I do not know if I have ever in my life seen so much despair – unwarranted despair.
Why is that? I suspect it is because society has created a fantasy universe in which to dwell and many people have an impending sense that reality is about to intervene. Society has created a universe where the stock market only goes up and never down. Where – in the several thousands of years of interest rate history – global interest rates are at the lowest they have ever been and that will never change. A universe that has a single super power that cannot be challenged. A universe with endless economic growth, no matter how tepid that growth has become. A universe that has endless government benefits to address every conceivable personal issue. This fantasy stands in contradiction to everything we know about history, economics, math, culture and human beings.
Those who dwell in the land of reality are not the people that are despairing – they are preparing and holding on to what is permanent. The fantasy – and the despair – is predicated on retaining the ephemeral.
The fantasy is dependent on a universe where the endless debt that must be acquired in order to fund all of the above must never be paid back or defaulted on.
Where as Americans have historically been known for our courage we have now become dreadfully afraid of reality. Americans are afraid of a stock market that may go down instead of up. Americans are afraid of interest rates rising. Americans are afraid of other countries challenging our superpower status. Americans are afraid of economic decline instead of growth. Afraid that the gravy train of government benefits must come to a logical end. In a very real way Americans have become afraid of being human.
We have become horribly afraid of the reality that defines our being human.
We are afraid of what other people say. We are afraid of what other people do, even when it has not the slightest thing to do with ourselves. We refuse to trust anyone who does not agree with us on politics and culture and life. To paraphrase William F. Buckley, society is demanding diversity and then shocked and dismayed to find there are people out there armed with facts and data that might impugn the fantasy universe that the popular culture has created.
Underpinning all of this is debt. Personal debt. Corporate debt. Government debt. This entire culture that we have created is dependent on ever increasing debt. The national debt (that portion the government chooses to count) has risen $640 billion in the last eight weeks alone. The Federal debt is now increasing at $16 billion per business day. To quote David Stockman, “…a $5.7 trillion increase in the public debt in just six years since October 2011. That is, during a period which supposedly constitutes the third longest business expansion in US history.”
What do you think that looks like when times get tough?
Some more from Stockman: “That’s right. Way late in the business cycle—–between month #89 and month #101 of the expansion—-the debt is increasing at a rate just under $1 trillion annually. Yet there is virtually no one in the Imperial City or in the Wall Street casino who has even noticed.
Nor have they noticed that revenue collections continue to weaken—-even as a massive surge of spending for the four disasters since August—Texas, Florida, California (fires) and Puerto Rico—– crank up, along with the Donald’s sharply increased tempo of defense operations.
During the last four months (July through October), in fact, revenue collections came in at $918 billion. That represented just a 2.9% gain over the $892 billion collected in the same prior year period, and barely 1% in real terms after factoring in CPI inflation during the interim.”
The debt is that reality that will intervene – and not just government debt. The stock markets reached a new high this month in leverage, i.e. debt, just as a new high in leverage in the markets has been reached each month for many months now. The house that I paid $150,000 for less than seven years ago is now worth in the neighborhood of $400,000. Parking lots are full of new cars. Yet in September of this year the inflation-adjusted household income finally regained the level it was at in September of 2008.
What has propelled prices upward so dramatically if the average household has just regained the income level that it first attained nine years ago?
It is the historically unprecedented levels of debt that has propelled prices.
To quote Lance Roberts, “Since 2014 the economy has only grown by a little less than 9%, top-line revenues by just 3% along with corporate profits after tax, and reported earnings by just 2%. All of that while asset prices have grown by 29% through Q2.”
The zeitgeist is that the fantasy will never have to end – and those who despair at reality intervening also then comfort themselves by proclaiming that if it does end then it is all Trump’s fault.
Yes, it is that absurd. No wonder they despair.