Bill Bonner Wednesdays

America’s Baby Boomers Have Gone to the Dark Side

“Bill, you admit that you are often wrong… or ‘early’…” begins a sympathetic letter from a dear reader, “so what makes you any different from all the other economists on Wall Street?”

Good question. We’ll work our way around to an answer.

But first, we will remind readers that our opinion – unchanged from the bottom of the crisis in 2009 to today – has been not only that the economy was not recovering, but also that it couldn’t recover – not as long as the feds were on the case.

Today, we have more evidence…

A Massive Shift in Wealth

Six years after the “recovery” train supposedly left the station, and GDP is backing up again. That is according to the feds’ own numbers, just revised.

They tell us that the economy shrank at a 0.7% annual rate in the first quarter. Household spending growth, meanwhile, was cut in half from the last quarter of 2014.

If there were any recovery, it certainly isn’t visible in these numbers. Which shouldn’t surprise you. Instead of unloading excess and unpayable debt, the feds were adding more.

According to McKinsey, global debt grew by $57 trillion between the fourth quarter of 2007 and the fourth quarter of 2014.

Worse, cheap credit has shifted real wealth from Main Street to Wall Street.

In doing so, the feds have perverted the entire system… and stopped real growth. After all, Main Street – factories and businesses – is where wealth is created, not on Wall Street.

The rich – who own financial assets – got richer. The poor, the young, and middle class – who mostly have only their labor to offer – got poorer.

Since 2009, the U.S. stock market almost tripled shareholders’ portfolios.

But it added nothing to the net worth of the working stiffs, as illustrated by the following calculation: In 1982, a typical workingman could buy the entire S&P 500 with 15 hours of his time. Now, the poor fellow would have to work two and a half weeks to get his hands on the same assets.

Dangerously Dysfunctional

The system is corrupt… and dangerously dysfunctional. But why does no one say so?

Opinion makers such as Paul Krugman and Larry Summers misunderstand intentionally. As though the feds had not put up enough obstacles already, they want more.

“More regulation!” “More redistribution!” “More credit… more spending… more debt… more wars… more crackpot schemes of all sorts!”

They want more “management” by the same people who’ve made such a mess of it already – people such as themselves. And the elite (and almost everybody else) is 100% behind them.

They are committed to trying to protect and extend the magical economy of the last three decades. This was made possible by a huge increase in debt. This led to big increases in stocks, bonds, real estate, contemporary art… and bonuses on Wall Street.

Almost everybody wants to see the past three decades continue.

But who speaks for the next three decades? Who speaks for Main Street… for the young… and for the unknown, surprise-filled future?

Who stands with the mysterious angels, inviting a depression to clear away the mistakes of the last three decades… and cheering on creative destruction, as it whacks the cronies and starves the zombies?

We do!

This is the point we have been edging toward in a recentcontroversial Diaryissue. Everyone wants more credit, more inflation, more bubbles, more subsidies, and more special privileges.

Who’s on the other side of the trade?

Almost no one.

But for the last 20 years, we’ve been building a network of researchers, analysts, economists, and (sometimes quirky) thinkers that is independent of Wall Street, government, and academia.

No cronies. No zombies. No fast talkers or midnight walkers.

Our motto: Sometimes right, sometimes wrong, and always in doubt.

Every day, we try to connect the dots. How come central banks, big business, Wall Street, government, and academia are all on the side of the policies that don’t work?

How come the old… notably fast-aging baby boomers… have gone over, too, to take the devil’s part?  Continue Here


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