Kevin Drum posted this chart earlier today and I think it tells you a lot of what you need to know about our current predicament. Wages for average people are, on some level, the real fundamentals of the economy. And simply put, they haven’t been growing. And yet there’s been all this production. And it’s not as if we’ve been operating as some kind of huge net exporter during this period. All that production’s getting consumed and then a bunch more production is getting consumed. Thanks to an increase in debt and to innovations in debt instruments.
It was typical to hear a little while ago that there couldn’t possibly be anything wrong with the economy because all these people own flat-screen televisions. Now I think we’re seeing that an economy that comes up with new ways to lend average people money is no substitute for an economy that comes up with new ways for average people to earn money.