The US Economy Is a Giant Ponzi Scheme

“The hallmark of an economic Ponzi scheme is that the operation of the economy relies on the constant creation of low-grade debt in order to finance consumption and income shortfalls among some members of the economy, using the massive surpluses earned by other members of the economy.”

“Debt-financed prosperity is typically abetted by central banks that encourage consumers and speculators to borrow (the demand side of Ponzi finance) and also encourage yield-seeking demand among investors for newly-issued debt securities that offer a “pickup” in yield (the supply side of Ponzi finance). The heavy issuance of low-grade debt, and the progressive deterioration in credit quality, ultimately combine to produce a debt crisis, and losses follow that wipe out an enormous amount of accumulated saving and securities value. The strains on the income distribution are partially relieved by borrowers defaulting on their obligations, and bondholders receiving less than they expected.”

This guy’s analysis is a bit complicated but the charts are worth it. He shows how the US worker has been paid less and less as a % of GDP since the 60’s:


One of the most important points is that further gains in employment will not boost the economy beyond 2% GDP. If that is so we have reached the apex of growth this cycle.

However the inevitability of a collapse in the short run, the key to predicting the collapse is a decline of market internals(Market Internals – Advance-Decline Line. The Advance–Decline (AD) Line is a stock market technical indicator used to measure the number of individual stocks participating in a market rise or fall. … Count up all the stocks down on the day.)…nzi-scheme

When adjusted for inflation, wage growth since 1967 has been nothing short of a disgrace. The United States has suffered close to five decades of real wage stagnation.

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