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Page added on June 12, 2018

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What’s Wrong With The Economy: 9 Toxic Dynamics

Consumption

These nine dynamics are mutually reinforcing.

Beneath the surface signals of an eternally rising stock market and expanding GDP, we all sense something is deeply, systemically wrong with the U.S. economy. These nine structural dynamics generate secondary dynamics, all of which are toxic to social mobility, sustainable prosperity, accountability and democracy:

1. The financialization of the economy, which transformed services, credit, risk and labor into commodities that could be traded globally. Financialization generates enormously asymmetric returns: those with access to low-cost credit, global markets and expertise in finance collect the lion’s share of gains in income and wealth.

2. The technological transformation of the economy, which has placed a substantial scarcity premium on specific tech/managerial/communication skills and devalued ordinary labor and capital. As a result, the majority of gains in wealth and income flow to those with the scarce skills and forms of capital, leaving little for ordinary labor and capital.

3. The end of cheap fossil fuels. The fracking boom/bubble has obscured the long-term secular trend: the depletion of cheap-to-access and process oil. As many analysts have observed (Nate Hagens, Gail Tverberg, Richard Heinberg, Chris Martenson et al.), the global economy only grows if energy and credit are both cheap.

4. Globalization, which transformed the developing world into the environmental dumping ground of the wealthy nations and enabled the owners of capital to offshore waste and labor.

5. The destructive consequences of “growth at any cost” are piling up. “Growth” is the one constant of all existing political-economic systems, and none of the current Modes of Production (i.e. the structures that organize production, consumption, the economy and society) recognize that “growth” is not sustainable.

The first two dynamics drive three other dynamics that have hollowed out the productive economy:

6. The dominance of debt-funded speculation as the means of “getting ahead”as opposed to producing products and services of intrinsic value that serve the core needs of communities.

7. The economy’s gains in income and wealth are concentrated in the very top of the wealth-power pyramid: the top 5%–entrepreneurs, professionals and technocrats, etc., and within this class, most of the gains go to the top 1/10th of 1% –the existing owners of wealth, and financiers/speculators with access to cheap credit.

The net result is the bottom 95% have few opportunities to “get ahead” outside of gambling in the asset bubbles du jour: the stock and housing market. While the average middle class household may be able to borrow enough to speculate in the housing bubble, two factors limit the odds of success for ordinary investors/gamblers:

A. The gains in housing are concentrated in specific markets; outside these hot markets, gains are modest.

B. Asset bubbles eventually pop, leaving those still owning the assets with losses. The risks are thus intrinsic and high. The average investor/gambler lacks the experience needed to recognize the bubble has stopped expanding and exit the market before ll the other speculators rush for the narrowing exit.

8. The devaluation of ordinary labor and capital means the bottom 60% of the economy that lacks the requisite skills with a scarcity premium in the Emerging Economy have lost easy access to the ladder of social mobility.

9. The concentration of wealth and power in the hands of the self-serving few corrupts the economy and democracy. The U.S. economy is dominated by insider and elite rackets, skims, scams and cartels/quasi-monopolies, all of which corrupt the economy by creating perverse incentives for exploitation and gaming the system to benefit the few at the expense of the many.

This corruption in service of maximizing private/personal gains at the expense of the system itself also corrupts the mechanisms of governance, which are now little more than cloaking devices that protect insiders and elites from scrutiny and consequences.

The 20% above the bottom 60% may appear to have some access to social/economic mobility, but this is largely an artifact of the bubble economy since 2009. Once the bubble deflates, the illusion of social mobility for the “middle class” between the bottom 60% and the upper 20% vanishes.

The “upper middle class” between the bottom 80% and the top 5% is being squeezed by the over-production of elites, i.e. the over-abundance of those with college degrees and the relative scarcity of secure jobs within the top 5%. As a result, credential inflation is rampant, with Masters Degrees replacing Bachelors Degrees as the default for a white-collar job, and PhDs replacing Masters diplomas as the new default for positions that lack security and upward mobility.

In other words, the number of people who qualify for and desire a slot in the elite class (top 5%) far exceeds the number of slots available. As Peter Turchin has explained, this competition generates social disorder at the top of economic heap as the top 20% fight over the few positions open in the top 5%. The disgruntled, frustrated losers far outnumber the relatively few winners.

These nine dynamics are mutually reinforcing, meaning that each dynamic strengthens one or more of the others, reinforcing each other so the sum of the nine is far more powerful than a mere addition might suggest.

The New Aristocracy (the top 9.9%) (The Atlantic)

*  *  *

Charles Hugh Smith via OfTwoMinds blog



346 Comments on "What’s Wrong With The Economy: 9 Toxic Dynamics"

  1. GregT on Thu, 14th Jun 2018 5:43 pm 

    Peer review does not mean that the reviewers (usually 2) agree with the findings of the journal or paper reviewed MM. While it may be the best agreed upon method, it is not without critisism.

  2. JuanP on Thu, 14th Jun 2018 5:44 pm 

    Micromind “Studies show around half of all men last less than two minutes in bed..” Your point being, fool?

  3. Davy on Thu, 14th Jun 2018 5:44 pm 

    Come on 3rd world the dementia is getting old. You look rediculous repeating yourself.

  4. Davy on Thu, 14th Jun 2018 5:48 pm 

    Juan, all we need to do is look at South America to see your worthless seed. The place is a failure. I understand why you left and never went back. You did talk about a doomstead there at one time but probably the family would not have you back as unstable as you are so instead they pay to keep you in Miami with all the other spoiled South American brats.

  5. JuanP on Thu, 14th Jun 2018 5:50 pm 

    Davy “Come on 3rd world the dementia is getting old. You look rediculous repeating yourself.”
    I have been reading Makati’s comments for years and, as far as I can tell, he shows no signs of suffering from dementia. You, on the other hand, can be very easily diagnosed as being completely delusional and clinically insane on a daily basis, Davy. And, nobody on this board repeats himself more than you, too, so if anyone is senile or suffering from dementia here, it’s you!

  6. GregT on Thu, 14th Jun 2018 5:50 pm 

    The word that you appear to be having difficulty with in you last post Davy, would be ‘ridiculous’, not ‘rediculous’.

    If you feel the need to continue to attack everyone, at least make an attempt to learn how to spell. It makes you look ridiculous.

  7. JuanP on Thu, 14th Jun 2018 5:54 pm 

    Davy, You have to be completely stupid or insane to think that I care about one place or another, but if there is one place in this world that is a verifiable shithole it is the flyover state of Missouri! Talk about being a failure! LOL! You want to see a failure, exceptionalist? Look at yourself in the mirror! LOL!

  8. GregT on Thu, 14th Jun 2018 5:54 pm 

    So now you’re attacking the entire continent of South America Davy?

    What next? Antarctica? That would be pretty much the only continent that you haven’t personally attacked here so far.

    LOL

  9. JuanP on Thu, 14th Jun 2018 5:57 pm 

    Please, Davy, keep posting delusional rants! With every comment you write you prove my point, exceptionalist white trash! Go back to mom’s trailer! LOL

  10. Makati1 on Thu, 14th Jun 2018 5:57 pm 

    MM, Studies take time. Usually years and, by the time they are written up, circulated and finally published, they are old news. “Science” has been hijacked by corporations and governments. You only get to read about things they approve of and decisions they want to use to brainwash the masses. It ALL about $$$ and power.

    Example: All the peer reviewed “studies” claiming that tobacco was not harmful. Doctors advertised cigarettes on TV. Billboards were plastered with positive “studies” and beautiful people smoking. The precursors to today’s internet and I-junk.

    Tell me about “science” being sacrosanct! How about the Creation Museum in Kentucky?

    https://www.nytimes.com/2007/05/24/arts/24crea.html

    “Two prehistoric children play near a burbling waterfall, thoroughly at home in the natural world. Dinosaurs cavort nearby,…”

    Peer review! Sacrosanct science! LMAO

  11. Davy on Thu, 14th Jun 2018 5:57 pm 

    Greggie, you will get a special type of disrespect because you deserve it. 3rd world is senile and Juan on drugs but you are just lazy and spoiled. The doctor wife works to support you and all you do all day is play grab ass with your extremist buddies on .po dot com.

  12. Makati1 on Thu, 14th Jun 2018 5:58 pm 

    Again…Davy chimes in with his usual bullshit, third grade putdowns and other meaningless posts.

  13. Davy on Thu, 14th Jun 2018 6:00 pm 

    Grehgiee, but you attack the whole American nation so aren’t you being your ususal hypocritical self? Look in the mirror at your ugly canadian mug.

  14. Davy on Thu, 14th Jun 2018 6:02 pm 

    3rd world slapping dentures again

  15. Makati1 on Thu, 14th Jun 2018 6:02 pm 

    And again, Davy chimes in with his usual bullshit, third grade putdowns and other meaningless posts.

  16. JuanP on Thu, 14th Jun 2018 6:02 pm 

    Davy, I seriously doubt that Greg, Mak, or anyone else on this board gives a fuck whether you respect them or not; I know I don’t. You do understand that we would need to value your opinion for that and we don’t. We are just sick and tired of your abusive behavior and delusional rants because your insane comments have been turning this board into a war zone for years ruining it for everyone else.

  17. JuanP on Thu, 14th Jun 2018 6:04 pm 

    Davy “3rd world slapping dentures again” More delusional rants from the board’s exceptionalist scum bag. Keep proving us right, fool! You are so insane you belong in a lunatic asylum! LOL!

  18. JuanP on Thu, 14th Jun 2018 6:05 pm 

    Davy is an asshole!

  19. GregT on Thu, 14th Jun 2018 6:06 pm 

    “We are just sick and tired of your abusive behavior and delusional rants because your insane comments have been turning this board into a war zone for years ruining it for everyone else.”

    Thanks Juan, I couldn’t have said it any better myself.

  20. JuanP on Thu, 14th Jun 2018 6:06 pm 

    Davy is a scumbag!

  21. JuanP on Thu, 14th Jun 2018 6:07 pm 

    Davy is insane!

  22. Davy on Thu, 14th Jun 2018 6:08 pm 

    Btw 3rd world. What happened to Manila1? Lol I know you where paranoid the NSA was watching you while in the state so you changed your handle…you are so stupid. Kind of like how you talk about the 3am flash of light. Like the Russians are going to strike at night

  23. Makati1 on Thu, 14th Jun 2018 6:10 pm 

    Cannot resist can you Davy? Davy chimes in with his usual bullshit, third grade putdowns and other meaningless posts.

  24. GregT on Thu, 14th Jun 2018 6:11 pm 

    “Grehgiee, but you attack the whole American nation so aren’t you being your ususal hypocritical self?”

    I have never attacked “the whole American nation” Davy. I have made my position crystal clear. The fact that you still can’t figure it out after five entire years of your delusional bullshit, proves beyond a shadow of a doubt that you are completely fucking insane.

  25. Davy on Thu, 14th Jun 2018 6:12 pm 

    Yea Juan, ruining the board extremist party of 3-5 dumbasses. LMfAO. You guys have such an inflated egos. It makes for great moderating. Go back on your meds Juan, you were a much better person.

  26. GregT on Thu, 14th Jun 2018 6:13 pm 

    “I know you where paranoid the NSA was watching you while in the state so you changed your handle…you are so stupid.”

    Now why would anybody be paranoid of being watched in the USA Davy? I thought it was supposed to be the shining beacon of freedom in the world.

  27. Makati1 on Thu, 14th Jun 2018 6:13 pm 

    Davy chimes in with his usual bullshit, third grade putdowns and other meaningless posts, again.

  28. JuanP on Thu, 14th Jun 2018 6:15 pm 

    Davy “you are so stupid.” If stupid is as stupid does, as a famous imaginary American retard once said, then you are the most stupid person on this board by far, exceptionalist, because you were stupid enough to pick a fight with me today, and you have to be unbelievably stupid to do such a stupid thing. I am going to fuck with your mind every single day for three months, prick, and by the time I am done with you not even your goats are going to want to have anything to do with you, goat fucker!

  29. Davy on Thu, 14th Jun 2018 6:16 pm 

    Greggie, you are an ugly Canadian anti-American with little to say so you stalk and prick Americans and enable extremist to do the same. You then try to act respectable. It doesn’t work that way stupid. You take on the personality of the people you sleep with. You bunk with extremist with ugly agendas of hate. You now have another closet Nazi in the group with Juan hooking back up with the gang.

  30. Davy on Thu, 14th Jun 2018 6:18 pm 

    3rd world your wearing your dentures out be carful. Lol

  31. JuanP on Thu, 14th Jun 2018 6:19 pm 

    Davy “It makes for great moderating. Go back on your meds Juan, you were a much better person”
    This moderating delusion you suffer from is one of the most irrefutable proofs that you are clinically insane, exceptionalist. You are not moderating anything, fool, you are just proving how fucking insane you are with every word you write. You are bat shit crazy!

  32. Makati1 on Thu, 14th Jun 2018 6:20 pm 

    Davy: Davy chimes in with his usual bullshit, third grade putdowns and other meaningless posts.

  33. JuanP on Thu, 14th Jun 2018 6:21 pm 

    Davy “3rd world your wearing your dentures out be carful. Lol”
    More insane rants from the playground bully. You have the emotional intelligence of an abused two year old. You are incredibly pathetic!

  34. Makati1 on Thu, 14th Jun 2018 6:22 pm 

    Yes, guys, the definition of delusional Insanity has a picture of Davy as its example.

    He just keeps proving it over and over here.

  35. Davy on Thu, 14th Jun 2018 6:51 pm 

    Like always I get the groupie extremist all hot and bothered and then they forget about their nasty agenda. Mission accomplished. Lol

  36. Makati1 on Thu, 14th Jun 2018 6:54 pm 

    LOL. Davy chimes in with his usual bullshit, third grade putdowns and other meaningless posts.

  37. Anonymouse1 on Thu, 14th Jun 2018 6:59 pm 

    For the last time, the exeptionalturd is not from what passes for the ‘upper class’ in amerika. This is a myth, a fantasy, like all his ‘spankings’ and ‘neuterings’ he has allegedly handed out, or would like to. (yuck).

    The exceptionalturd is as common, and low as as they come. He may be few steps above homeless, but his specific place in the lower rungs of amerikan serfdom is really not that important. What is important, is not to feed his vanity, and insanity, by giving his stories about his (implied) wealth and status any credence.

    It is worth pointing out, the exceptionalturd is the only one on the board that has ever played the ‘Im rich’ card. Even the boards retards dont bother playing that game, preferring to focus on their own sheer stupidity, rather than material possessions, or dollars on hand. Davyturd, seems to prefer both games, which makes him again, something of an outlier. Or just a liar if your prefer.

    He is already stark raving mad, how does telling him he is ‘wealthy’ and pampered member of the elite over and again help him any? All it does is stoke his massively inflated ego. It does not represent reality.

  38. Makati1 on Thu, 14th Jun 2018 7:05 pm 

    Anon, yes, he is the lowest of the low, not the top of the pile. It is fun to play with his warped mind. Cheap entertainment. A typical Ozark, uneducated, inbred, moonshine guzzling hillbilly. Or, at least, that is how I see him.

  39. GregT on Thu, 14th Jun 2018 7:23 pm 

    “Like always I get the groupie extremist all hot and bothered and then they forget about their nasty agenda.”

    You’re not playing with a full deck Davy.

  40. Davy on Thu, 14th Jun 2018 7:25 pm 

    yesss, flushed the weasel too. All the ugly repugnants have come out of their dens today.

  41. Anonymouse1 on Thu, 14th Jun 2018 7:29 pm 

    LoL!

  42. Makati1 on Thu, 14th Jun 2018 7:31 pm 

    …Davy chimes in with his usual bullshit, third grade putdowns and other meaningless posts.

  43. Anonymouse1 on Thu, 14th Jun 2018 7:39 pm 

    I think we can safely stop expecting otherwise by now, lol.

  44. Davy on Thu, 14th Jun 2018 7:48 pm 

    Grehggie, this one is for you the board millionaire. You are disgusting.

    “Millionaires Now Control Half of the World’s Personal Wealth”
    https://tinyurl.com/yaku2k4t

    “The growing ranks of millionaires and billionaires now hold almost half of global personal wealth, up from slightly less than 45 percent in 2012, according to the report. In North America, which had $86.1 trillion of total wealth, 42 percent of investable capital is held by people with more than $5 million in assets. Investable assets include equities, investment funds, cash and bonds. “The fact that the wealth held by millionaires as a percentage of total wealth is increasing does not mean that the poor are getting poorer,” Anna Zakrzewski, the report’s lead author, said in an emailed statement. “What it means is that everyone is getting richer. Specifically, we believe that the rich are getting richer faster.”

  45. Makati1 on Thu, 14th Jun 2018 7:54 pm 

    ..Davy chimes in with his usual bullshit, third grade putdowns and other meaningless posts.

  46. JuanP on Thu, 14th Jun 2018 7:56 pm 

    Davy “You are disgusting.”
    Projecting a lot, exceptionalist turd? I am back to slap you around a little more, scum of the Earth! LOL! You can look forward to three months of this, pussy! I am going to make you my bitch! LOL!

  47. JuanP on Thu, 14th Jun 2018 7:58 pm 

    Davy, Why do you resent other people’s wealth and success so much? Are you that much of a failure, bitch? Bend over again! Did it hurt? You should put some butter in it so it won’t hurt as much next time, pussy!

  48. Makati1 on Thu, 14th Jun 2018 8:02 pm 

    Davy cannot accept that an old man in the Ps can be financially and socially secure when he can never be either in the tax farm/police state called America.

  49. GregT on Thu, 14th Jun 2018 8:21 pm 

    Between my wife and myself Davy, we worked our asses off for a total of 72 years, and neither one of us received one red cent from our families after we moved away from our childhood homes.

    Unlike you.

  50. GregT on Thu, 14th Jun 2018 8:24 pm 

    “Millionaires Now Control Half of the World’s Personal Wealth”

    Bloomborg. Resistance Is futile.

    LOL

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