Why Wage Inflation Will Accelerate

The Fed has created trillions out of thin air to boost the speculative wealth of Wall Street, but it can't print experienced workers willing to work for low wages.

The Federal Reserve is reassuring us daily that inflation is temporary, but allow me to assure you that wage inflation is just getting started and will accelerate rapidly. As I noted yesterday, the Fed can create currency out of thin and funnel it to financiers, but the Fed can't create experienced, motivated workers out of thin air or entrepreneurs with the chops to launch and sustain real-world enterprises.

Let's start with a funny little thing called competition, which has been pushing wages down for the past 50 years. Globalization means you're competing with every other worker on the planet for jobs in tradable goods and services, and mass immigration and relatively high birth rates means there have been more potential workers than secure jobs.

Competition for paid work has been wonderful for global corporations, whose profits have soared five-fold thanks to labor arbitrage, also known as offshoring, where companies can pick and choose locales with the lowest cost labor.

There's also been fierce competition for campaign contributions, as the cost of securing re-election has soared into the millions or tens of millions for congressional seats, and the bottom 90% can't compete with the top 0.1% in terms of lavishing millions on politicians who have become keenly attuned to the "needs" of their corporate handlers.

Thanks to global labor arbitrage and the outright purchase of our pay-to-play political system, capital has skimmed $50 trillion from labor over the past 45 years. It's all quantified in the RAND Corporation's 2020 report Trends in Income From 1975 to 2018 that documents the $50 trillion that's been transferred to the Financial Aristocracy from the bottom 90% of American households in the past 45 years.

Time magazine's article The Top 1% of Americans Have Taken $50 Trillion From the Bottom 90% -- And That's Made the U.S. Less Secure lays out the key role played by our political leadership:

No, this upward redistribution of income, wealth, and power wasn't inevitable; it was a choice-- a direct result of the trickle-down policies we chose to implement since 1975.

We chose to cut taxes on billionaires and to deregulate the financial industry. We chose to allow CEOs to manipulate share prices through stock buybacks, and to lavishly reward themselves with the proceeds. We chose to permit giant corporations, through mergers and acquisitions, to accumulate the vast monopoly power necessary to dictate both prices charged and wages paid. We chose to erode the minimum wage and the overtime threshold and the bargaining power of labor. For four decades, we chose to elect political leaders who put the material interests of the rich and powerful above those of the American people.

So now The Bill for America's $50 Trillion Gluttony of Inequality Is Overdue (9/21/21). Consider the minimum wage as a reflection of the structural stripmining of labor. According to the BLS inflation calculator, the $1.65 per hour minimum wage I earned in 1970 on Dole's pineapple plantation now equals $11.66 per hour--hence the calls for $12 per hour minimum wage.

But we all know the Consumer Price Index (CPI) has been gamed for decades to understate inflation, and in terms of the goods and services that could be bought with $1.65 in 1970, it would take at least $18 in today's money to buy the same basket of goods and services--if you include real-world prices for healthcare, childcare, higher education, rent, etc.

In terms of competition, the worm has turned, as the number of people who are competent, reliable and willing to work for lousy pay has dwindled. While our educational system was busy trying to make every student into an engineer, coder or at least a college graduate, all the real-world skills needed to keep the real world functioning were given short shrift and denigrated in the media as unworthy compared to the fantasy of coding something and selling it to Facebook, Apple or Google for millions.

The discussion about the decline of competence and reliability is one worth pursuing, but for now the point is that the decline is real, and so the competition for the competent, reliable and willing to work is heating up.

As I explained yesterday in The 'Take This Job and Shove It' Recession, a consequential percentage of the workforce is re-thinking trading their lives for Neofeudal Debt-Serfdom. Workers in all sectors and pay scales are seeking ways to escape the meaninglessness and dead-end nature of "work" in a neofeudal economy that taxes productive labor but lets Big Tech escape taxes and regulation.

There are two other dynamics in play in wages ratcheting higher: one is that wages, like taxes, ratchet higher but resist dropping back to previous levels. Once someone earns $15 an hour, they're less inclined to accept $12 an hour, just as local governments are never inclined to lower property taxes, excise taxes, etc. to previous levels.

Another is that when you have to pay one warehouse worker more money to fill the position, word gets out and every other worker in the warehouse will demand the same wage as the new hire. This is how pricing on the margins of the labor market ends up increasing the wages of the entire workforce.

Corporations love to demand everyone keep their salary secret to avoid this ratcheting up from the margins (and mask various biases in pay scales), but the political winds protecting corporations at all costs are finally shifting, and it's going to be more difficult to retain workers at $12 an hour after they heard the new employee is getting $15 an hour for the same work.

If we can risk a moment of honesty here, let's stipulate that real-world inflation has gutted the purchasing power of wages for 50 years while capital rigged the system to skim $50 trillion from those who work rather than speculate. A consequential percentage of the potential workforce simply doesn't have what it takes to work full-time in demanding jobs, and the blame-game about why this is so is fun but pointless.

An increasingly consequential percentage of the potential workforce is opting out of working for Corporate America or the government, preferring lower earnings and fewer hours.

Another consequential percentage of the potential workforce has gone on informal strike and refuses to work for wages so low that they're not even close to a living wage.

All of these dynamics will accelerate wage "inflation," Corporate Media-Speak for a long overdue shift back from capital to labor. The Fed has created trillions out of thin air to boost the speculative wealth of Wall Street, but it can't print experienced workers willing to work for low wages.

Now that McMansions are unaffordable, people are giving up their McMansion Dreams. And once people give up McMansion Dreams of debt-funded overconsumption, they also give up debt-serfdom and wage slavery.

Of related interest:

My book Get a Job, Build a Real Career and Defy a Bewildering Economy is a primer for those seeking sustainable self-employment in the nooks and crannies of the economy.








If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

My new book is available! A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet 20% and 15% discounts (Kindle $7, print $17, audiobook now available $17.46)

Read excerpts of the book for free (PDF).

The Story Behind the Book and the Introduction.


Recent Podcasts:

Salon #43: History shows again and again how nature points out the folly of men...

Covid Has Triggered The Next Great Financial Crisis (34:46)

My COVID-19 Pandemic Posts


My recent books:

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).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

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


Become a $1/month patron of my work via patreon.com.

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The 'Take This Job and Shove It' Recession

So hey there Corporate America, the Fed and your neofeudal cronies: take this job and shove it. This time it really is different, but not in the way the Wall Street shucksters are claiming.

Conventional economists, politicos and pundits are completely clueless about the unraveling that's gathering momentum beneath the superficial surface of "reflation" because they don't yet grasp we're entering an unprecedented new type of recession: a 'Take This Job and Shove It' recession which is unlike any previous downturn.

Long-time readers know I've addressed the emergent class structure and systemic decay of the socio-economic order for many years. Just as a quick refresher, here are a few of the dozens of essays I've written on these topics:

America's Nine Classes: The New Class Hierarchy 4/29/14

The Managerial/ Professional Class Is Burning Out 3/28/16

America's Metastasizing Class Wars 8/27/20

This Is How It Ends: All That Is Solid Melts Into Air 9/10/20

This Is Why Inflation Will Rip Everyone's Face Off 9/17/20

What the chattering class of apologists, toadies, lackeys, factotums and apparatchiks missed about the pandemic lockdown was the tidal change in perceptions of work and life enabled by a withdrawal from the deranging frenzy of work: once people had time to reflect on their lives, mortality, goals, identity and the soaring costs and dwindling rewards of their efforts to "get ahead" via slaving away in a dead-end job / career, the tune that began to haunt their subconscious ruminations was Johnny Paycheck's timeless classic, Take This Job And Shove It (2:31).

Whether anyone in the halls of power cares to notice or not, a mass withdrawal from the workforce is underway. What's remarkable about this swelling exodus is that it isn't confined to one class of workers: low-wage workers are jumping ship en masse, but so are mid-level white-collar workers and well-paid but overworked technocrats in the top 10%.

As the professional apologists frantically spew rah-rah PR about the "recovery" (you mean we're all addicts and are now "recovering"?), the workforce is finally awakening to the emptiness of the PR: the rewards of the economy have flowed to two classes: the Financial Aristocracy (a.k.a. the New Nobility in our neofeudal economy), the top 0.1% who now own more wealth than the bottom 80% of American households, and speculators, from the scammers on Wall Street to the daytraders gambling their stimmy payments.

The reality that wages have stagnated for the past 50 years is finally sinking in, and people are responding accordingly. By any realistic measure, most workers have lost ground when the purchasing power of their wages in the 1980s is compared to what their earnings buy now in healthcare, childcare, rent, higher education, property taxes, etc.

The erosion of labor's value has been catastrophic for the bottom 60%. As I recently noted, I was making $12 an hour in 1985, an OK wage but nothing special, and after 36 years of inflation, many workers are still earning $12 an hour--or less. Measured in purchasing power, wages have declined since the early 1970s.

Take a glance at the chart below of wage's share of the economy and observe it's been in a downtrend since the early 1970s.

Meanwhile, the cost of big-ticket expenses such as healthcare, childcare, rent/housing and higher education have tripled. Even high-earners such as physicians have lost ground, as their salaries in 1985 bought far more goods and services than their salaries do today.

Young high-earners have been flocking to the FIRE movement for years: financial independence, retire early is the upper-middle class way of saying Take This Job And Shove It, as the goal is to save enough earnings by scrimping and saving to exit the workforce for good while still in your early 30s.

Lower-wage workers are finding other workarounds. Much to the consternation of employers, many are milking the extended unemployment payments. But beneath the radar, others have carved out informal-economy niches or found ways to slash their living costs--for example, constructing a micro-home on a cheap plot of rural land and saying good-bye to McMansion dreams and $2,000 a month rents for tiny apartments in decaying urban cores.

Even highly paid people are realizing that the meager rewards of slaving away to make Corporate America another couple trillion in profits isn't worth their life. As desperate employers offer overworked technocrats bonuses to keep them slaving away, the workers are ploughing the bonuses into bets they hope will pay off and fund their escape from neofeudal serfdom sooner than planned.

While the apologists, toadies, lackeys, factotums and apparatchiks serve their neofeudal lords for pennies tossed in the sawdust, the most productive workers are melting away. Nobody dares mention the number of physicians and nurses who are leaving America's sickcare system; once again, the pandemic served as a catalyst for action to be taken on long-simmering frustrations.

YOLO (you only live once) isn't just about making risky bets in bubblicious markets--it's about deciding to do something else with you life other than make Corporate America another couple trillion in profits or keep your small business afloat as taxes, fees, penalties, surcharges, rent and every other expense soars.

The pandemic posed a question few had time to ponder: what's the point? What no financial analyst dares confess is the corporate profits they cheer every quarter have come at a cost that many Americans will soon be unable to bear. Millions of highly experienced, essential employees are either planning to quit, retire, cut their hours or switch to lower stress jobs.

It isn't easy to escape the clutches of the Corporate-State neofeudal system; the costs (tangible and intangible) of self-employment have been rising steadily for decades:

The Troubling Decline of Financial Independence in America (August 28, 2015)

The Fading American Dream of Working for Yourself (October 2015)

Social Mobility between classes has decayed, and people are finally beginning to grasp this. After you do all the right things--borrow a fortune to get a college degree, build your resume with low-paying jobs working ridiculous hours, etc., you eventually realize you're a precariat just like everyone else. Maybe a better paid precariat, or maybe a poorly paid precariat, but this is all the Financial Mobility you're ever going to get.

The Top 0.1% winners in this system are protected by the Federal Reserve, while the losers are stripmined by crushing taxes. Even if they don't understand the exact mechanisms of the Federal Reserve's bag of tricks, they now understand the rich get richer and the state protects them from the precariats and serfs doing all the work.

The Federal Reserve can conjure up trillions of dollars out of thin air to further enrich the nation's parasitic elite, but they can't print experienced, motivated workers or people with entrepreneurial skills.

The danger to the state is not who rebels but who opts out. Outright rebellion suits the state, as it can turn its monopoly on force on the citizenry. But when those keeping everything glued together have had enough and find a way to quit, the entire system starts unraveling in ways the state is powerless to stop.

If the Technocrat Caste opts out, the private sector loses its tax donkeys and managerial expertise. If what remains of the middle class opts out, what's left of America's civic glue disappears.

If the working poor opt out, the scut work required to provide the upper classes with their comforts will not get done. (Hey, Mr. State Bureaucrat and Mr. Financier, here's a saw and a knife. Butcher your own meat.)

There's only so much inequality and unfairness a workforce can bear, and America is well past that point. To those who claim "people can't afford to quit," just watch. Those who've had enough are finding ways to opt out. There's plenty of woodwork to disappear into.

So hey there Corporate America, the Fed and your neofeudal cronies: take this job and shove it. This time it really is different, but not in the way the Wall Street shucksters are claiming.

So take this job and shove it, I ain't working here no more. I'm stepping off the rat-race merry-go-round, thank you very much. You can find some other sucker to do your dirty work and BS work, all for the greater glory and wealth of your New Nobility shareholders. I'm outta here. So I won't get rich, that dream died a long time ago. What I'm interested in now is getting my life back and getting the heck out of Dodge as things unravel.

Of related interest:

My book Get a Job, Build a Real Career and Defy a Bewildering Economy is a primer for those seeking sustainable self-employment in the nooks and crannies of the economy.








If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

My new book is available! A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet 20% and 15% discounts (Kindle $7, print $17, audiobook now available $17.46)

Read excerpts of the book for free (PDF).

The Story Behind the Book and the Introduction.


Recent Podcasts:

Salon #43: History shows again and again how nature points out the folly of men...

Covid Has Triggered The Next Great Financial Crisis (34:46)

My COVID-19 Pandemic Posts


My recent books:

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).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

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


Become a $1/month patron of my work via patreon.com.

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NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Simons C. ($50), for your supremely generous contribution to this site -- I am greatly honored by your steadfast support and readership.

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Read more...

Here's How 'Everything Bubbles' Pop

But weirdly, and irrationally, bubbles pop anyway.

At long last, the moment you've been hoping for has arrived: you're pitching your screenplay to a producer. Your agent is cautious but you're confident nobody else has concocted a story as outlandish as yours. Your agent gives you the nod and you're off and running:

Writer: Two guys start a cryptocurrency as a joke to parody the crypto craze, and they name it KittyCoin. It goes nowhere but then the greatest speculative bubble of all time takes off, it's the dot-com and housing bubble times 100 but in everything, and within a couple months the entire economy is dependent on this bubble, and the bubble is dependent on KittyCoin, which has shot up 15,000 percent in a few weeks. A celebrity CEO who's been promoting KittyCoin is invited to host a failing TV variety show, and now the whole economy depends on KittyCoin soaring even higher.

Producer: So it's 'The Big Short' plus 'Network'.

Writer: Something like that, only zanier.

Producer: I get the zaniness but it's so implausible -- it's preposterous.

Writer: It's an absurdist comedy.

Producer: But it ends with everyone being wiped out.

Writer: OK, a tragi-comedy.

And here we are, in the Greatest Bubble of All Time (GBOAT) hanging on the thin thread of speculators rotating out of one bubble into another even more improbable bubble. If there is no heir-apparent for the rotation, then players rotate back into an asset that already reached bubblicious heights and is awaiting the next booster.

The Everything Bubble is one for the ages, but alas, even the most glorious global Tulip Bulb manias crash back to Earth. So how do Everything Bubbles end? Like every other bubble ends:

Preposterous moves to implausible which moves to plausible which moves to inevitable. In other words, bubbles inflating to even more outlandish valuations are no longer merely plausible, they've become inevitable: the Federal Reserve will continue printing money forever, Americans have trillions of dollars in stimmy and savings they're itching to spend, and so on.

All bubbles reach their zenith when plausible becomes inevitable. In the 1920s, it was radio which was clearly the next big thing and indeed it was. But the prospect of decades of growth drove valuations to heights which were disconnected from actual revenues and earnings, and so the bubble burst.

The same thing happened in the dot-com bubble, as the euphoria about decades of future growth lifted valuations to preposterous levels.

Every bubble has a speculative mania component and a credit-leverage component: since gains are inevitable, it would be irrational not to borrow money and leverage greater gambles to maximize the guaranteed gains.

Easy money is an essential fuel in the bubble rocket. With money this easy to borrow and leverage, it's a slam-dunk that the bubble can keep expanding until some far distant time that's so remote we don't have to worry about it, because we'll all sell at the top and be out long before the bubble pops. Uh, right. That's exactly how it works.

Well, not quite. Almost no one gets out at the top, and many of those few who do anxiously re-enter just before the bubble finally pops. This is the pernicious consequence of bubbles becoming inevitable: there is simply no way the Fed will stop printing money, no way Americans won't spend their stimmy, no way inflation won't keep soaring, etc., and so future gains are inevitable.

This certainty pushes valuations to preposterous levels, but they keep on rising, proving the inevitability of continued expansion. This rational exuberance is based on the idea that the rocket will never run of out fuel. Put another way, easy money will always be available to greater fools who will gladly take an asset off our hands at much higher prices.

But weirdly, and irrationally, bubbles pop anyway. Bubbles tend to display symmetry, i.e. follow the same trajectory down that they took on the way up, but this isn't a law of nature, it's just a manifestation of psychology: there's typically a last buy the dip pop higher as the multitudes (and their trading bots) have been trained by the inevitability of gains to consider every tiny dip lower as an opportunity to lock in ever greater gains.

The zaniness moves from absurd to tragi-comedy before anyone is aware the third act has begun.




If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

My new book is available! A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet 20% and 15% discounts (Kindle $7, print $17, audiobook now available $17.46)

Read excerpts of the book for free (PDF).

The Story Behind the Book and the Introduction.


Recent Podcasts:

Salon #43: History shows again and again how nature points out the folly of men...

Covid Has Triggered The Next Great Financial Crisis (34:46)

My COVID-19 Pandemic Posts


My recent books:

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).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

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


Become a $1/month patron of my work via patreon.com.

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NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, John H. ($100), for your outrageously generous contribution to this site -- I am greatly honored by your steadfast support and readership.

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Read more...

Hey Fed, Explain Again How Making Billionaires Richer Creates Jobs

Despite their hollow bleatings about 'doing all we can to achieve full employment', the Fed's policies has been Kryptonite to employment, labor and the bottom 90%--and most especially to the bottom 50%, the working poor that one might imagine most deserve a leg up.

As wealth and income inequality soar to new heights thanks to the Federal Reserve's policies of zero interest rates, money-printing and financial stimulus, the Fed says its goal is to create more jobs. Really? OK, let's look at how the Fed's doing with that.

I've assembled a chart deck to display the consequences of Fed policies on debt, wealth inequality and employment. Recall what Fed policies actually do:

1. Zero interest rate policy (ZIRP) destroyed the low-risk return on savings and money market funds, stripping everyone not in the Fed-privileged rentier-speculator-financier class of safe, real returns on capital.

2. Zero interest rate policy (ZIRP) lowered the cost of speculation by financiers and corporations but left the interest rates paid by the working poor for credit cards, auto loans and student loans at extortionate rates.

3. QE--quantitative easing--creates trillions of dollars out of thin air to buy U.S. Treasury bonds, enabling no skin in the game federal spending and funneling trillions of dollars of nearly free money into the soft greedy hands of the rentier-speculator-financier class, not into the real economy.

4. Both ZIRP and QE incentivized borrowing low-cost billions to speculate in assets, inflating unprecedented debt-leverage-driven assets bubbles which have now infected every asset class: The Everything Bubble.

Here is the Fed policy in a nutshell: working, saving and prudent investing--you get nothing. You're already rich, borrow huge sums and leverage up speculative bets--you win big. Recall that the rentier-speculator-financier class has no skin in the game because the Fed and other agencies rush in to bail out all their losing bets, while the bottom 99.9% are left to twist in the wind should they foolishly follow the billionaires into risky bets.

In the world the Fed has created, work is for chumps, the way to get rich is borrow, leverage and speculate.

Note that this chart deck is from the Federal Reserve database except for one chart from the Washington Post.

So what are the consequences of Fed policies on debt, wealth inequality and employment? Let's have a look.

The Fed balance sheet, i.e. money it creates out of thin air: a near-vertical line up.



Federal debt, i.e. money borrowed by selling Treasury bonds: a near-vertical line up.



Total debt, i.e. what the Fed encourages everyone to do--borrow more!: a near-vertical line up.



Net worth of the top 1% and top 90% to 99%: massive increases since 2009 and more recently, a moonshot higher. The bottom 50%, meanwhile, is flatlined near zero.



Thanks to the Fed, the top 0.1% own more wealth than the bottom 80%. Thanks to the Fed. the rentier-speculator-financier class has done very well, the top 90-99% have ridden the Fed's coattails nicely, but the bottom 80% have been left in the dust. Good job, Fed!



While the Fed printed and distributed trillions to the rentier-speculator-financier class, labor's share of the economy has been in a free-fall. Working is for chumps, gambling with Fed money is for winners. And if you lose, the Fed bails you out. The Fed casino is the place to be for guaranteed winnings--if you're already rich, of course.



The Fed's policies are all based on the trickle-down theory that when billionaires get richer, some magic pixie-dust miraculously drifts down to the bottom 50%. Oops. The bottom 50% lost ground while the billionaires reaped billions. Gosh, I wonder why the financial media bows down and worships the Fed as living gods.



Since the Fed is doing all this wealth creation in the top 0.1% to create jobs, let's look at the labor participation rate, the percentage of the labor force which is employed in some fashion. Hmm, that topped out in 1999 and has been in a freel-fall since.



The percentage of the population that's employed has a very similar pattern, topping out in 1999 and then dropping to new lows every time the Fed's speculative bubbles pop.



Despite their hollow bleatings about doing all we can to achieve full employment, the Fed's policies has been Kryptonite to employment, labor and the bottom 90%--and most especially to the bottom 50%, the working poor that one might imagine most deserve a leg up.

So Fed governors, lackeys and apologists, please explain again how making billionaires richer creates jobs, fosters employment and benefits the bottom 90%. If the Fed was actually attempting to bolster the income and wealth of the laboring class, it has failed miserably by every meaningful metric. If, on the other hand, Fed policy was always aimed at further enriching the top 0.1%, top 1% and corporations, then the Fed has reached the pinnacle of success.




If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

My new book is available! A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet 20% and 15% discounts (Kindle $7, print $17, audiobook now available $17.46)

Read excerpts of the book for free (PDF).

The Story Behind the Book and the Introduction.


Recent Podcasts:

Salon #43: History shows again and again how nature points out the folly of men...

Covid Has Triggered The Next Great Financial Crisis (34:46)

My COVID-19 Pandemic Posts


My recent books:

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).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

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


Become a $1/month patron of my work via patreon.com.

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NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, David K. ($200), for your beyond-outrageously generous contribution to this site -- I am greatly honored by your steadfast support and readership.

Thank you, Daniel E. ($4.50), for yet another most generous contribution to this site -- I am greatly honored by your steadfast support and readership.

Read more...

Covid Has Triggered The Next Great Financial Crisis

What's left are the 'fatal synergies' of soaring debt and leverage, diminishing returns on stimulus, the substitution of credit for savings and the coming deflationary tsunami that pops all the speculative bubbles.

Imagine a once modest but sturdy home built near a cliff to maximize the vistas. Over the decades, the foundation slowly degraded and the house moved imperceptibly closer to the unstable edge of the cliff. Those who observed the slippage and the potential for eventual disaster were either derided as alarmists or ignored.

Given the enviable location and views, the home rose in value and a series of increasingly gaudy additions were added, completely obscuring the once-modest exterior with cheap imitations of long-lasting, time-tested materials (plastic trim and brittle fake-marble veneers). The foundations of these ostentatious additions were slapdash, shallow and poorly made, as the goal was not durability but appearance.

The low-quality additions accelerated the slide to the unstable cliff edge, and in 2019 the viewing deck broke away and crashed into the canyon below. The repairs were hasty and the residents were assured all was well--in fact, better than ever.

In 2020, the weak foundation of the gaudiest, lowest-quality addition crumbled. The response of the owners was to fill the widening crack in the decaying structure and spray on a new coat of paint. There--good as new, the residents were told.

But this was not true. The house is now teetering on the precariously unstable cliff edge. Ironically, the vast majority of the residents have moved to the game room, which is now cantilevered over thin air. The slightest movement will tip the entire decayed structure over the cliff.

That decayed, precariously unstable structure is the U.S. economy, and Covid was the catalyst that nudged the economy right to the edge. Gordon Long and I discuss the causes and consequences in our new video program, Covid Has Triggered The Next Great Financial Crisis (34:46).

Chief among the many causes is a very basic one that's easy to understand: America has consumed more than it has produced for decades, and filled the gap with imports purchased with borrowed money and currency created out of thin air.

As Gordon and I explain, this is a very well-worn path to instability and collapse: governments (which now include nominally independent central banks) have always responded to declines in productivity and affordable energy/materials, the expansion of a parasitic elite and excessive spending with the same bag of financial tricks:

1. They borrow more money, eventually borrowing more to pay interest on existing debts, greasing the slide to default and insolvency.

2. They defraud the users of their currency by devaluing the currency. In the old days, this was accomplished by substituting base metals for silver or gold in the minting of coinage. Eventually the coins contained only a trace of silver. Users soon caught on and the result was the coinage lost purchasing power, a.k.a. inflation destroyed the value of the officially issued money.

In today's fiat currency regime, central banks create trillions of new units of "money" with a few keystrokes, effectively diluting the value of all existing currency.

3. Desperate for revenues, governments raise taxes, which despite all claims to the contrary by political leaders, fall most heavily on the productive middle class. Since the parasitic elite will never accept any consequential reduction of their wealth or power, the higher taxes and economic stagnation that result from these three policies crush the middle class, which was the engine of productivity and demand that enabled the parasitic elite to live large.

These are key dynamics in what Gordon calls the killing of the golden goose, the productive synergies that generate widespread prosperity and opportunity.

What's left are the fatal synergies of soaring debt and leverage, diminishing returns on stimulus, the substitution of credit for savings and the coming deflationary tsunami (53 min) that pops all the speculative bubbles, setting up the destabilization and cliff-dive of the entire decayed, flimsy structure--The Next Great Financial Crisis that cannot be papered over with more central bank legerdemain.

There's more in our 34-minute video program:




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Covid Has Triggered The Next Great Financial Crisis

My COVID-19 Pandemic Posts


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