Our Phantom Middle Class

Our Phantom Middle Class. By Charles Hugh Smith.

Of the many things we cannot bring ourselves to admit, one of the most consequential is that our vaunted middle class is illusory, a phantom of our imagination rather than a reality. The reality is the vast majority of the nation’s wealth and income has been diverted from the middle class to those at the pinnacle of the wealth-power pyramid and the technocrat / financier insider class (the top 10%) that serves the interests of those at the pinnacle.

This transfer has accelerated rapidly in the 21st century as virtually all the real income gains of the past 20 years have flowed to the top 0.1%. …

As for wealth: the top 0.1% own more than the bottom 80%, the top 1% own 40% of all private wealth, and the top 10% own 90%.

If the top 10% own 90% of the wealth and has captured virtually all the income gains of the past 20 years, then isn’t it obvious America has no middle class? What the traditional middle class — generally defined as the 50% between the bottom 40% and the top 10% — own is debt and a feeble grasp on very thin reeds of capital. …

Broadly speaking, the key assets of the middle class are capital and agency, with “capital” being defined as financial, intellectual and social capital that generates income, earned and unearned, and “agency” defined as control over one’s life and options and having a say in public decision-making.

Understood in this way, the 50% between the bottom 40% and the top 10% own precious little income-producing capital and possess very little agency. The political class serves the top 0.1% and only gives lip-service to the PR-worthy convention of a middle class in the form of platitudes. …

Even the top 10% is misleading, as the vast majority of capital and agency are held by the top 1% and to a lesser degree, the top 5%. The actual capital and agency of those below the 5% mark falls off rapidly, effectively reaching near-zero about the 15% mark. …

As for pensions, these promises on future energy and income gains are only geared for an economy of ever-expanding energy, productivity and production of surplus goods and services. As America has substituted speculation for these real-world gains, pensions are also one encounter with reality away from disappearing into the mists.

It’s all about the money. At the root of identity politics, critical race theory, corruption, election manipulation, cultural Marxism, and all the other nonsense tearing western civilization down at the moment, is money. It’s a squabble over who gets what. And it happens even though we all know that love of money is the root of all evil.

Money underpins society. It both facilitates exchange and production, and is our accounting system, a way of keeping score.

The corruption of the money system by bankers and government over the last three centuries strangely gets ignored almost completely by the media. Hardly anyone knows where money comes from any more, or how it is manufactured (just ask around, accounts differ substantially). Fortunately, the trend of the last three and a half centuries towards ever easier money in banking has almost run to exhaustion. It’s a one-way street due to the ever accumulating debt, and the end is in sight. The climax might be a decade away yet, or it could be upon us tomorrow. Some sort of great reset will then have to occur. Not so coincidentally, people are increasingly talking about an imminent “reset” in all sorts of contexts.