It is easier to understand when you realize who benefitted from this purposeful shift in societal norms. The low debt, high savings, production era from 1950 through 1980 benefitted the working middle class, allowing millions to improve their standard of living. The rising debt, low savings, consumption era, from 1980 through today, benefits the 1% Alphas while impoverishing the middle class & sentencing the lower class to a lifetime of dependent servitude to the state. Who benefitted from debt fueled conspicuous consumption & continues to benefit today? The peddlers of consumer debt on Wall Street & the mega-corporations that convinced Americans they couldn’t live without that 5,500 square foot McMansion, BMW X5, stainless steel appliances, 84 inch 3D HDTV, iPhone 5, diamond encrusted Coach handbag, & thousands of other Chinese made trinkets that pile up in underwater homes across the land, benefitted tremendously. The proliferation of debt resulted in obscene profits for the financial sector, record profits for the mega-corporations that shipped production to Asia in order to take advantage of the slave labor, & three decades of wage stagnation & increasing debt for the average working middle class American.
The financialization of America was a conscious decision by the oligarchs. They controlled the issuance of credit. They controlled the currency & level of inflation inflicted upon the masses. They controlled the corporations selling consumer goods on credit. They controlled the Congress, courts, & government agencies with their deep pocket lobbying & buying of influence. Lastly, they controlled the media messages & molded the opinions & tastes of the masses through their Bernaysian propaganda techniques perfected over the decades. In one of the boldest & most blatant acts of audacity in world history, the Wall Street/K Street oligarchs wrecked the world economy in their insatiable thirst for profits, shifted their worthless debt onto the backs of taxpayers & unborn generations, threw senior citizens & savers under the bus by stealing $400 billion per year of interest from them, & enriched themselves with bubble level profits & bonus payouts. Meanwhile, median household income continues to fall, real GDP is stagnant, true unemployment exceeds 22%, & 47 million people are living on food stamps. ]
Well said. Once this ugly truth is understood the level of comprehension expands exponentially from there. This is only applicable if this information is understood as what has delivered us to this point, if not then you will still be holding desperately onto the accepted story line that is pumped into your living room every night by the corporate media. The corporate media’s version of reality is that this was a fluke of capitalism & simply subprime borrowers that slipped through the cracks in the housing market rally that skewed the housing price appreciation into a bubble & we are simply in the correction phase. The problem is that this is off the mark by a country mile. The subprime borrowers did not sneak into the real estate rally through the back door, they were specifically targeted by Wall Street as a way to bundle higher yielding debt instruments together in order to sell them on the secondary markets at higher rates of return, thus expanding the derivative bubble to epic proportions.
Since the Wall Street banks had the rating agencies in their pockets & they would rate ANYTHING as a practically “ZERO risk AAA investment” for the right fee they were able to take the riskiest debt instruments & fashion them as super safe AAA investments that would now qualify for government secured retirement investments. These banks then peddled their wares on the pension funds, mutual funds & retiree investment management firms of the world (to include the govt. pensions too) which gave them the ability to swap out the good long terms investments that once were required to qualify for govt. insured investments for these new toxic turds. I’m afraid nothing is safe in the paper investment world since we have no real way of validating the stability of retirement investments since they have been bastardized into these Frankenstein toxic investments in order to protect the banks from the consequences of their own creations.
This was only possible because the people of the nation gradually changed from an informed populace that was once aware & involved in politics, economics, world events & personal responsibility to a herd of helpless sheep trained to do whatever a person in an expensive suit or uniform told them to do. This herd of consumers was dazzled with the idea of endless immediate consumption through easy credit without that pesky thing called hard work & saving to be able to responsibly acquire the item they desired. Even those, like myself, who refused to forget the lessons of the prior generations were challenged by the new reality as we were forced to watch artificial expansion of living standards without the hard work it once required. My father always told me regarding credit: “If you want something you pay for it w/ cash. If you don’t have the money then you need to get back to work until you save enough to acquire that item. By the time you acquire the funds for the purchase you will more than likely feel different about the impulse buy you once were convinced you had to have which will encourage you to allocate those hard earned funds into a better choice”. What a crazy idea huh?
This has happened over a long period of time & for those who think the FED can give TRILLIONS of newly printed fiat dollars to their banker buddies who created this & fix it over a 3 year period I can assure you nothing could be farther form the truth. There will have to be at least a decade of contraction WITHOUT QUANTITATIVE EASING in order to rebalance the multi-decade over consumption period if there is ever going to be any real recovery. Now that we have embarked upon this grand theft of future generations QE campaign God only knows how long it will take to work this thing out. Long before there can be any recovery now that this path has been chosen for us the more immediate threat is one of the current global currency war turning into a trade war with China that could eventually degrade into a real war. Time is short for those who intend to put their money into an inflation hedging investment & the options for this strategy are few & far between. Establish your “Currency War Insurance Policy” in physical gold & silver bullion today & begin to participate in the sound money debate before its too late. Inflation can morph into hyperinflation, recessions can morph into depressions & currency wars can degrade into trade wars that can eventually lead to real wars as desperate nations struggle to hold onto their nations economy. Remember that it is a far better strategy to PREPARE your portfolio rather than attempting to REPAIR it once the damage has begun. Tick, tock.