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Why We’re Doomed…

Why We’re Doomed… thumbnail

The point is the present system cannot endure.

Despite all the happy talk about “recovery” and higher growth, wages have gone nowhere since 2000–and for the bottom 20% of workers, they’ve gone nowhere since the 1970s.

Gross domestic product (GDP) has risen smartly since 2000, but the share of GDP going to wages and salaries has plummeted: this is simply an extension of a 47-year downtrend.

Last month I posted one reason Why We’re Doomed: Our Economy’s Toxic Inequality (August 16, 2017). The second half of why we’re doomed is stagnant wages. Why do stagnating wages for the bottom 95% doom our status quo? As I noted yesterday in Why Wages Have Lost Ground in the 21st Century, our system requires ever-higher household incomes to function–not just in the top 5%, but in the top 80%.

Our federal social programs–Social Security, Medicare and Medicaid–are pay-as-you-go: all the expenditures this year are paid by taxes collected this year. As I have detailed many times, the so-called “Trust Funds” are fictions; when Social Security runs a deficit, the difference between receipts and expenses are filled by selling Treasury bonds in the open market–the exact same mechanism the government uses to fund any other deficit.

The demographics of the nation have changed in the past two generations. The Baby Boom is retiring en masse, expanding the number of beneficiaries of these programs, while the number of full-time workers to retirees is down from 10-to-1 in the good old days to 2-to-1: there are 60 million beneficiaries of Social Security and Medicare and about 120 million full-time workers in the U.S.

Meanwhile, medical expenses per person are soaring. Profiteering by healthcare cartels, new and ever-more costly treatments, the rise of chronic lifestyle illnesses–there are many drivers of this trend. There is absolutely no evidence to support the fantasy that this trend will magically reverse.

Costs are skyrocketing and the number of retirees is ballooning, but wages are going nowhere. Do you see the problem? All pay-as-you-go programs are based on the assumption that the number of workers and the wages they earn will both rise at a rate that is above the underlying rate of inflation and equal to the rate of increase in pay-as-you-go programs.

If 95% of the households are earning less money when adjusted for inflation, and their wealth has also declined or stagnated, then how can we pay for programs which expand by 6% or more every year?

The short answer is you can’t.

The budgets of state and local governments also expand every year as citizens demand more services, infrastructure requires costly maintenance and upgrades, and the overall costs of providing government services rises (soaring healthcare premiums are a major driver of higher government expenses). How can households pay higher property and sales taxes if their incomes are going nowhere?

Stagnant wages = stagnant income tax revenues.

Then there’s the consumer economy that depends on ever-higher consumer spending. If wages are stagnant, how can households spend more money? The conventional answer is: we’ll blow asset bubbles in stocks, bonds and housing, and households can spend this newfound wealth.

Nice theory, but only the top slice of American households own enough of these assets to matter. Feast your eyes on these two charts of skyrocketing income and wealth inequality. This chart shows that the majority of income growth is now concentrated in the top 1/0th of 1%, and most of what’s left has gone to the top 5%. This is the only possible outcome of financialization and central-bank inflated asset bubbles.

Here’s another look at the same dynamic, but excluding capital gains, which flow to those who own most of the assets, i.e. the top 1%: the bottom 90% lost 10% in the decade 2002-2012, the top 5% gained 6% and the very top of the wealth-power pyramid, the top 1/100th of the 1%, gained 76%.

The conclusion is sobering: wages/salaries are no longer an adequate means to distribute income or paid work. Our system is broken at the deepest levels–not just economically broken, but socially broken as well. Clinging to this broken model and filling the widening gap between the super-wealthy and everyone else with more debt will doom the system.

This is why I’ve proposed a new way to organize production, consumption, work and income in my book A Radically Beneficial World: Automation, Technology & Creating Jobs for All.

The point is the present system cannot endure. Borrowing trillions of dollars to paper over this failure won’t work for much longer. We need a new system, or we’re well and truly doomed.

Charles Hugh Smith via OfTwoMinds blog



64 Comments on "Why We’re Doomed…"

  1. GregT on Sat, 2nd Sep 2017 8:59 pm 

    Davy,

    Your delusions continue to get more disturbing each and every day. Please go and talk with a healthcare professional.

  2. Theedrich on Sun, 3rd Sep 2017 12:55 am 

    A purposeless nation is carrion.  Orwellian slogans such as today’s “democracy,” “freedom,” “rights” and the like are empty slogans, useful only for attacking others.  Whatever America was in the first three-quarters of a century of its existence, it has since become a genosuicidal and planeticidal cancer.  It engages in unprovoked wars based on specious grounds for reasons of power alone, whatever the tripe it feeds its masses as an excuse.

    It unleashed the Spanish-American War (1898) after undertaking to have its battleship Maine mysteriously blown up in Havana harbor, then blaming it on Spain.  It entered the First World War after engineering the sinking of the British naval ship Lusitania with some Americans aboard (1915), then, after greatly assisting the Brits against Germany, used as a casus belli a German telegram (the “Zimmermann telegram”) to Mexico, which the Brits had decoded and which told puny Mexico that if it went to war on the U.S., Germany would help it get back the southwest U.S.  With its usual bloodthirst, Washington lept at the chance for war and, as a side note, also invaded Mexico just to make sure all its bases were covered.  (There is a museum beneath a large plaza in the middle of Mexico City documenting this Gringo occupation.)  Following the German defeat and American assistance in implanting the new Bolshevik Communist regime in Russia, America reneged on its promises to the German people and allowed the criminal Versailles Treaty to tear Germany apart, thereby setting the stage for another war.

    When WW II began in Europe, Washington warmongers, led by FDR, frustrated at not getting Germany to attack the U.S. directly, deftly lured the Japanese into attacking Pearl Harbor, which allowed the “indispensable nation” to destroy Germany once again.

    During these latter two military exercises, the U.S. shifted from attacking and destroying opposing military forces to the wholesale slaughter of civilian populations.  After all, that is much easier and more cost-effective than actual fighting.  Thus it practiced the “carpet-bombing” of Japanese and German cities.  In mid-February of 1945, the Anglophones massacred about a third of a million Germans in Dresden, then stuffed with large numbers of refugees fleeing the advancing Russians.  The primary reason for this mass annihilation was to show the Stalin, the Russian dictator, just how effective our bombing campaigns were, so that he would not later try any advances against the Allies.

    Also of note were the nuclear bombings of Hiroshima and Nagasaki, for which all kinds of excuses have been made:  they saved the lives of many American soldiers, and many Japanese, to boot.  (Of course, it was necessary to nuke the Japs because we needed to get, as in the case of Germany, “unconditional” surrender.)  The Jews, of course, loved it.

    But again, as many have determined, the true reason for the nuclear bombings was the same as with Dresden:  to make Stalin realize that the U.S. was the top dog in martial affairs, so he had better not try anything funny.  The Japanese, like the Germans, were merely expendable pawns in the game.

    Today the heirs of this hypocrisy-and-deception-based strategy for committing war crimes are at it again.  A number of the retired military brass is today calling for nuking North Korea to eliminate the “existential threat” to U.S. world supremacy.  They conveniently suppress the horrors their forbears visited on that nation in the Korean War (1950-53), not to mention that the Chinese themselves lost half a million soldiers while trying to help the North.

    The U.S. pretends that it does not want regime change in North Korea, only elimination of Kim Jong Un’s nukes.  This is another absurdity that Washington serves up to credulous fools everywhere.  But somehow Jong Un doesn’t believe it.  We wonder why.

    In a similar vein, the Heeb nation has long been urging the U.S. to attack Iran and destroy that country’s nuclear laboratories, with a primary justification for the attack being that Iran’s loony Mohammedan presidents deny the “Holocaust.”  Therefore America should help the Semite nation destroy Iran — and the world’s petroleum industry in the bargain.  Yup, “Holocaust denial” (as defined by Zionist Jews) is a world crime that calls for war against the denier’s country.  Case closed.

    The only substantial evidence for mass deaths in concentration camps, of course, yields a total of 1,274,166, as determined by the foremost scholar of WW II, David Irving, the bête noire of the Yids.  That number includes all types killed, not just Kikes.  And it was in the midst of a war being waged with mass bombing by Jew-directed Americans and British against German civilians, crimes which were calculated to elicit exasperation on parts of the German military and high command, and intensify the brutality of vengeance.  (And never mind the Yid role in getting America to war against Germany in the First World War, along with shredding that land to pieces in Versailles.)

    As opposed to this one-and-a-quarter million, professor emeritus of political science and a Nobel Peace Prize finalist R. J. Rummel determined that Heeb-supported Stalin & Co. murdered 61,911,000 people, while Chinese communist leader Mao Tse-tung murdered 77 million human beings.  Together with all the lesser communist dictators, such as Cambodia’s Pol Pot, Cuba’s Fidel Castro and the like, the sum total of people killed by the Jewish ideology exceeds 150 million — as a lowest-possible estimate.

    How remarkable that one never hears anything about this Yid mega-slaughter from the “mainstream” media!

    But there are strange things which happen in history.  Strangest of all are those that seem to be driven by the mass unconscious of a species, submitting all its individuals to the will of the group soul, things similar to the “murmuration” of birds, fish and other types.  What with the movement of North Korea toward building a thermonuclear-tipped ICBM, we may be slouching toward a point where the group unconscious of homo sapiens may suddenly reduce mankind to the earth’s carrying capacity.

  3. Cloggie on Sun, 3rd Sep 2017 2:58 am 

    http://www.bettysvacation.com/wp-content/uploads/2014/02/Herman-2.jpg

    While I agree with most of what Theedrich writes. This quote…

    The only substantial evidence for mass deaths in concentration camps, of course, yields a total of 1,274,166 as determined by the foremost scholar of WW II, David Irving, the bête noire of the Yids

    …deserves some annotations. Among revisionists Irving is not undisputed. There is one figure though not a single revisionist will challenge, namely the evaluation of German original data (“Sterbebuecher”) by the genuine neutral organisation the Red Cross as held in the archives of Bad Arolsen:

    https://furtherglory.files.wordpress.com/2011/01/arolsen21.jpg

    373,468

    Perhaps half of them Jews. Almost all died from “natural causes”, mostly typhus.

    Bishop Richard Williamson:

    https://www.youtube.com/watch?v=k6C9BuXe2RM

    I think that in the end Vladimir Putin will let the Germans off the hook by opening his war archives and reveal the truth in exchange for full membership of European civilization (“Paris-Berlin-Moscow”).

    Once we have that achieved we can clean out the mess in North-America.

    https://www.youtube.com/watch?v=2KUmqFjE1vc

    Neither the female commie nor Spencer tell the truth here. The coming war of secession in North-America will be bloody but not “genocidal”. If previous dismemberment operations like Yugoslavia, Iraq and Syria can serve as an example, about 1% of the population will die. In the case of the US that would be 3 million.

    In contrast with 1861-65, this time there is a good chance that the Confederate flag will in the end wave over large parts of America between the Rockies and Appalachians, because everybody on this planet except George Soros and his mother has an interest in seeing America go (in its presents shape and Washington at the helm).

  4. deadlykillerbeaz on Sun, 3rd Sep 2017 3:39 am 

    I’m in my comfort zone inside my safe space where I can shelter in place.

    No trouble in the bubble.

    All of the money goes back to Warshington immediately, so the only real problem would be a stoppage in the flow.

    In other words, the only money you need is the money you have to pay to make it all happen.

    JP Morgan and Goldman Sachs charge interest to keep the flow going.

    The money is not yours, you just have it to make sure everything else is hunky dory.

    Who cares about the 0.1 percent? They can manage without me, you too, for that matter.

    A 100,000 person turnout for a protest in Warshington, District of Criminals is a $100,000,000 windfall for Warshingtonians.

    Food trucks are busy on the Mall.

  5. Cloggie on Sun, 3rd Sep 2017 4:59 am 

    Wind turbine installation cost saving innovation:

    https://deepresource.wordpress.com/2017/09/03/lagerwey-climbing-crane/

  6. Cloggie on Sun, 3rd Sep 2017 5:21 am 

    US offshore wind about to take off:

    https://deepresource.wordpress.com/2017/09/03/us-offshore-wind-about-to-take-off/

  7. Davy on Sun, 3rd Sep 2017 7:44 am 

    If you are a doomer as I am you study doom dynamics daily. I see no good response to this situation than an orderly multiyear withdrawal from this part of Asia by the US. This could be done in the context of de-escalation immediately. This may result in the further nuclearization of Asia by Japan and South Korea if this effort were to happen disorderly. Can you blame SK and Japan? Both have the capability. This is a global issue as much as an Asian issue. This is one of those handful of predicaments we discuss here routinely. None of us are immune including Europe. This is a global economy issues with so much of the worlds vital production in one smallish area. This is a catch 22 dilemma.

    If you are planning on affluence continuing to achieve those important developments like renewable energy then this issue should worry you. A war there will end the global economy as it is. Who knows how it will change. This issue is one of those too difficult to predict outcomes. The prediction we can eliminate is something good coming out of this NK predicament. Economic activity will be reduced and surely reduced significantly. This will set back everyone’s effort no matter what you are doing. It could be worse than that. It could be the end of the world as we know it into a cascading collapse process of war and economic decline.

    “Three Dangerous Delusions About Korea”
    http://tinyurl.com/y9kngdo6

    “Delusion 1: All options, including U.S. military force, are «on the table. Hence, any contemplated U.S. preemptive strike would have to be massive from the start, imposing a ghastly cost on North Koreans (do their lives count?) but still running the risk that anything less than total success would mean a devastating retaliation. That’s not even taking into account possible actions of other countries, notably China’s response to an American attack on their detestable buffer state.”

    “Delusion 2: North Korea must be denuclearized. Ether anyone likes it or not, North Korea is a nuclear weapons state outside the Nuclear Non-Proliferation Treaty and will remain so. Kim Jong-un learned the lessons of Saddam Hussein and Muammar Gaddafi.”

    “Delusion 3: If the U.S. presses China hard enough, Beijing will solve the problem for us. – There is no combination of U.S. sanctions, threats, or pressures that will make Beijing take steps that are fundamentally contrary to China’s vital national security interests.”

  8. Boat on Sun, 3rd Sep 2017 1:15 pm 

    Tesla starts production of solar cells in Buffalo

    Tesla eventually hopes to reach 2 gigawatts of cell production annually at the Buffalo plant. That’s higher than its initial target of 1 gigawatt by 2019. Straubel said Tesla has been working on making the factory more efficient.

    One gigawatt is equivalent to the annual output of a large nuclear or coal-fired power plant, Straubel said, “so it’s like we’re eliminating one of those every single year.”

    http://www.foxbusiness.com/markets/2017/08/31/tesla-starts-production-solar-cells-in-buffalo.html

  9. Makati1 on Sun, 3rd Sep 2017 7:51 pm 

    “Russia Slowly but Surely Putting an End to the American Empire?”

    “…These are just a few examples that demonstrate the American empire is slowly breaking off piece by piece and being acquired by America’s Cold War rival Russia in the process. Most famous of the examples is undoubtedly the fact that Russia is also one of the leading nations

    in the so-called BRICS coalition, which has attempted to provide a buffer to American dominance of the financial order.

    The next time the media decides to rattle on with the alleged interference carried out by Russia in the 2016 election, remember what is really at stake and that the true motives for confronting Russia are not rooted in concerns about democracy in any way, shape or form. Instead, the powers-that-be are concerned with the need to prop up a failing empire that Russia is continuously challenging.”

    http://www.globalresearch.ca/russia-slowly-but-surely-putting-an-end-to-the-american-empire/5607174

    Bit by bit…

  10. Davy on Sun, 3rd Sep 2017 7:55 pm 

    Is that like the Bric bank you were cheerleading for so long?

  11. Makati1 on Sun, 3rd Sep 2017 8:41 pm 

    Your knowledge of world events is lacking, Davy. The BRIC Bank is moving forward quite well. As is the New Silk Road.

    “BRICS not a talking shop but a task-force that gets things done: Xi”
    “Putin bats for BRICS energy platform, unity against protectionism”
    “BRICS NDB bank loans to reach $2.5 bln in 2017 – official”
    “A Brighter Future for BRICS”
    “Larger maize harvest will boost South Africa’s economic growth – Agbiz”
    “Russian industrial town gets direct rail link with China”
    “India’s top court champions right to privacy”
    ““A historic day”, says Zuma at launch of BRICS Bank African unit”
    http://thebricspost.com/

  12. Makati1 on Sun, 3rd Sep 2017 8:47 pm 

    As for the road:

    “New Silk Road Shall Bring ASEAN Countries Closer to China”
    “Africa’s Pivotal Role in the Successful Implementation of China’s OBOR Vision”
    “China and Sri Lanka Jointly Invest in Hambantota Port”
    “On the ‘Asia-Africa Growth Corridor'”
    https://journal-neo.org/

    Moving forward as the West sinks.

  13. Theedrich on Mon, 4th Sep 2017 1:00 am 

    Thanks, Cloggie, for the JPG of the Urkunde from Sonderstandesamt Arolsen.  I was completely unaware of it and its total of 282,077 deaths in the listed camps, or the number (373,468) of all cards registering Konzentrationslager-Sterbefälle in the office’s main file.  I would not be surprised if the Chosenites had made it a criminal offense for any German to publish the document anywhere, just as for some time now they have had any German — or even Frenchman — thrown into jail for expressing the truth about WW II.

    There is no question but that Vladimir Putin is our main chance for survival.  The U.S. and its vassals are very clearly the enemy of evolution and seek to rip it out, root and branch.  Four and a half billion years of planetary biodevelopment mean nothing to Washington.  On Sunday, 2017 September 3, Defense Secretary James Mattis stated that, “We are not looking to the total annihilation of a country, namely North Korea.  But ….”  In other words, if NK blocks American world supremacy, the U.S. will use thermonukes to wipe out it (and incidentally South Korea in the process), and by implication do the same to any other nation (e.g., Iran) that stands in our way.  That is, the “indispensable nation” will destroy the entire world unless it submits to race-mixing Big Brother in D.C.

  14. GregT on Mon, 4th Sep 2017 1:33 am 

    There is no such thing as a pure race Theedrich, racial intermixing goes back as far as man himself. You also seem somewhat confused about nationalism. It has absolutely nothing to do with “our” way. They don’t give a shit about you, anymore than they give a shit about anybody else. Other than that, you appear to have a strong grasp on geopolitical affairs.

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