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What’s Wrong With The Economy: 9 Toxic Dynamics


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. MASTERMIND on Wed, 13th Jun 2018 3:54 pm 


    Why are you so scared to ask real historians? Don’t you want to prove that you are right?

    The fact that you won’t even try proves that your theory won’t stand up to critical examination..

  2. Cloggie on Wed, 13th Jun 2018 3:55 pm 

    “Here is reddit’s ask a historian can ask any question to real historians..Ask them about your theory how Hitler was set up by the Jews and the US..And take a screen shot and show me what they say.”

    You want historians, you get historians. The best book about how the Jews managed to use Churchill to get the war started in Europe is this:

    From the same author the best book I know about Barbarossa, better than Suvorov:

    I personnally gave these books to David Irving, with whom I did exchange emails and met in person twice, in London and The Hague, just like I did with the esteemed US historian Mark Weber (exchage emails):

    This is a good book about the Danzig and Polish situation in 1939:

    You can stick your intellectual antifa midgets fron reddit in a place where the sun doesn’t shine.

  3. MASTERMIND on Wed, 13th Jun 2018 4:08 pm 

    This is the end game for the paranoid preppers

    Doomsday cult leader in central Utah pleads guilty to child bigamy, sodomy charges

  4. MASTERMIND on Wed, 13th Jun 2018 4:12 pm 


    why don’t you ask the independent experts on Reddit..Prove yourself..those books are lies meant to make money from stupid people..

    Prove yourself Clog..Ask a real historian..

    You wont’t because you know what you are clamming isn’t true..its just a form of mental illness.

    Put up or shut up

  5. MASTERMIND on Wed, 13th Jun 2018 4:16 pm 

    Greg and clogg

    You two are tin foil hat whack lunatics..You better watch out for those black helicopters! I bet the deep state would love to kill you because only you two know the actual

  6. kanon on Wed, 13th Jun 2018 4:29 pm 

    This article is a discussion of the symptoms of living under the Federal Reserve Monetary System. Banker control of money leads to creation of a finance based aristocracy and there is no apparent political response for the lower classes. The U.S. population is systematically exploited by usury and reduced to a mindless proletariat to slake the insatiable money demands of the plutocrats. But the U.S. political system has always been a few plutocrats, a supportive “middle class,” and the mass of exploited poor. What is different now is the the FED, refinement of propaganda, and resource limits. While I do not regard CHS as a great thinker, at least he can be pretty good. I think he has not yet pulled the curtain back all the way.

  7. Davy on Wed, 13th Jun 2018 4:38 pm 

    “Always blame the other guys. Much easier than peering behind the curtain”

    Wow that is a special one from Mr Prick doing the pot calling the kettle black thingy in his routine hipocrisy.

  8. MASTERMIND on Wed, 13th Jun 2018 4:46 pm 

    The Federal Reserve is a private bank..If you go to any of their websites they are all .org…If they were a branch of the government they would have to use a .gov..

  9. Makati1 on Wed, 13th Jun 2018 4:46 pm 

    I don’t think that Davy or MM have enough working brain cells to ever understand how brainwashed they both are. Nor the wish to ever get out of the Us MSM box and look at the real world.

    The ’empire’ is leveling the playing field (or trying) and the Us is its main target. When it goes down, so will all of the Western and other countries. Or so they hope. I don’t see that happening. I do see a major change in America to about 3rd world levels and some hurt in most other countries, but not total collapse.

    The current problem with the imperial dreams are China and Russia. Neither are going to kiss the imperial ass. And, if Trump continues his trade threats, the EU is going to side with Russia. If the imperialists had any sense of history, they would know that they are going to lose. The empire is already dying. It is only a matter of time.

  10. Davy on Wed, 13th Jun 2018 4:47 pm 

    “You sound like a paranoid loon..who are these lying liberals? you live in Jesus fantasy land.”

    Like I said blind lying liberal but add stupid to it.

  11. Makati1 on Wed, 13th Jun 2018 4:48 pm 

    Davy is still living in Davyland. Blame others but don’t look in the mirror. LMAO

  12. Davy on Wed, 13th Jun 2018 4:53 pm 

    A Better and more true world than the fictional world of mr 3rd world the senile old guy in the P’s.

  13. MASTERMIND on Wed, 13th Jun 2018 4:55 pm 


    Albert Einstein’s Shocking Private Diaries Reveal His ‘Racist’ Views Towards The Chinese

    The Chinks are sub human animals..Brainwashed from cradle to the grave..And these are the people you are rooting for against America?

  14. MASTERMIND on Wed, 13th Jun 2018 4:56 pm 


    Perhaps the people that Einstein disliked most during that period were the Chinese, whom he described as being “industrious, filthy, obtuse people” in his diaries, even going on to state that “it would be a pity if these Chinese supplant all other races. For the likes of us the mere thought is unspeakably dreary.”

  15. JuanP on Wed, 13th Jun 2018 4:59 pm 

    There is nothing gramatically wrong with Greg’s sentence.

  16. Makati1 on Wed, 13th Jun 2018 5:05 pm 

    MM, you do understand that “historians” write what they are told to write? History is written by the winners, not the losers. Don’t you understand propaganda?

    Oh, that’s right! You live submerged in the cesspit of propaganda called America. Hard to see truth when it is denied to you or buried in tons of bullshit.

    You have to study history from many sources to begin to get the true picture. When you do, you find that the Us is NOT what you have been told or taught. It is a terrorist, plundering, lying, immoral country, not the indispensable/exceptional country.

    BTW: The Us didn’t win WW2, the Russians did. Were you taught that in your history class? I bet not. You might watch this series and get a different view of the USSR. If they hadn’t destroyed the German army in the East, you might be speaking German now.

    “Soviet Storm: World War II” Produced in 2011 by Russia and the English version is by the UK. I recommend it to you and anyone interested in how WW2 shaped today.

  17. JuanP on Wed, 13th Jun 2018 5:11 pm 

    History is nothing more than a collection of narratives which changes constantly. Anyone who thinks that the version of history they were thought represents the truth doesn’t understand what history is. The Jewish-American narrative of the evil Nazis and the brave American GIs who saved the world is not the truth, though Americans and Westerners have been so thoroughly brainwashed with it that one can’t really blame them for believing it. The damage American GIs inflicted on the Nazis was nothing compared to the damge inflicted by the Soviets. The Nazis had basically already lost the war by the time the USA landed its first troops in Europe. And, the only reason the Nazis are considered evil today is because they lost the war. Germany was pushed to war to defend itself and its people.

    History is rewritten every single day and WWII’s history will be rewritten in the future, too, after the coming American collapse.

  18. JuanP on Wed, 13th Jun 2018 5:12 pm 

    That thought was meant to be a taught.

  19. Makati1 on Wed, 13th Jun 2018 5:14 pm 

    Also, MM, Einstein was also a product of German/America propaganda, like yourself. I doubt he ever visited any Asian countries in his life time. If you take what you are told as truth, you are a fool or, at least, intellectually lazy.

    BTW: His math abilities did not make him an expert on any other topic so why are you using his diary as proof of anything?

  20. MASTERMIND on Wed, 13th Jun 2018 5:19 pm 


    I know everyone is brainwashed and ignorant..only an uneducated senile former construction worker knows the ‘truth”…Heavy must be the crown you wear..You better watch out for those black helicopters..Once they take out Greg and Clogg ill bet they will be coming for you next…They will do anything to keep the “truth” a secret…LOL

  21. MASTERMIND on Wed, 13th Jun 2018 5:22 pm 


    That is the funny thing about conspiracy theories..If you try to refute them with anything, it just because part of the conspiracy..You should go ask the historians on reddit…tell em you saw a youtube video..LOL

  22. Boat on Wed, 13th Jun 2018 5:26 pm 


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

  23. Makati1 on Wed, 13th Jun 2018 5:31 pm 

    “The Real Economic Numbers: 21.5 Percent Unemployment, 10 Percent Inflation And Negative Economic Growth”

    ” Williams’ findings, while controversial, corroborate a variety of other data points. Median wage gains have been stagnant for decades. The U.S. labour force participation rate remains at multi-decade lows. Even our own light-hearted Big Mac deflator suggests that the U.S. economy is in a depression.

    Another clue is to evaluate the U.S. economy just as economists would a third world nation whose data they don’t trust. They do this by resorting to figures that are hard to fudge.

    There, too, by a variety of measures—ranging from petroleum consumption to consumer goods production to the Cass Freight Index—the U.S. economy appears to have not grown much, if at all, since the turn of the millennium.”

    Slip slidin’…

  24. Boat on Wed, 13th Jun 2018 5:36 pm 

    The thing is JuanP, when WWII ended the US was just getting rolling. The war machine was kicking out weapon systems faster than ever seen and by huge amounts. While soldiers were the tip of the spear the US as a country had the axis of evil bent double taking the shaft.

  25. Anonymouse1 on Wed, 13th Jun 2018 5:37 pm 

    Shut up retard, JuanP is, and does pay attention. Go read your bible, watch CNN, and faux news, and keep believing the retarded states of duhmerica is #1.

    You are still the alpha retard. And will likely remain so despite some serious competition around here.

  26. Boney Joe on Wed, 13th Jun 2018 5:39 pm 

    To “Davy” :

    It’s most obvious, even to this casual observer, you are a fraud of the most vile and obnoxious sort.

  27. Makati1 on Wed, 13th Jun 2018 5:39 pm 

    MM, you don’t like the truth do you? You and Davy evade it with putdowns and immature rants. Belittling the messenger does not change truth. It only shows your ignorance and fear. You live in a crumbling country and, like Davy, see no way out. It must be very depressing. Even scary.

    BTW: if you learn Tagalog, the Ps is looking for English teachers. A way out.

  28. MASTERMIND on Wed, 13th Jun 2018 5:43 pm 


    Yes the US econony hasn’t grown since 2000..up until then US median income raised with GDP..But since then GDP has raised and median income has peaked..and energy consumption has been flat..last year energy consumption was the same as 1998..

    Retail sales, Auto sales, restaurant sales, movie sales, home sales, all declining..where is the growth?

  29. MASTERMIND on Wed, 13th Jun 2018 5:45 pm 

    Jeff Gundlach sounds alarm on America’s ‘exploding’ debt says Washington is spending its way to a “suicide mission”

  30. JuanP on Wed, 13th Jun 2018 5:51 pm 

    Boat, You are entitled to your opinions and are free to believe that if you want, but it is not important to me because you are not making any valid points or providing any evidence that contradicts what I’ve learned so far. I am always willing to admit I am wrong and change my mind when confronted with evidence and a logical argument. When I was a child I believed some of the things you believe, but I have changed my mind as I’ve learned more and realized I was lied to.

  31. JuanP on Wed, 13th Jun 2018 5:53 pm 

    Boat “The winners write the history, The US is still the alpha dog.” And, you are its bitch, not me! LOL!

  32. MASTERMIND on Wed, 13th Jun 2018 6:02 pm 

    Israel condemned by the UN today..

  33. GregT on Wed, 13th Jun 2018 6:06 pm 

    ” I am always willing to admit I am wrong and change my mind when confronted with evidence and a logical argument. When I was a child I believed some of the things you believe, but I have changed my mind as I’ve learned more and realized I was lied to.”

    That makes two of us. The very reason why I enjoy considerate, reasoned, intelligent debate. As soon as a person closes his mind, he stops learning.

    Exactly what the propagandists count on. Closed minded individuals.

  34. GregT on Wed, 13th Jun 2018 6:10 pm 

    Why are you so scared to ask real historians? Don’t you want to prove that you are right?”

    I lived with one for four years MM, and her area of expertise was the two world wars. Her take, for the most part, is the same as Cloggie’s.

  35. GregT on Wed, 13th Jun 2018 6:17 pm 

    “Israel condemned by the UN today..”

    Anti-semitism is one of those terms used by the propagandists to brainwash the masses MM.

  36. GregT on Wed, 13th Jun 2018 6:20 pm 

    If you are anti middle eastern terrorists, you would be anti-Semitic.

  37. MASTERMIND on Wed, 13th Jun 2018 6:21 pm 


    You wont even ask an expert to examine your conclusion..Because you know the conspiracies you are spewing are bunk..If not you would have no problem letting an expert examine them..

    You are a fake, a fraud, and a gutless coward..Put up or shut up..

  38. MASTERMIND on Wed, 13th Jun 2018 6:28 pm 

    See how easy it is to debunk lunatic conspiracy theorist! They can lie on here all they want but they know the fact that they wont accept my challenge proves they are full of shit…

    MM 1
    Lunatics Nazi’s 0

    My advice to CLogg and Greg, go see a doctor and get on some have left the ship of fools..And get a proper education so you won’t be so easily fooled by junk sources.

  39. GregT on Wed, 13th Jun 2018 6:32 pm 

    Define expert MM

  40. GregT on Wed, 13th Jun 2018 6:34 pm 

    “And get a proper education so you won’t be so easily fooled by junk sources.”

    My education spans a period longer than you’ve been alive, and I’m sure that Cloggie’s does as well.

  41. MASTERMIND on Wed, 13th Jun 2018 6:47 pm 


    An expert in this case someone who is an actual historian..And you think clog has a proper education? LOL he post links from the daily mail and alex jones and youtube videos..the guy is a fruit basket..Just like you…like minds think alike..and the fact that you wont accept my challenge just shows how fragile your theory is..I feel sorry for your family…

  42. GregT on Wed, 13th Jun 2018 6:54 pm 

    You don’t know what ‘my theory’ is MM, I dated an ‘actual historian’ for over four years, and I have absolutely no reason to answer to you.

    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.

  43. MASTERMIND on Wed, 13th Jun 2018 7:08 pm 


    If you dated a historian and your story checks out you, should have no problem asking another one..Just be wont accept my challenge because you know your theory is bunk..You are too scared have your theory tested..put up or shut up..Put your theory to the test..If you wont you are admitting you are wrong by default..

  44. Makati1 on Wed, 13th Jun 2018 7:09 pm 

    MM, perhaps those who lived thru history (us old timers) do have a better handle on it then those who only write about it from other sources? For instance, I lived thru the best years of America and can see the slide to the 3rd world level gaining speed every day. You, however, do not have those seven plus decades of perspective to judge my observation, only what you read.

    I talked to my parents and grand parents about the decades they experienced before I existed so I also have some perspective of those years from those who lived them. WW1, the Great Depression, WW2, etc. My my grandfather fought in the trenches of France and was gassed. My grandparents raised a large family during the Depression. My father parachuted into Normandy on D-Day. I trust their observations which differ from the “official” accounts in many ways. Reality, not propaganda.

  45. Makati1 on Wed, 13th Jun 2018 7:20 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.

    He hopes the world will collapse before it becomes necessary to go out on his own and be a responsible adult. I think he will be disappointed. The “collapse is going to take years, maybe a decade or so, but it is and will happen.

    The 3rd world is coming to America. That does not mean the end of everything and cannibal zombies. It just means hardship and pain every day to survive like most of the world lives today. America living on 4% of the world’s resources, not 24%. People dying younger because there are no meds for the serfs. Imports limited to necessities, not luxuries. Etc. A foreign lifestyle that will become the norm. The sooner the Us empire is unable to make war, the better.

  46. Anonymouse1 on Wed, 13th Jun 2018 7:31 pm 

    From Greg

    “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.”

    In other words, ‘mushmind’ = davyturd.

  47. MASTERMIND on Wed, 13th Jun 2018 8:02 pm 

    Billionaire Hugo Salinas Price Just Predicted This Will Be Catastrophic For Humanity

  48. MASTERMIND on Wed, 13th Jun 2018 8:07 pm 


    You have zero evidence to support your assertion that collapse will take decades..Zero…I have cited numerous scholarly papers and emailed many experts to verify.Both of which I have posted as proof…You can rip on my life all you want..I have likely done more in my 30 years than you two could ever dream are just pathetic old wrinkled girlfriend doesn’t even wear underwear most days and shaves everything..

  49. MASTERMIND on Wed, 13th Jun 2018 8:09 pm 


    we don’t have enough time for the US to regress into a third world country..The world is going to be running out of oil soon and the global economy will collapse..Along with it all the worlds governments and the rule of law..and then you will be totally on your won to fend for yourself..Dont look to the government to save you..they will be hiding in their bunkers..

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