More is revealed each and every day. Whether you like it or not, the glut of information expands like the glut of Federal Reserve notes in foreign account balances. Last week was no exception…many significant discoveries were made…
Samsung, for example, was found guilty of violating Apple’s patents in its mobile products. So, too, Mitt Romney said he would replace Federal Reserve Chairman Ben Bernanke if elected President. On top of that, photo documentation of Good Time Harry’s flagrante delictos in sin city was posted on the world wide web for everyone to ogle at. But that’s not all…
The September issue of National Geographic said that “Rome’s border walls were the beginning of its end.” What’s more, researchers at Columbia University reported they now believe the Mayan Empire collapsed because of corn crop induced droughts. Can you believe it?
Here at the Economic Prism we’re not sure what any of these data points have to do with each other. But we have an inkling that, somehow, someway, they’re related. Connecting the dots takes creativity and imagination. Correlations are nonlinear…and they’re dynamic too.
Yet, while we may not be able to wrap our mind around it all, we can make inferences based on partial information. What we mean is we can close our eyes and make guesses about what it all means and about what could happen next. More on this in a moment…but first, back to the data…
The Incredible Shrinking Middle Class
While laboring to crystalize down last week’s data to its very essence we came across findings from the Pew Research Center that did the work for us…
“Since 2000, the middle class has shrunk in size, fallen backward in income and wealth, and shed some—but by no means all—of its characteristic faith in the future.
“These stark assessments are based on findings from a new nationally representative Pew Research Center survey that includes 1,287 adults who describe themselves as middle class, supplemented by the Center’s analysis of data from the U.S. Census Bureau and Federal Reserve Board of Governors.
“Fully 85 percent of self-described middle-class adults say it is more difficult now than it was a decade ago for middle-class people to maintain their standard of living.
“Their downbeat take on their economic situation comes at the end of a decade in which, for the first time since the end of World War II, mean family incomes declined for Americans in all income tiers. But the middle-income tier—defined in this Pew Research analysis as all adults whose annual household income is two-thirds to double the national median—is the only one that also shrunk in size, a trend that has continued over the past four decades.”
The Great Middle Class Debasement
The very fact that the middle class is shrinking is nothing new to American life. As noted by the Pew Research Center, this has been going on for 40 years. Nonetheless, if this trend keeps up the middle class will one day be a nonentity.
Pondering this deduction, and scratching for a dot to connect to, we caught a finger hold on a separate, but related, data point: The U.S. Dollar. Like America’s middle class, the U.S. dollar has lost market share over the last 40 years.
In fact, the dollar has lost 84 percent of its value since Neil Armstrong first stepped foot on the moon. In other words, it takes $1 today to buy what you could get with $0.16 in 1969. No doubt, incomes have failed to keep pace with inflation.
You see, the more the U.S. dollar has been debauched over the years the weaker the middle class has become. The relationship is really quite simple. Through policies of mass inflation, not only has the government been successful at debasing the dollar…they have been successful at debasing the middle class. You can actually see its increasing disappearance, and disfigured replacement, everywhere you look.
The rising graffiti index is one important measurement. The vast expanse of urban blight is another. Of course, these are just two data points – among many – signifying the great middle class debasement into an uglier, more barbaric, world.
for Economic Prism