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:

What Matters: The Gospel According To Charles Hugh Smith

The other day when I included a link to Tom Luongo's musings on Secession I had intended to include more commentary of my own. However, I was put off by my ignorance of economic matters. A day or so later I'm just as ignorant as before, but I still want to raise these issues to see what others--who may know more--have to say. 

One article on Secession that I came across while I was preparing the blog Recommended Reading For Christmas contended that Blue counties account for 70% of GDP and that Red counties are basically populated by losers who scuffle to get by and have little to offer the country as a whole. That seemed a pretty extreme assessment to me. I mean, I knew that the Blue counties don't actually produce much of anything--not energy, not food, not really too much in terms of consumer goods. Still I wasn't sure how to proceed.

Many of you, I'm guessing, have some familiarity with Charles Hugh Smith through republication of his blogs at Zerohedge. If so, you'll know that his big bugaboo is the "financialization" of our economy. As far as that goes, I've always been receptive to the idea that the decline and repeal of Glass Steagall is what got us to where we are now, with an economy that's top heavy in the financial sector and a population that keeps falling further behind. 

Obviously, to that extent I blame simple minded Libertarians for enabling the pass we've come to. Luongo, a self professed Libertarian, at least recognizes that the "American Myth" of Classical Liberalism has pretty much collapsed and doesn't have much to offer in terms of a way forward for the nation. Trump wanted to restructure the economy, away from financialization and towards productivity in the real world, and we're seeing the result--a Deep State hit and the collapse of our constitutional order. I think we all get that: While the top 5% of the population wasn't out there stuffing the ballot boxes--they had useful idiots to do that--they were the ones who dictated that Trump had to go, constitution be damned.

Now, I can't say that I read everything that Smith writes--actually, far from it. Still, I decided that one way to proceed would be to see if I could find a blog in which he explains his ideas, excerpt that, and see what other conservatives might think of his thesis. My reason for doing this is because, while I acknowledge my ignorance in this regard, it seems that any attempt to make sense of what's coming at us in the tunnel ahead will have to take financialization into account.

With that as my premise, I dug up this blog: