[continued from previous message]   
      
   >> store of value is being debauched faster than an ordinary person can   
   >> earn dollars through labor, the path to success lies in asset   
   >> ownership and not in simply in earning marginally more dollars.   
   >>   
   >> In the current American economy, it is asset ownership that matters   
   >> (or a very high wage in an industry in the business of asset   
   >> ownership). Accordingly, Gen Zers correctly identify $30 as not being   
   >> worth much more than a poke bowl.   
   >>   
   >> For a good comparison, in 17th century England, historians estimate   
   >> that beer and ale could account for as much as 10-25% of a laborer’s   
   >> cash outlays. This wasn’t because England was populated by inveterate   
   >> drunks or fantastically irresponsible people, but because there was no   
   >> point in saving the marginal unit of money in a rigid, hierarchical   
   >> system in which the barriers to true social advancement were too high.   
   >> DoorDash culture is the digital version of that.   
   >>   
   >> If this sounds a bit like feudalism, it is because that is exactly   
   >> what it is. Or more precisely, it’s a hybrid of feudalism and the type   
   >> of pre-Weimar detachment that arises when wages don’t match prices,   
   >> the currency is being debauched, and the future is profoundly   
   >> uncertain and ominous.   
   >>   
   >> To take the analysis a step further, think of the US economy as not   
   >> just a post-middle-class economy but a post-growth economy. Let’s run   
   >> a simple comparison of two different eras.   
   >>   
   >> The 1960s were a time of growth driven by manufacturing, industrial   
   >> innovation, infrastructure, and rising productivity; GDP gains largely   
   >> reflected the expansion of real-world economic activity; markets   
   >> functioned without hand-holding by central banks; debt levels were   
   >> manageable; high interest rates rewarded saving. Housing was   
   >> affordable for working families.   
   >>   
   >> The 2020s are a time of growth driven primarily by financial services,   
   >> asset inflation, and debt-fueled consumption, with government spending   
   >> and central bank liquidity the primary engines rather than real   
   >> productivity gains; central banks engage in all manner of gimmicks to   
   >> prop up a system that no longer self-corrects. Asset prices are   
   >> inflated; housing is unaffordable, while real wages are declining.   
   >>   
   >> These days, there just isn’t much growth, and whatever there is has to   
   >> be squeezed with great exertion as if out of an empty toothpaste tube.   
   >> And it takes a whole lot of debt to even attempt the squeeze. The US   
   >> economy managed to expand at a clip of 2.4% in 2024 – hardly an   
   >> impressive figure – but it did so with deficit spending reaching a   
   >> staggering $1.8 trillion and by vastly understating systemic inflation.   
   >>   
   >> It also bears keeping in mind that the 2.4% figure is already   
   >> distorted because GDP makes no distinction between organic growth and   
   >> the growth created by debt-fueled consumption.   
   >>   
   >> This brings us back to the notion of feudalism. This is the type of   
   >> system that coalesces in one form or another when an economy exits a   
   >> growth phase and enters zero-sum mode. Periods of economic expansion   
   >> are dynamic and tend to reshuffle the cards. Avenues appear for upward   
   >> mobility, new elites are created, and savings can be deployed to   
   >> productive endeavors. In the post-growth world, by contrast, the main   
   >> mechanism defining economic relations becomes rent rather than   
   >> production.   
   >>   
   >> The period from about 950 to 1250 in Europe was very economically   
   >> dynamic. The heavy plow became widespread, which allowed northern   
   >> Europe’s heavy soils to be brought under cultivation. The three-field   
   >> system replaced the two-field system, which increased yields. The   
   >> horse collar, horseshoes, and windmills all appeared or spread widely   
   >> during this period. These were incremental but transformative   
   >> innovations. Deforestation and reclamation advanced. Lots of forest   
   >> and swamp were converted into farmland across France, Germany,   
   >> England, and Poland. Europe’s population roughly doubled between the   
   >> years 1000 and 1300.   
   >>   
   >> The great cathedral-building boom of the 12th and 13th centuries was a   
   >> direct expression of this surplus. The Reconquista in Spain, German   
   >> eastward expansion, and the Crusades all represented outlets for   
   >> surplus population and ambition.   
   >>   
   >> By the late 13th century, however, the limits of this expansion were   
   >> being reached. Virtually all arable land had been brought under   
   >> cultivation. Marginal lands were being farmed, temporarily increasing   
   >> output but with falling yields. Population growth began to outstrip   
   >> food supply.   
   >>   
   >> It was this world of economic stagnation after a long period of   
   >> expansion that produced the feudalism of the High Middle Ages.   
   >> Hierarchies hardened and social structures rigidified as mobility and   
   >> opportunity shrank.  The feudal pyramid “froze”: a static hierarchy of   
   >> rent-seeking landed elites presided over a peasantry with declining   
   >> freedom. Cities and noble courts were often fiscally overextended and   
   >> clung tenaciously to existing structures because change felt dangerous.   
   >>   
   >> We are exactly at that point, except the feudalism of today isn’t   
   >> recognizable to us. But how different are things, really? In the   
   >> rearview mirror are the dynamic post-war decades. Now, meanwhile,   
   >> we've settled into a system where the elites own the scarce assets   
   >> while everyone else pays ever more in participation costs while   
   >> securing less ownership. Perpetually rising asset values are a perfect   
   >> defense against those rising participation costs – if, that is, you’re   
   >> fortunate enough to be part of the asset-owning class. What’s 8%   
   >> inflation and 15% higher childcare costs if your stock portfolio is up   
   >> 25% and your home is now worth nearly $2 million?   
   >>   
   >> Asset prices are always rising because the system is designed to   
   >> prioritize preserving balance-sheet stability. Markets are always too   
   >> big to fail and a disorderly decline in asset prices is treated as a   
   >> systemic emergency requiring intervention. But this means that losses   
   >> are socialized on the downside whereas gains remain private. The   
   >> result: asset prices trend upward over time almost by definition.   
   >>   
   >> Like everything else, protests in the US are a business   
   >> Read more Like everything else, protests in the US are a business   
   >> To put it bluntly, central banks and governments guarantee that asset   
   >> prices stay ahead of inflation – an updated form of the old noble   
   >> privileges dished out by medieval kings.   
   >>   
   >> We can extend the analogy. Power is tied to control finite resources,   
   >> not so much land but financial claims and, maybe even more   
   >> importantly, access to credit. Whereas average people who need funding   
   >> pay 25% on credit card debt, too-big-to-fail banks get to post   
   >> underwater bonds as collateral at full face value – not to mention a   
   >> full bailout if things go awry. This becomes even more perverse when   
   >> you realize that this abundant and essentially free credit provided to   
   >> certain institutions is being used to bid up asset prices even more.   
   >>   
   >> Elites, meanwhile, protect their assets via political capture, while   
   >> the rest of society pays rents rather than shares in growth. In   
   >> medieval feudalism, power was decentralized: nobles had their own   
      
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   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)