Was the economic recovery from 2008 really that effective? Sure, we avoided a depression (thanks to the Fed?); we are experiencing record highs in several financial assets such as the stock market; and household net worth has risen.
But we also have the lowest net income and full-time jobs since WWII. Take a look at the chart below. It illustrates household net worth in the last 40 years against the backdrop of decelerating job growth.
Do you realize what’s happening here? Ray Dalio called it in one of his articles: the recovery is for the wealthy class only! Take a look at the chart illustrating the Fed’s Survey of Consumer Finances. The top 20% income earners are the ones that have been enjoying record growth in household net worth since 2007. Everyone else’s net worth has been declining!
One means of detailing this “lopsided” impact is to compare HHNW with the US fertility rate. In years past, a rise in HHNW coincided with a rise in fertility rates as people had enough confidence in the economic environment to establish families. Since 2007, however, fertility rates have severely declined. What does this say about the majority of Americans’ confidence in economic recovery?
Next, look at the US fertility rate against US stocks (as represented by the Wilshire 5000). It’s clear that the “recovery” is not happening for those of childbearing age.
Our current economic model is based on the flawed premise of perpetual population growth transforming into consumer growth. As we can see, the consumer class is collapsing.
We can also see that the Fed has been rewarding a shrinking number of asset holders while punishing those who do not hold assets. Unfortunately, the rise in asset prices against stagnant wages means that such a model will prevent most people from ever becoming asset holders!
The following chart shows annual YOY US 15+yr/old population growth divided (and color coded) by age groups:
- Dark green: ages 15 to 24
- Aqua blue: ages 25 to 54
- Yellow: ages 55 to 64
- Red: ages 65+
You can see the deceleration in growth among the age groups over the years. The largest population growth is the 65+ segment. The spikes on the chart are “one-time” Census adjustments (not actual population spikes).
Population growth is a critical factor because average income peaks at around the age of 45, its deceleration increasing as the head of household approaches 65. By age 75, the head of household’s income and spending is halved, and so does his/her use of credit to fund purchases.
The chart below illustrates the annual US yoy population changes since around 2001. Look at what happens leading up to the financial crisis of 2008. Compare that with what’s happening now, in 2017. Could it be that the rise in asset prices have something to do with this phenomenon; a pattern that may repeat itself?
Last but not least, growth among the 20 to 65 year old population is falling at an accelerated rate. Based on these stats (from the US Census and the UN), the dominant population group will soon consist of those belonging to the 65 and older group.
“Change candidates” (of either party), presidents, and political parties have come and gone...all of them promising change...none of them having made any real difference.
NOT ONE OF THEM HAS DONE ANYTHING ABOUT THE FED.
At this pace, nobody in America can even imagine such a thing happening. For decades, the Fed has rewarded the wealthiest 20%--the top 1% or 2% truly benefitting from the Fed’s protections. The BOTTOM 80%, those who hold little to no assets, have been consistently held down and punished.
Based on our current population growth trend, our aging Americans will not get us out of this vicious cycle.
Nothing short of a vital revolutionary movement will get us out of this cycle of economic slavery--a movement that will not merely switch one party for another, or one president for another, but one that will strategically resist, short-circuit, and counter the corrupt machinations of government and central bank planning.