Due to the destruction of unions, alongside deindustrialization of the heartland, the standards of living of the average American have been slowly in decline since the 1980s and the 1990s because of stagnating wages and lack of decent job opportunities for the uneducated. To offset this decline, and to maintain societal stability, there was a significant transition towards funding the American lifestyle by increasing amounts of debt. Education debt increased. Medical debt increased. Housing debt increased. The Federal debt increased to maintain our military and retirement social programs.
But obviously, because wages stagnated, it was merely a matter of time before debt alone could not sustain our lifestyles. This status quo finally broke in 2008 with the great financial crisis and the housing market crash revealed the house of cards. This should have been the wake up call moment…but it wasn't. We instituted QE measures and dropped interests rates to try and encourage the recovery….and then when just didn't stop. Why? Because low interest rates, make it more appealing to ….you guessed it….take on debt.
This worked, which is why we saw a bull market throughout the 2010s. At least, it worked until we face another crisis, and we used up the last of our tools.
Now the chickens are finally coming home to roost. We have to raise interest rates or the dollar will just become worthless. This is causing what I call, the Great Deleveraging. No more debt to keep us happy anymore. They say it's supply chains, putin, covid….they can all be somewhat influential. But to ignore the glaring role of accumulating debt to finance our unsustainable lifestyles is ignorance.
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