Here is what I see happening in this economy

[KingNothing]

There is a very good set of articles over at Zero Hedge on this by author "Cognitive Dissonance". Lays out a reasoned argument along with explanations why it will likely be a crumble rather than a crash.

I don't even think it will crumble. I think we'll endure periods of wealth transfers. I think we'll see other nations experience faster growth and more dramatic standard of living increases than we do, but I do not believe that we will regress. Nothing will change the fact that we are a nation of 300+ million people, most of whom are literate and educated, living on a massive chunk of land that is filled with natural resources, beautiful vacation and entertainment locations, cultural hotspots and an infrastructure to pull them all together. In that regard, we are a peculiar country. At this time, there is no other country as large as us, with such a diverse geography, economy, and population. Much as some want to denigrate our outlook as a nation, we have a uniquely stable foundation. We might not grow rapidly, but we'll advance, slowly but surely.

[Michigan11]

I hate to nitpick, but if people say this, people are wrong. Their real-wages may have decreased slightly, but standard of living is not falling. The rapid rate of technological advances almost preclude that from happening.

I am not sure how wages going down equates standard of living increasing.

[psi2941]

I've been watching all of the predictions and forecast sites and authors for years and many of you have watched much longer than I have. This economic collapse many speak of will not be an event. It will be more of what we have seen if you look at the trends. There is no doubt the middle class is pretty much gone from what you would think of as a middle class.

Most people I meet and know that I talk to don't disagree with that at all, they mostly will say that there is no longer a middle class most likely because they have seen their own and their families standard of living decrease. I have lived in the better parts of areas, and to hear this repeatedly tells me all I need to know, and lately there are very successfull business owners that have the type of businesses that are sort of mini-monopolies that cannot just be duplicated in their areas, their telling me they aren't seeing the profits they once did (finally seeing what the previous middle class has seen) and would sell if they could for what they view their business is worth, but they can't in this economy, and they are looking for new ventures to make up for their decreasing standards of living but aren't finding real opportunites for profit.

People are becoming working slaves like frogs in a pot. They know its not right and they at this point aren't even thinking they will move ahead either. So the mind set has adjusted for the average person and has been working its way up to the new smaller middle class, or what was thought of once as the upper middle class. Most businesses they say were always on the verge of going out of business, from what older, wiser people tell me, but if you look around today and compare businesses to just say 15 years ago, and you think about it, I'm not sure. Back then just years ago, starting a business first, you would see a profit potential that was clearly there, that is why I started a business almost 20 years ago. I didn't plan to start one, just to hope for a profit as many are doing today. I didn't start it just to undercut, but because I saw a thriving and healthy sector of the economy that had higher demand than supply. Today I don't even hear too much of people working on their own, unless its to undercut other businesses that aren't even thriving in the first place, but from what I remember, nobody would have sacrificed their job for that type of business, because there was potential good paying jobs for many to thrive from. Today its similar to people looking for a safety net or delariously following some dream that they aren't even sure exists, or because they can't find a job that will pay a meaninful amount.

The point I am making in writing this, is that we aren't going to see some big event, especially since the FED doesn't have a risk involved, since there are central banks connected with them all over the world, that protect each other. We are going to see the "frog in the pot", more of the same, and it will continue to gradually engulf the so called "upper middle class" and further up that chain, while the majority of poor 3rd world Americans grows and gets used to nothing. That is scary to think about, but that is what is happening.

I guess I wrote this because what I am seeing does not line up with those who think there will be an event, and this is something to think about going forward. Most slaves here today are not even phased by their new reality, which worries me, but they are also not aware of much knowledge about anything really either.

Basically all of these big events of gloom and doom aren't going to happen, the gloom and doom is coming from what the people aren't going to do to fight this. We need to perservere and spread the reality of our situation around to those close to us, and get them on our team. How would anyone want to see their closest friends and family eating mud pies in the near future?

the only reason i disagree, is looking at other countries that have been in the situation mostly soviet Russia. Yea they do have the crumbling effect and it does until the masses wake up and notices whats going on. Then there is a sudden drop.

For example oil(gas) people will be ok with gas prices increasing 20% every year for a while until people wake up and notice its not the oil prices are rising its the fact money is loosing value. Once the masses realize money is worthless and refuse to accept fiat money there will be a short collapse, like the soviet union. However things will get better real quick. I would guess you only need 3-6 months of supply of food and ammo.

[Natural Citizen]

Nothing will change the fact that we are a nation of 300+ million people, most of whom are literate and educated, living on a massive chunk of land that is filled with natural resources, beautiful vacation and entertainment locations, cultural hotspots and an infrastructure to pull them all together. In that regard, we are a peculiar country. At this time, there is no other country as large as us, with such a diverse geography, economy, and population. Much as some want to denigrate our outlook as a nation, we have a uniquely stable foundation. We might not grow rapidly, but we'll advance, slowly but surely.

That's a very good point. You could take that and run with it and it would serve as a very interesting discussion from a trends perspective. I had just mentioned some place around here about this very phenomenon needing to happen from a cultural perspective. I'm fairly sure we are on this path as a nation to maybe scale back a bit and live in a manner in which we did a couple of decades ago. Which is a good thing.

But yes. Excellent observation in my opinion.

[KingNothing]

I am not sure how wages going down equates standard of living increasing.

In 2013, $1000 can buy you a laptop and several months of internet service. In 1913, it couldn't do that because the technology wasn't even close to existing. It could buy you, like, a telegraph, or something.

Who has a higher standard of living? The man with the technology to mentally go anywhere on the face of the Earth (anywhere in the known universe, even), or the man with the equivalent of many, more dollars in his pocket who has to leave his house to use the bathroom and can't call anyone he knows on the magic device we carry around with us that we refer to as cell phones?

Standard of living is not just real wages.

Honestly, in consider that real wages were a bit higher in the 1970s.... but also that society was more violent, transportation to vacation destinations was more expensive, food more costly and less available, entertainment further from our fingertips --- Lord almighty, I'm conversing with someone I've never met, and will never even see, instantly. If we wanted, we could both download an episode of The Wire and talk about it in the chat, simultaneously. And then I could drive to a restaurant, listening to satellite radio on the way, and when I arrive I could eat fresh mozzarella that was imported from Italy this morning as an appetizer before an entre of, say, Kobe beef and Alaskan salmon, then drink a microbrew imported from Belgium. An average man is affording things that even a very wealthy couldn't have had several generations ago.


Life is good. Seriously, life is obscenely good. Don't lose sight of that.

[cbc58]

I might argue that the guy back in 1913 had a higher standard of living when you compare stress levels, tax burdens, overall happiness, and the strength of the family unit. Many people would gladly live more simply if they could. Honestly I think technology
has it's place but it's gotten out of hand. Is anyone here happier than they were 20 years ago? I'm not... especially with what I see coming.

[Stallheim]

I don't even think it will crumble. I think we'll endure periods of wealth transfers. I think we'll see other nations experience faster growth and more dramatic standard of living increases than we do, but I do not believe that we will regress. Nothing will change the fact that we are a nation of 300+ million people, most of whom are literate and educated, living on a massive chunk of land that is filled with natural resources, beautiful vacation and entertainment locations, cultural hotspots and an infrastructure to pull them all together. In that regard, we are a peculiar country. At this time, there is no other country as large as us, with such a diverse geography, economy, and population. Much as some want to denigrate our outlook as a nation, we have a uniquely stable foundation. We might not grow rapidly, but we'll advance, slowly but surely.

You write as though these are all givens, but currency destruction and the wealth transfers you glibly brush aside are capable of setting a civilization back a significant amount, especially when the 'solution' exacerbates the problem. Underpinning our prosperity are several foundations, natural resources, land, geographical isolation/insulation and that elusive 'pioneering spirit,' but the role of our currency as reserve to the world has disguised much of the undermining that has already happened. If the US dollar becomes even a little less attractive internationally standards of living will be very affected by the ensuing cost push inflation. Make no mistake, that international demand for the dollar is one of the very hardest assumptions to fathom as it connects everything.

To those suggesting that this decline proceeds predictably and gradually as before, I only agree for a time, then it turns very quickly. The tinder accumulates when many people realizing they are better off starting something of their own instead of working for an established firm begin to ignore and circumvent the draconian regulations that are piling up unabated. A mass of individuals gradually losing their servile preconditioning, not through ideological preaching, or economic education but through pursuing their own self interested quest for prosperity more creatively than before, because they must, (or at least the cost of doing so seems reasonable finally). Public services will become more costly, tax revenue will not keep up, and inflation will lead to increasing dissatisfaction from those working and those receiving, while tax revenue will not keep up without increasingly painful extractions from an increasingly less compliant populace. Citizens who feel like they are good and reasonable people, knowing many more, will be very demoralized by what they see as an unreasonable backlash by the state, and the upshot will be a widespread erosion of government legitimacy. People might well wake up, educate themselves and demand change, through established political channels. This is the nice scenario.

Should hyperinflation kick in (not cost push, but an accelerating flight into anything else, due to lost confidence in the soundness of the currency, in this case the world reserve) the results will be very ugly. No one knows when a hyperinflation will come, but it hits fast and can run its course in a very short time. In this country or in the EU it will most likely highlight severe regional inequalities with the very real potential for conflict. The current value of the US dollar is almost entirely tradition based, "it was worth that yesterday so why not today." In this context it is easy to see that once the ball begins to roll, there will be little to stop it and rebuild confidence. It could easily have been crippled in the late 70s, and we were not indebted as a nation, the world needed us.

Now? Before the Fed started buying up treasuries (and other junkier assets?) the trend of the 90s was culminating in 97% of loans to the federal government coming from foreign sources. When this trend slowed a bit the dollar took a major dive, so the Fed stepped in and took up the slack. (somewhat indirectly but the math works.) In the past year the Fed purchased more US government debt in the open market than the treasury issued (US government borrowed.) Remove that demand and our purchasing power plummets, let any of that cash trickle out of the banks and the same thing happens. The tinder could get sparked easily at any time.

[Stallheim]

In 2013, $1000 can buy you a laptop and several months of internet service. In 1913, it couldn't do that because the technology wasn't even close to existing. It could buy you, like, a telegraph, or something.

Who has a higher standard of living? The man with the technology to mentally go anywhere on the face of the Earth (anywhere in the known universe, even), or the man with the equivalent of many, more dollars in his pocket who has to leave his house to use the bathroom and can't call anyone he knows on the magic device we carry around with us that we refer to as cell phones?

Standard of living is not just real wages.

Actually standard of living is EXACTLY what real wages is trying to approximately measure. You can't eat a laptop or a highspeed internet connection, but you CAN use these to organize a revolution.

[Stallheim]

Life is good. Seriously, life is obscenely good. Don't lose sight of that.

People are notoriously ungrateful when their benefits are cut or their standard of living drops. During stagflation for example people will not happily take a cut when they increasingly see a protected class of politicians living high when they are scraping by (relatively speaking.) Notice that the poor American seldom compares himself with the poor Nigerian? Sure life is good, but no one likes the feeling that they are being increasingly exploited. This will hit across political party lines. We all wish no one should lose sight of this. Another thing, without the taxation, regulation and wars of the 20th century we would all be far better off in terms of living standards, but the unknown is very hard to communicate. A period of accelerated inflation, however, reveals that something has been lost, and you don't need much in an information rich world, to discover and communicate the causes. People don't forget the feeling of being exploited, once they realize it. This doesn't take a big educational appeal during a bad protracted 'soft patch.'

[GunnyFreedom]

I hate to nitpick, but if people say this, people are wrong. Their real-wages may have decreased slightly, but standard of living is not falling. The rapid rate of technological advances almost preclude that from happening.

From where I sit, my own standard of living has dropped by 75% in the last 5 years. Everybody I know without exception is materially worse off than they were 4 years ago. Who are these people maintaining their standard of living you are speaking of? Because I've not met them.