The Phantom Middle Class

Now, to follow up on the last blog, What Matters ..., I present an excerpt from Charles Hugh Smith's latest blog, Our Phantom Middle Class. And most of us are the phantoms Smith is talking about.

Recall that in What Matters we presented Smith's concept of financialization:

Financialization is the commoditization of debt collaterized by previously unsecuritized assets, a pyramiding of risk and speculation that is only possible in a massive expansion of low-cost credit and leverage for those at the top of the wealth-power pyramid: financiers, banks and corporations.

The result of the transformation of the economy under the influence of financialization is seen in some of the phenomena that Trump's populism was intended to combat:

Globalization and financialization have been the two engines of soaring wealth inequality. ...

In other words, globalization is the result of those at the top of the wealth-power pyramid shifting borrowed capital around the world to exploit lower costs of labor, commodities, environmental regulations and taxes.

This manifests as offshoring of jobs, the stripmining of forests, minerals, etc., the degradation of local ecosystems, the decline of tax revenues derived from capital and the explosive rise in stock market valuations as wages stagnate or decline.

Here we'll present, basically, a series of charts to show the concrete results of this process, which--while building for many decades--really took off with the Reagan Revolution:

Of the many things we cannot bring ourselves to admit, one of the most consequential is that our vaunted middle class is illusory, a phantom of our imagination rather than a reality. The reality is the vast majority of the nation's wealth and income has been diverted from the middle class to those at the pinnacle of the wealth-power pyramid and the technocrat / financier insider class (the top 10%) that serves the interests of those at the pinnacle.

This transfer has accelerated rapidly in the 21st century as virtually all the real income gains of the past 20 years have flowed to the top 0.1%. This RAND study found that America's elites siphoned $50 trillion into their own pockets in the past two generations: Trends in Income From 1975 to 2018. (Please look at the "Fruits of Financialization" chart below.)

The earnings of the top 0.1% grew 15 times faster than the earnings of the bottom 90% (See chart below)...

...as wages' share of the economy continues its 50-year decline...

As for wealth: the top 0.1% own more than the bottom 80% (see chart below) and the top 1% own 40% of all private wealth and the top 10% own 90%.

If the top 10% own 90% of the wealth and has captured virtually all the income gains of the past 20 years, then isn't it obvious America has no middle class? What the traditional middle class--generally defined as the 50% between the bottom 40% and the top 10%--own is debt and a feeble grasp on very thin reeds of capital. 

The point to all this is the question: Having rid themselves of Trump--as I presume--how will our Globalist Power Elite or Ruling Class deal with the consequences, now that their Uniparty his in full control again? How will they deal with a possibly massively recalcitrant populace that will likely will slowly begin to recognize the series of hoaxes that have been played on them? What other consequences could flow from the unraveling of our financialized economy?

In considering these questions, recall where this train of thought began for me. The issue that sparked it was Secession--raised as an issue in the aftermath of the historic Big Steal--and the claim that national prosperity is dependent largely on the Blue counties remaining in control of the levers of power that govern the economy for an undivided nation.