I want to put some context around the “wtf” predicament you find yourselves in today. $2.6 trillion in car and student loans is no joke. Add credit card debt to boot and yeah, there is no sugar coating it. But I believe it’s important that you be able to identify and discuss the specifics around what is a societal altering reality. I want to explain why it is what it is and how it happened. You deserve to understand these issues as well as anyone.
The ugly truths…
- You will never have a positive net worth
- You will never retire
- You will never own a house
- You will never own a new car
- You will never own a new smartphone
- You will never receive a pension
- You will declare bankruptcy if ever you have catastrophic health issues
- Your purchasing power will never go up
- If you’re lucky enough to get a good job but lose it you will never get another one
- Your children will be worse off than you
You are the first generation to truly have no chance at the “American Dream” but you will not be the last. The American way of life is now a serfdom. Everything will come with a monthly payment; an annuity to corporate America and its controlling shareholders. Apple is a perfect example.
Apple’s phones are too expensive for its customers to purchase (because real incomes haven’t increased in three decades) so we finance them directly or through the service carrier (e.g. AT&T). These corporations collect your monthly payment every month and forever because the phone is designed to break before it is paid off and so you enter another phone contract – they call it your 2 year upgrade.
Apple has amassed $250 billion in cash from its customers and just announced it would send $100 billion of those collected rents to shareholders. The vast majority will go to a few extremely wealthy individuals. That is the definition of serfdom and Apple is the new Sheriff of Nottingham.
The following chart depicts the existing extraction model we blindly participate in.
I’ve coined this The Economic Extraction Model (TEEM). There is no I(ncome) in TEEM.
The corporate class has figured out a way to print money, stick the respective liability that comes with it to the American consumer while channeling the asset portion (i.e. dollars) into their own equity accounts. This is America’s Economy.
You have been deceived that manufacturing jobs are “old world economy” despite the fact Americans consume more manufactured goods than ever before. The reality is shareholders and corporations understand very well they don’t have to pay you an income and you will still choose to buy their products with credit and welfare. If you think I’m making this up let me show you the observable data.
The next chart shows us how much credit and welfare there is in America per person. This means that for every baby, child, teenager and adult in America today there is about $16,000 of credit and welfare. But the shocking revelation is not even the level… it’s the trend.
There has never been a year where this figure declined.
The system is predicated on all of us taking on more debt, forever. The reason is simple. Shareholders demand perpetual growth in the money they are sent by the corporations they control. But in a system where our incomes are being redirected to shareholders the only way for sales growth is through credit and welfare.
Every dollar of debt we take on turns into revenues for corporations. You are being used as a conduit to funnel money through to shareholders and C-suite executives and indebting yourselves by doing it.
The irony is that as consumers your spending is 70% of the total economy and so the economy is just a reflection of the way you spend. Don’t like the way the economy is then change the way you spend. Stop reinforcing a system that is designed to take your money and gift it to the wealthy. It’s really that simple.
Local & independent businesses do a far better job at using your consumer dollars in a way that stimulates widespread prosperity. They invest your spending back into the economy rather than gifting it out to shareholders through record cash distributions. Here’s a joint study by some prof’s over at Harvard, UCLA and NYU that makes the same conclusion.
By choosing who gets your money you hold more power than shareholders to make demands of CEO’s. But when you fail to use that power it defaults down to shareholders who never fail to use it for their own advantage.
It is so essential to understand that the way you spend and who you choose to buy from shapes the world. Your spending is a reflection of you, your values and the world you want to live in. This needs to be a life lesson we teach our kids at a young age because the implications have a profound impact on society. If the economy i.e. your spending isn’t lining up well with you and your values it’s time to make an adjustment in your spending choices. Become empowered.