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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 Wed, 13th Jun 2018 8:15 pm 

    “I have likely done more in my 30 years than you two could ever dream about.”

    That would be one of the most stupid things that you’ve said yet MM, but I have no doubt that you’ll top it.

    You’re obviously not the brightest tool in the shed.

  2. MASTERMIND on Wed, 13th Jun 2018 8:19 pm 

    Greg

    I have listed my numerous accomplishments many times..I am tired of repeating myself..You can think whatever you want about me..I don’t care. it makes no difference either way.

  3. MASTERMIND on Wed, 13th Jun 2018 8:22 pm 

    Greg

    You and Madkat and clogg who has gone silent..are just mad because i called you out for your dubious lies about WW2.

    You say I am a loser..

    what do you call an elderly man who spreads lunatic conspiracies theories on the internet?

  4. Davy on Wed, 13th Jun 2018 8:22 pm 

    “I dated an ‘actual historian’ for over four years, and I have absolutely no reason to answer to you.”

    You dated a conspiracy extremist, big difference, grehgie. I can tell by your many comments you have a warped sense of history that is influenced by deep seated emotional issues IOW, your history is what you want your history to be.

  5. Davy on Wed, 13th Jun 2018 8:23 pm 

    “I have likely done more in my 30 years than you two could ever dream about.”

    Sure, greggie, look at you now stalking and pricking an internet blog. Wow, that is a lot to dream about.

  6. Davy on Wed, 13th Jun 2018 8:25 pm 

    “As far as I am concerned, you are an insignificant nobody, with a very loud obnoxious mouth, who is doing nothing with his life, and is going absolutely nowhere. In other words, a complete loser.”

    Perfect description of any one of the grotesque groupies.

  7. GregT on Wed, 13th Jun 2018 8:28 pm 

    “I have listed my numerous accomplishments many times.”

    By the time I was your age MM, my accomplishments far outweighed yours. Supposedly winning a chess match, amassing $100,000 in debt, and going to school, are hardly what I would even consider to be accomplishments. More like a complete waste of time.

  8. Davy on Wed, 13th Jun 2018 8:29 pm 

    “Yes, MM is a loser and refuses to even consider a real life and future with another person. Marriage is not in his plans. Life with mom is easier and more comforting. No responsibility or worries. A child to the end.”
    3rd worlder, what are you talking about so high and mighty. You are divorced, failed in your position in the Mormon church and deserted your family for the P’s. One failure after another. LOOSER.

    “The 3rd world is coming to America.”
    3rd world has always been here dumbshit. Quit your empty drama.

    “America living on 4% of the world’s resources, not 24%.”
    Quit your stupid 24% figure also. That figure is outdated and not clarified you bozo.

  9. GregT on Wed, 13th Jun 2018 8:34 pm 

    “Sure, greggie, look at you now stalking and pricking an internet blog. Wow, that is a lot to dream about.”

    I’m realizing my dreams Davy, and unlike you, I did it all on my own.

  10. Davy on Wed, 13th Jun 2018 8:39 pm 

    grehggie, nothing more nauseating than a loser that brags about himself. You and the 3rd worlder are always lavishing praise on yourselves. The reason for it is you are both failures but think you are great successes.

  11. GregT on Wed, 13th Jun 2018 8:40 pm 

    “You are divorced, failed in your position in the Mormon church and deserted your family for the P’s. One failure after another. LOOSER.”

    Having troubles with basic grade school spelling again Davy? Try LOSER.

    And Buddy,

    Not everyone was born into a .0001%er family, and sponged off of mommy and daddy like you have. In my view, not making it on your own would be the very definition of a loser.

  12. Makati1 on Wed, 13th Jun 2018 8:42 pm 

    Mm, but the Us collapse has already taken decades. It started in 1971 when Nixon took the dollar off of the gold standard and worthless paper took its place. The slide has continued ever since. But, that was before your time, not mine. I remember ‘Tricky Dick’ as he was part of my world then. I even liked Ike.

    As for how much time we have left, don’t kid yourself. There will be oil for a s long as someone, somewhere can pump it. The peak only means that we have to go down the other side of the curve and it may take 100 years to reach the bottom. The Us may not have much oil but other places will. And less will be needed when we quit using it stupidly for throwaway junk and unnecessary travel.

    As I said, you want to see a total end of everything so you don’t have to take any responsibility for anything. There will be decline but not the zombie world you hope for. Something in between that will mean your degree will be worthless and you will have to sweat for your living. Maybe become a construction laborer? LMAO

  13. Davy on Wed, 13th Jun 2018 8:52 pm 

    “Not everyone was born into a .0001%er family”

    You are the million dollar butthole columbia boy who came out big at the vancouver housing casino. Got his doctor wife so you can be lazy and worthless. All you do is go to therapy, walk the dog, and prick the internet.

  14. Makati1 on Wed, 13th Jun 2018 8:52 pm 

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

    MM & Davy, losers all the way. By age 30, I had traveled across the Us several times, been to Puerto Rico, the Bahamas, has learned several useful survival and bartering skills, served as an officer in the military and was engaged to be married. Not to mention having been self supporting and independent. Unlike the above two mentioned.

    That was only the beginning of a full and happy life which continues to provide opportunities to learn and enjoy new places and friends. They should be so lucky.

  15. Davy on Wed, 13th Jun 2018 8:56 pm 

    “By age 30”
    Spare me the self-aggrandizement 3rd world. You are a failure. You want to think you are a special success story but it is a lie. Your life is near its end and the worst is ahead of you has you lose your

  16. Makati1 on Wed, 13th Jun 2018 9:00 pm 

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

  17. Davy on Wed, 13th Jun 2018 9:16 pm 

    3rd world, you just said that dementia man.

  18. MASTERMIND on Wed, 13th Jun 2018 9:24 pm 

    Madkat

    when the oil shortages hits in a few years it will cause a global economic collapse..and that will be the end of the world..i have already cited numerous studies to prove this and i emailed a energy economist who teaches this subject for a living..You are short sited..and why would i want the collapse to happen at my young age? I think the collapse will lead to my death..if I wanted that to happen i could just take my life now..why wait for the collapse? You are the one who wants to believe because you have no proof to support your conclusions..

  19. MASTERMIND on Wed, 13th Jun 2018 9:26 pm 

    Madkat

    My sister just had a baby and it will be coming out of diapers, right as you are going into them..

    LMFAO!1

  20. MASTERMIND on Wed, 13th Jun 2018 9:34 pm 

    Philippines plans to give free guns to ‘clean’ community leaders willing to fight drugs & crime

    https://www.rt.com/news/429682-philippines-armed-community-leaders/

    Great timing Madkat..right before your society collapses..everyone gets a gun…I hope your depends diapers are bullet proof…

    LMFAO!

  21. GregT on Wed, 13th Jun 2018 9:43 pm 

    “You are the million dollar butthole columbia boy who came out big at the vancouver housing casino. Got his doctor wife so you can be lazy and worthless. All you do is go to therapy, walk the dog, and prick the internet.”

    A million dollars is chump change in this market Davy, as has already been pointed out to you numerous times before.

    My wife doesn’t need to work. She is dedicated to making a positive contribution to other people’s lives, and is a type A personality.

    I’ve never been to therapy, but I have taken numerous Psychology courses over the decades.

    I’ve almost finished 400 feet of 6 ft high deer fencing that I’ve been putting up over the past few weeks. I’m just waiting for the Sikkens to dry so I can install the gates. ( that I also built)

    Tomatoes are almost 3 ft high and have fruit. Potatoes, lettuces, radishes, onions, squashes, peppers, celery, zucchini, beets, carrots, beans, peas, cauliflower, broccoli, etc., are all growing like weeds.

    Raspberries should be ripe within the next couple of weeks. Blueberries, currents, blackberries, apples, plums, pears, and figs, are all coming along well.

    I’ve cleared, levelled, and seeded, about an acre and a half immediately behind the house, and already put up 3 cords of firewood. Felled, limbed, bucked, split, and stacked, in the 12 x 14 woodshed that I built last fall.

    And yes Davy, I walk my dog, through mountainous terrain, at least 8 km each and every day. Sun, rain, sleet, or snow.

  22. Makati1 on Wed, 13th Jun 2018 10:00 pm 

    MM, and which country has the most guns per capita?

    USA is number one with 101 guns per 100 people.

    The Philippines has 4.7 guns per 100 people.

    https://en.wikipedia.org/wiki/Estimated_number_of_guns_per_capita_by_country

    “Even though it has half the population of the other 22 nations combined, the United States accounted for 82 percent of all gun deaths. The United States also accounted for 90 percent of all women killed by guns, the study found. Ninety-one percent of children under 14 who died by gun violence were in the United States. And 92 percent of young people between ages 15 and 24 killed by guns were in the United States, the study found.”

    https://www.cbsnews.com/news/how-u-s-gun-deaths-compare-to-other-countries/

    And your point, MM, is? Keep trying to find some reason the Ps is a bad place to be. LMAO

  23. Makati1 on Wed, 13th Jun 2018 10:06 pm 

    MM, you never ‘came out of diapers’ obviously. You are still sucking mommy’s teat or at least living off of her income. Get out and rent a room somewhere. Get a job. Pay your own way. Buy a car. Get married. Raise a family. THEN you will have something to support your claims. Until then, you are just another snowflake that will melt when the heat is turned on.

  24. Makati1 on Wed, 13th Jun 2018 10:10 pm 

    “3rd world, you just said that dementia man.”

    And I will keep saying it every time you make a putdown post. I copied it onto my desktop so it is handy. LOL

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

  25. GregT on Wed, 13th Jun 2018 10:16 pm 

    In the three and a half years that we’ve been here, there’s only been one shooting. My neighbour’s place 5 km down the road. His hired hand committed suicide when he found out he was terminally ill with cancer, and everybody that I know here owns guns.

  26. MASTERMIND on Wed, 13th Jun 2018 10:43 pm 

    Madkat

    I have lived on my own since I was 21..And why would i want to start a family when society is collapsing soon? That would be one of the dumbest things i could do..And sorry I dont deny science studies and experts and evidence like you..

  27. MASTERMIND on Wed, 13th Jun 2018 11:23 pm 

    Border Patrol raided a two-bedroom house. They found 62 people inside.

    https://www.msn.com/en-us/news/us/border-patrol-raided-a-two-bedroom-house-they-found-62-people-inside/ar-AAyBQ3F?ocid=ob-tw-enus-677

  28. Makati1 on Wed, 13th Jun 2018 11:31 pm 

    Prove that you have done as you claim. You cannot. That is the problem with making claims on the interment unless you want to publish personal info that can be traced. All you can do is try to be the person that you claim to be. However, your immature persona comes over loud and clear to the rest of us. It is in sharp contrast to the intelligent, 30 year old person you claim to be.

    As for marriage and kids. They are what makes life worthwhile. You think that the world is going to end before they could grow up and enjoy life? How is that different than in most of the world today? Nothing is for sure anywhere. Ask an Iraqi, or a Syrian, or even a person in the slums of Chicago. Best you off yourself and save those resources for others.

    I deny/suspect anything that has a $$$ sign under or behind it. That includes “studies” paid for by corporations, colleges, and government. ALL have spin. The evidence for my assertions are all around you and are easily observable if you try to see and then think about what you have seen. My predictions are not based on MSM “news” or some ivory tower nerd that never had a real job in his life. They are based on my observations and long experience.

    The world changes constantly and no years old “study” is going to be more correct than current observations. Your academic brainwashing has prevented you from looking and seeing for yourself. You depend on the so called “observations of learned men” for your thoughts. Too bad. Dependence is a trait of the immature.

  29. Anonymouse1 on Wed, 13th Jun 2018 11:42 pm 

    “Not everyone was born into a .0001%er family”

    Its quite alright, Greg, the exceptionalturd wasn’t born into a .0001% family either.

    Not even close.

  30. Cloggie on Wed, 13th Jun 2018 11:54 pm 

    The Federal Reserve is a private bank.

    This is the first thing that is going to change, after “the break”.

    The winners write the history, The US is still the alpha dog. So pay attention!

    https://www.cia.gov/news-information/featured-story-archive/2015-featured-story-archive/images/vietnam-lagueux/Saigon-Famous_Image2.jpg/image.jpg

    my girlfriend doesn’t even wear underwear most days

    Poor thing, permanent diarrhea?

  31. Cloggie on Thu, 14th Jun 2018 12:11 am 

    Trumpini:

    http://www.spiegel.de/politik/ausland/italien-wie-matteo-salvini-gegen-fluechtlinge-propagiert-a-1212799.html

    According to leftist rag der Spiegel is Salvini now #1 of Italy and the #1 of the European Right, despite the fact that he only has half the votes of the 5-star movement. According to der Spiegel is Salvini a “real problem”. Salvini: “Africans have also the right NOT to emigrate, I am going to fight for that right!”

    Salvini: “Italy First!”. He has the most followers on Facebook and Twitter in Italy.

  32. Cloggie on Thu, 14th Jun 2018 12:18 am 

    Merkel with the back against the wall. She wants to continue to take in any third-worlder who shows up, but now even her own party is resisting. I hope Seehofer blows up the government:

    http://www.spiegel.de/politik/deutschland/angela-merkel-und-horst-seehofer-schweigen-ueber-krisentreffen-zu-asylstreit-a-1212829.html

    “Erdogan could lose the elections”:

    http://www.spiegel.de/wirtschaft/soziales/tuerkei-warum-recep-tayyip-erdogan-die-wahlen-verlieren-koennte-a-1211782.html

  33. GregT on Thu, 14th Jun 2018 12:45 am 

    “Its quite alright, Greg, the exceptionalturd wasn’t born into a .0001% family either.”

    “Not even close.”

    Ya I know, but you have to admit, it’s great fun facilitating his paranoid delusions.

    Where else can a person get this much entertainment value for free?

  34. GregT on Thu, 14th Jun 2018 1:05 am 

    MM,

    “I have lived on my own since I was 21. And why would i want to start a family when society is collapsing soon? That would be one of the dumbest things i could do.”

    I got booted out of the house 3 weeks after I graduated from high school MM, with honours. I was only 17.

    In grade 11 we learned all about the LTG model. That was in 1978. Society was expected to collapse long before the year 2000, and here we all are, going strong in 2018.

    Get on with your life dude. No matter what happens, it’s the only one you’ll ever have.

  35. GregT on Thu, 14th Jun 2018 1:32 am 

    One more thing that just came to mind MM,

    In my younger years, there was this gal that I really had the hots for. I mean she literally lit up the room every time she walked through the door..

    One morning on the way to work, she slipped and hit her head on the curb just outside of our head office. She died instantly. She was only 23.

    None of us know how long we have here, and we’re all going to the same place eventually. So stop wasting all of your time worrying about the future, that none of us has any clue what’s in store, and live your life for today.

  36. marmico on Thu, 14th Jun 2018 2:56 am 

    MM, you never ‘came out of diapers’ obviously.

    Gail Turdburger changes his pampers 6 times a day at Our Finite World. Same shit, different color.

    Isn’t that right, baby doomer?

    Baby Doomer is a fuckin’ retard!

  37. MASTERMIND on Thu, 14th Jun 2018 4:08 am 

    Oh look marmico is stalking me on other blogs and is triggered!

    You mad brah?

    LMFAO!

  38. JuanP on Thu, 14th Jun 2018 4:13 am 

    Oh, my goodness! MARMICO IS BACK!

  39. MASTERMIND on Thu, 14th Jun 2018 4:14 am 

    Madkat

    I showed you an email from an energy economist that verified what the studies were concluding..and it wasn’t sponsored by anyone or anything..And you have no problem trusting what click bait sites like Zerohedge claim that have ads sponsored by corporations all over them..And the limits to growth study at MIT wasn’t paid for by any corporation..It was paid for by the University from grants..

  40. JuanP on Thu, 14th Jun 2018 4:17 am 

    MM, Do you do anything besides hanging out here at PO? You are wasting your life, man! Remember that you only live once and you are no longer a kid! Volunteer, go out for a walk, read a book, go get laid!

  41. MASTERMIND on Thu, 14th Jun 2018 4:19 am 

    ECB gets ready to pull the plug on stimulus scheme

    https://uk.reuters.com/article/uk-ecb-policy/ecb-gets-ready-to-pull-the-plug-on-stimulus-scheme-idUKKBN1J9379

    Good bye Europe! If fascism is Capitalism in decay, you are in decay..

  42. JuanP on Thu, 14th Jun 2018 4:22 am 

    MM, no truly smart person would pay much attention to an economist’s opinion. Most economists are more disconnected and deluded than the average ignoramus. The way you believe in others is clear proof of your lack of intelligence!

  43. JuanP on Thu, 14th Jun 2018 4:29 am 

    Greg’s life sounds good. He is undertaking a lot of hard, fun, useful projects. Not much going on for me in Miami right now. I am taking some time for myself this summer. I am teaching a few classes and workshops and helping out in a couple of community gardens, but I want some downtime for hanging out with my wife and friends because we were busier than usual during the first half of the year.

  44. MASTERMIND on Thu, 14th Jun 2018 4:38 am 

    Juanp

    I know what do Doctors know anyways..Next to clogg you are dumbest person on this board..

    LMFAO!

  45. MASTERMIND on Thu, 14th Jun 2018 4:43 am 

    Juanp

    I took a year off from my job for family leave..I go back to work in July so you will see much less of me then..But I use a computer at work all day so I can still post anytime I want to..Unlike you I don’t mow lawns all day..LOL

  46. Cloggie on Thu, 14th Jun 2018 5:01 am 

    Millimind links:

    “ECB gets ready to pull the plug on stimulus scheme
    https://uk.reuters.com/article/uk-ecb-policy/ecb-gets-ready-to-pull-the-plug-on-stimulus-scheme-idUKKBN1J9379
    Good bye Europe! If fascism is Capitalism in decay, you are in decay..”

    But if you open the link, it reads:

    “The European Central Bank will debate on Thursday whether to end its huge asset purchases by year-end, in what would be its biggest step towards dismantling crisis-era stimulus credited with pulling the euro zone economy out of recession.”

    Exactly the opposite of what liar-fundamentalist millimind claims.

  47. Cloggie on Thu, 14th Jun 2018 5:04 am 

    “I took a year off from my job for family leave..I go back to work in July so you will see much less of me then.“

    Imagine my horror!

    We are all going to miss you… like the plague.

  48. MASTERMIND on Thu, 14th Jun 2018 5:12 am 

    Clogg

    Bloomberg: Without immigrants to replenish it’s ranks, Europe runs the risk of dying off.

    https://www.bloomberg.com/news/articles/2018-06-13/europe-s-unresolved-migration-crisis-triggers-political-turmoil

    It’s either open borders, or economic collapse? You choose clogg, and choose wisely!

    LMFAO!!

  49. Makati1 on Thu, 14th Jun 2018 5:15 am 

    Economists are chicken gut readers and nothing more. They never predict correctly or are on time. Always looking in the rear view mirror for the future. LOL

  50. MASTERMIND on Thu, 14th Jun 2018 5:21 am 

    Clogg

    Look at that chart. Italy needs immigrants the most and they are turning them away..How counter productive..I hope they like eating their pets and zoo animals soon when their country becomes another Venezuela.

    Better open those borders and let those African migrants run wild…They will get your baby count up! You know brothers are packing! LOL

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