|
|
Musings Report 2017:40 10-7-17 The Fading Scent of Our Collective Memory of Good Times
You are receiving this email because you are one of the 500+ subscribers/major contributors to www.oftwominds.com.
For those who are new to the Musings reports: they are basically a glimpse into my notebook, the unfiltered swamp where I organize future themes, sort through the dozens of stories and links submitted by readers, refine my own research and start connecting dots which appear later in the blog or in my books. As always, I hope the Musings spark new appraisals and insights. Thank you for supporting the site and for inviting me into your circle of correspondents.
The Fading Scent of Our Collective Memory of Good Times
As I talk to young people struggling to make ends meet and raise children, and read articles like this on retirees who can't afford to retire, I'm increasingly thinking that we're following the fading scent of our collective memory of good times--a prosperity that has slowly been lost to stagnation and under-reported inflation.
The New Reality of Old Age in America.
In other words, the idea that life should get easier and more prosperous as the natural course of modern life is still embedded in our collective memory, even though the collective reality has changed: for the bottom 90%, life is typically getting harder and less prosperous as the cost of living rises, wages remain flat and the demands on workers increase.
Meanwhile, the asset bubbles inflated by central banks have enriched the top 10% of households, which own over 75% of all assets and take home over 50% of all household income. This excerpt from the above article is striking:
"While most Americans are unprepared for retirement, rich older people are doing better than ever. Among people older than 65, the wealthiest 20 percent own virtually all of the nation’s $25 trillion in retirement accounts, according to the Economic Policy Institute."
Household wealth follows a power-law distribution, i.e. the vast majority is held by the top few households: the top .1% own roughly 25% of all US household wealth, the top 1% around 40%, and so on. So the households between 80% and and 90% own a very modest percentage of what the top 90%-99% own.
The power-law distribution of wealth is visible in this chart:
Statistically, average per capita (per person) income and per capita share of GDP have risen substantially over the past 30 years. By these measures, everyone is considerably wealthier. Yet how many households are measurably better off in terms of free time, savings, disposable income, retirement accounts, financial security, reduction in debt loads, etc.?
Clearly, the political-financial system and the policies of central banks have combined to concentrate wealth and income in the top of the wealth/income pyramid: those who own the assets that have bubbled higher are booking luxury cruises, while those who don't own much of bubbling-ever-higher assets are working at tourist spots visited by the cruise ships.
The average person knows the scent of Good Times is fading, and many have lost hope of obtaining what was once taken for granted: home ownership, increasing income, and an easier life as household income and wealth slowly but surely increased with time.
But the collective memory of Good Times that were more evenly distributed remains; people feel they should be able to take a vacation, should be able to buy a starter home, should be free of constant worry about paying the bills, and so on. With this collective memory still in place (and constantly kept alive by advertising), people naturally start feeling a pervasive sense of betrayal: the system implicitly promised everyone who works some measure of security and increasing prosperity.
Expectations are out of alignment with reality. As I have often noted in my writing, this creates a highly combustible and dangerous dynamic, as the emotions of betrayal and despair are politically and socially volatile.
In other words, if 90% of the work force expects to be poor their entire lives, has no thought of ever owning a house, anticipates scraping by in their senior years, etc., then their expectations are aligned with the realities of a hierarchical power-law economy and social structure. Low expectations are difficult to dash.
But when 90% of the work force harbors expectations for Good Times based on memories of those expectations being met, the widening gap between expectations and reality unleashes a range of emotions that lead to a politically combustible realization that the Good Times are now concentrated in the hands of the top 10%.
A sense of injustice and betrayal arises, along with a sense that something has gone profoundly wrong with our society and economy. This dynamic has yet to fully play out, but it will.
Summary of the Blog This Past Week
Migration of the Tax Donkeys 10/6/17
Be Careful What You Wish For: Inflation Is Much Higher Than Advertised 10/5/17
What Few Expect: Inflation Will Surge, Destabilizing the Status Quo 10/4/17
What If the Tax Donkeys Rebel? 10/3/17
2009 - 2016: Was the Eight-Year Experiment in Maintaining the Status Quo a Success or a Failure? 10/1/17
Best Thing That Happened To Me This Week
A great visit with my in-laws in Honolulu, much repair work accomplished and grilled chicken wings on the barbie.
Market Musings: Cryptocurrency Market Capitalization
Anyone interested in cryptocurrencies (CC) will benefit from looking at this visualization of the cryptocurrency sector by market capitalization and by volume.
The market cap chart quickly reveals the bitcoin is by far the dominant CC, with Ethereum being the other dominant player at around 40% of BTC's market cap. There are a half-dozen smaller CCs (Ripple, Dash, etc.) and hundreds of tiny players.
Clearly, the CC sector is following a power-law distribution.
Given that power-law distributions are a common feature of natural systems, it's difficult to imagine a complete collapse of this structure into some other distribution.
If you click on the "volume" button in the left sidebar, you will see that transaction volume closely matches market cap.
Proponents of ETH may suggest that eventually BTC and ETH will swap places, with ETH the largest player and BTC the smaller CC. Anything is possible in such a young and volatile field, and we should remain alert for signs of such tectonic shifts.
But for the time being, it seems the BTC will retain its dominance in volume and market cap, which at $72 billion is roughly 1% of the current value of the world's gold and mere signal noise in the world's $300 trillion of financial assets ($500 trillion if we add in real estate).
From Left Field
'Our minds can be hijacked': the tech insiders who fear a smartphone dystopia (via Joel M.)
San Francisco: now with more dystopia -- increasing wealth divide, mass blindness to SF's dependence on asset bubbles for its "wealth"...
The Secret Place Where Music Shows Get Made (via GFB) - example of the localized economy...
Bronze Arm Found in Famous Shipwreck Points to More Treasure Below-- exciting stuff...a load of treasure for the elite households of 2000 years ago...
How to Fund a Universal Basic Income Without Increasing Taxes or Inflation -- color me skeptical; this is all based on the "infinite growth on a finite planet" mode. that is unrealistic in the extreme...
New Report Claims UBI Would Grow the U.S. Economy by $2.5 Trillion-- no DeGrowth in the future, according to UBI advocates...
Why Some Scars From the Recession May Never Vanish -- not unless we change the way we create and distribute currency...
Bump in U.S. Incomes Doesn’t Erase 50 Years of Pain -- more on the same topic...
Income, Poverty and Health Insurance Coverage in the United States: 2016-- Census Bureau report uses increases in % to apply lipstick to the pig... functionaries are being ordered to add a rosy tint to soaring income-wealth inequality....
Why taxing robots is not a good idea -- there are many other flaws as well...
What's the Average American's Tax Rate? -- averages not a good metric for taxes... bottom half pay nothing, top 10% pays the majority, very progressive....
For Decades, New York’s Chinatown Duped ‘Slum Tourists’ With Faked Danger and Depravity -- slumming DisneyLand?
Thanks for reading--
charles |
|
|
|
|
|
