just enriched a few billionaires; it's created an entire class of wealthy numbering in the millions. When 10 million households have the wealth and credit to buy houses beyond the family home they live in, that's a very large pool of buyers--buyers who have seen their initial purchases soaring in value, incentivizing additional purchases of housing.

8. Housing is priced on the margins, so a relative handful of purchases can push the valuations of an entire neighborhood to the moon. Compared to stocks and bonds, housing is illiquid; transactions are few and take months to settle. The last five sales will adjust the valuation (via appraisals seeking nearby comparables) of the surrounding 100 homes.

Corporations and the super-wealthy have also been on massive buying sprees, snapping up hundreds or thousands of houses as rental properties. The $55 trillion in excess "bubble wealth" is always seeking a higher return, and as rents have soared (see chart below), rental housing has been seen as a safe and profitable haven for the trillions of dollars floating around seeking a low-risk high return.

As the last chart shows, the current housing bubble is far more extreme than Housing Bubble #1. It took a much shorter period of time to reach far higher heights of overvaluation.

This is why the bottom 90% can't afford a house: the Bubble Economy created $55 trillion out of thin air and 90% of that went to the top 10%, a class historically attuned to owning real estate for income and investment. The bottom 90% skimmed a few bucks in the past 25 years of the Bubble Economy, but nowhere near enough to compete with corporations, the Financial Aristocracy or the upper-middle class.

This is the direct consequence of the Federal Reserve's decades of unprecedented stimulus: extremes of wealth and income inequality that gave the wealthiest households the means to bid up housing to the point it's no longer affordable to the bottom 90%.

---

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

Read the first chapter for free (PDF)

Read excerpts of all three chapters

Podcast with Richard Bonugli: Self Reliance in the 21st Century (43 min)


My recent books:

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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Reinventing Democracy

The whole point of democracy and free markets is to force competition on elites who are desperate to eliminate competition.

What's the point of discussing reforms that aren't even possible in the current status quo? That's a good question, as any discussion of major systemic changes can be dismissed as pointless (since they'll never be adopted), and a distraction from the "real work" that can be managed within the current system.

On the other hand, we might ask: what's the point of discussing what is do-able in the status quo, i.e. superficial feel-good policy tweaks that change nothing in the power structure? In other words, everything is ultimately a superficial feel-good policy tweak if it doesn't change how power, "money," credit and resources are amassed and distributed.

The argument for discussing "impossible" systemic changes is this: we must ponder other ways to structure who has power for two reasons: 1) to validate how far we descended into neofeudalism and neocolonialism, and thus how desperately we need to re-arrange the power structure, and 2) to explore different models of governance and economic incentives, with an eye on the value of competition between ideas and systems.

Richard Bonugli and I discuss ways to restore or reinvent democracy in our recent podcast, The Roundtable Insight Vision Series: Democracy (29:36).

Although this sounds cynical, it isn't: democracy is not really about self-rule, it's about keeping an elite-run system stable by institutionalizing a safety valve and a governor on elite greed, corruption and mismanagement.

Democracy gives the rabble a restricted voice as a means of limiting elite misrule, which is the natural path taken by elites everywhere, in all eras. The elite echo-chamber is: we're entitled (by birth, rights granted by the gods, superior intelligence, merit, etc.) to rule, and therefore whatever we decide is wise--even if it is self-serving and delusional.

Other models of governance rely on competition between elites to keep whichever elite is currently dominant from destroying the whole arrangement via their hubris, narcissism, greed, corruption, stupidity, delusions of grandeur and all the other pathologies of power.

These models tend to fail because the dominant elite tends to see eliminating competitors as a very good strategy for consolidating power--just like corporations always seek monopolies or cartel arrangements to eliminate the pesky risks of open competition--which as we all know, introduces the possibility of losing, which a bad thing. To eliminate the possibility of losing, eliminate competition: what an excellent solution!

This is why "capitalism" isn't really about free markets, any more than colonialism is about "civilizing the natives;" it's all about eliminating competition and rigging markets. In this way, "capitalism" and democracy are a perfect partnership, as each claims a noble cloak to obscure the actual machinery of elite self-service.

The strength of democracy in system terms is it introduces a feedback loop that serves to limit systemically dangerous extremes, for example, a dictatorship that requires everyone to wear their underwear on the outside of their clothing, or (ahem) a system like ours that has boiled away social mobility and financial security, leaving a rapaciously exploitive machine that feeds off persuading poor people to borrow even more money to convince themselves that they're not poor and powerless.

The wealthy own the income-producing capital, the poor "own" debt: the wealthy own the mortgage / auto loan / student loan, the poor owe the mortgage / auto loan / student loan. Funny how neofeudalism works: the financial aristocracy is in the castle, protected by the Central State, and the debt-serfs are toiling away down there, protected by, well, no one. But by all means, vote for your favorite actor on the tawdry side-stage erected to amuse the public: what flourishes, what emotion, what comedy.

(Please pardon the outburst of "truthiness." I'll try not to let it happen again.)

If democracy is boiled away, the only pressure-relief valve and governor-on-greed left is messy uprising or a messy uprising plus the wholesale abandonment of the status quo by the technocrat class that keeps the whole thing glued together (what I call opting out).

The prime directive in governance is to always, always, always centralize power to extend the reach of the elite currently at the wheel, and to limit the number of grubby hands trying to reach the wheel. Centralizing political power makes life considerably easier for elites, as they only need to bribe, blackmail or persuade a handful of folks at the top to cement their power / monopoly /cartel.

I discuss this in my book Resistance, Revolution, Liberation.

Consider the difficulties of cementing a quasi-monopoly on banking if banking were restricted to the county level. The would-be cartel grifters would have to bribe, blackmail or persuade 3,000+ county councils, all of whom are far closer to voters and far more exposed to competition than federal regulators or the Federal Reserve or Congress-critters, who as we all know, are re-elected like clockwork except in a few cases that are basically signal noise.

This illustrates the value of Subsidiarity in a democracy, with Subsidiarity defined as "the principle that a central authority should have a subsidiary function, performing only those tasks which cannot be performed at a more local level."

The Subsidiarity principle only works in a democracy if capital is also democratized. What's conveniently forgotten or left unsaid is: capital always "votes" three times.

1) Capital's beneficiaries, allies and employees will vote to keep their gravy train running;

2) Capital influences the public with ad campaigns and public relations, all of which are quite affordable;

3) Capital influences the political / regulatory power players in private, a.k.a. lobbying, revolving doors between corporations and the political/regulatory agencies, junkets, farcically bloated speaking fees, etc.

The only possible conclusion: if we don't democratize capital, democracy is boiled away. I wish this could be sugarcoated, but it's much like my other aphorism: if we don't change the way money is created and distributed, we've change nothing.

In other words, if we don't change the money/credit system and democratize capital, then all we'll ever have is more superficial feel-good policy tweaks: all sound and fury, signifying nothing.

There are ways to re-structure the system to restore / reinvent democracy. Ellen Brown has made a persuasive case for public / community banking for many years, and the same idea can be applied to private-sector companies: How Community Companies Can Smash Monopolies (via Sadie).

It seems impossible at this point to decentralize power and capital, but with the pressure-relief valve and governor-on-greed of democracy both disabled, the system is starting to shake apart at the seams. I've often discussed the various classes and elites jostling for power in the U.S., and it's possible some elite might awaken to the necessity to restore the possibility that those with the vast majority of wealth and power might actually lose, i.e. restore real competition in the economy and our system of governance.

This competition starts with the competition of ideas. That's the point of our discussion on Democracy (29:36), which covers many other interesting ideas for decentralizing / reinventing democracy.

Where to start? Here: the whole point of democracy and free markets is to force competition on elites who are desperate to eliminate competition.


(via K.K.)

---

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

Read the first chapter for free (PDF)

Read excerpts of all three chapters

Podcast with Richard Bonugli: Self Reliance in the 21st Century (43 min)


My recent books:

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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We're Living in a Neofeudal Bubble

If you want to understand the neofeudal reality, study these charts.

If you listen to conventional economists, everything's rosy: thanks to the expansion of alt-energy like wind and solar, energy is getting cheaper, batteries will power the new global economy, we're getting smarter -- just look at the rising number of advanced college degrees, wages are finally growing, inflation is trending down, household balance sheets and corporate profits are strong, debt loads are not an issue yet and GDP is rising.

All this happy news is backed by statistics, of course, but there's one little problem: all the conventional cheerleaders are living in a bubble of like-minded elites who are insulated from the neofeudal realities of life in the real world.

Outside the bubble of wealthy, protected elites that generate the statistics and the "news," the global economy is completely, totally neofeudal--and so is the American economy. What does neofeudal mean? It refers to a two-tiered socio-economic system in which an aristocracy owns the vast majority of the wealth and collects the lion's share of the income, and uses this financial dominance to buy political and narrative dominance.

In a neofeudal arrangement, the machinery of governance protects and enforces elite dominance. Cartels and monopolies have free rein to price-fix and exploit, tax revenues flow freely to cartels, elite organizations such as family trusts get tax breaks, and so on.

In other words, "the market" is rigged and the government maintains the status quo.

Toiling away to enrich the aristocratic owners of capital are the serfs and peasants, who own a tiny shred of income-producing capital. Their primary assets--the family home and vehicles--are actually income streams for the wealthy who collect the mortgage and auto-loan interest paid by the serfs.

The core dynamic in neofeudalism is the already-wealthy increase their share of the wealth, and everyone else sees their meager share diminish. As the charts below show, the vast majority of financial gains generated by the US economy flow to the top 0.1% of households. The top 1%'s share has risen by 40% while the bottom 50%'s share of the wealth has slipped to 3%--essentially signal noise.

Social mobility is limited to the occasional serf clawing their way into the technocrat class, the top 5% who slavishly serve the interests of the financial aristocracy. This class lives in a self-contained, protected bubble: an echo chamber of privilege, residential enclaves, jetting around the world, and so on: everything's great because we're doing great.

Life is good in the bubble because there's no homeless encampment a block away, there's plenty of money coming in and our wealth--401Ks, inherited bonds and rental property, university pensions, corporate stock options, and so on--increases smartly, year after year and decade after decade.

The Wealthy Are Not Like You and Me--Our Terminally Stratified Society (8/3/23)

That all this wealth expansion is the result of unprecedented central bank intervention is left unsaid. As noted above, the role of the state and central bank is to maintain the status quo of the already-wealthy increasing their share of the national wealth and income, and loading more (very profitable) debt on the serfs. (See student loan debt chart below.)

Outside the technocrats' privileged bubble, wages' share of the economy have been stripmined by the aristocracy for 45 years. Oh dear; could this be why I'm having such trouble finding low-wage reliable "help"?

While wages inch up, costs of shelter, utilities, debt, vehicles, public transport, childcare and other essentials soar. Please glance at the chart of wages and rents below. This is neofeudalism in a nutshell. Wages have flatlined (or fallen when measured in purchasing power) while rent has steadily increased, eating away at the serfs' disposable income.

Inside the technocrat class bubble, everything's wunnerful. AI will boost profits (all of which flow to the aristocracy, so that's wunnerful), energy's getting cheaper and more abundant, and so on.

Oh, wait. Alt-energy only looks cheap because all the full lifetime costs have been ignored (i.e. externalized), and these modest additions to our vast hydrocarbon consumption aren't actually replacing hydrocarbons, they're simply adding more energy for us to consume.

Thousands of Old Wind Turbine Blades Pile Up in West Texas

Avangrid agrees to pay $48 million to terminate offshore wind deal

Models Hide the Shortcomings of Wind and Solar

In other words, conventional economists and the other technocrats maintain their privileged bubble by clinging to a delusionally disconnected-from-the-real-world mindset. There's always a slew of academic papers or think-tank / corporate reports to bolster the inside-the-bubble confidence that everything's great, because generating positive narratives that leave the neofeudal structure untouched in the primary industry of the technocrat class.

If you want to understand the neofeudal reality, study these charts. There are no rebuttals, there are only sputtering obfuscations: b-b-but the mission to Mars! Taylor Swift raked in a billion bucks! OnlyFans pulled in $5 billion! Stocks are rallying! Everything's great!

Sure--if your dose of Delusional is high enough. Then you can go back to complaining about air travel delays, finding someone to repair your pool pump and bragging about how well your investments are doing.

---

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

Read the first chapter for free (PDF)

Read excerpts of all three chapters

Podcast with Richard Bonugli: Self Reliance in the 21st Century (43 min)


My recent books:

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).

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Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
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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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