This Wealth Destruction Process is Inevitable – The Bubble Party is Over
Leverage: The numerical ratio of borrowings to assets.
Economic Bubble: A periodic swing in the value of a class of assets when the economic value is excessive beyond reason. Economic Bubbles result in Burstings of the Bubble or “Crashes”.
Quantitative Easing: The purchase of the debt of a nation by itself. This happens by printing in money and the usual ending is not what governments expect.
Thomas Jefferson – “If the American people ever allow private banks to control the issue of currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered.”
During the last 25 years the USA and indeed the world went through the best economic era in a very long time… This unusual economic boom was brought on by new technologies, new ideas, and new ways of managing financial affairs… In the last 25 years we became more and more money oriented as we all became entrepreneurial. This happened as our printed and video media (Television) started to “deify” and profile the fabulous lives of the wealthy. As a result, we as a society shifted its values from thrift, saving, and hard work towards consumption and living the rich lifestyle… As our values changed we started speculating more and more with our savings. We all wanted “in” and decided to redeploy our investments from savings and conservative assets and started to invest in more speculative assets than our safe “bonds” and bank accounts. The well known speculative bubble developed.
Unfortunately these eras don’t last too long… We can no longer flip each other the same piece of overpriced asset. (When we all move to one side of a ship it starts to lean over). No “bubble” can sustain itself. We now have reached the heights of the boom and are experiencing the inevitable “crash”, This web site is here to collect the articles in the media that document how people are dealing with the end of the bubble… By contemplating what happened and why we can make better choices. This site hopes to educate you…
Dewealthification is an apt adjective for the current wealth destruction that is suddenly changing our “boomer” life styles. We in America have been steadily wealthified since our country's founding by a combination of being born or living in a naturally rich country, being thrown together with a bunch of enterprising and creative people, having our friends and enemies destroying each other in 2 World Wars, and the establishment a “fair” social compact between government, industry and our politicians. Through the confluence of time, history, power, and culture our country has experienced immense wealth creation in the last century. In the last 20 years we have not only steadily wealthified but have leveraged our wealth as a country. “Leverage" is the act of borrowing to make larger bets.
Humans generally leverage themselves like we have by taking more risks when they know “deep down” that their basic needs are covered. As Alexander Tyler said aptly “Once a society becomes successful it becomes arrogant, righteous, overconfident, corrupt, and decadent… overspends… costly wars… wealth inequity and social tensions increase; and society enters a secular decline”. Our actions in the last 20 years indicate that we feel overconfident, act arrogantly and behave decadently as a country. Look at our politicians. They ignore the basic realities around them. I must conclude that we have “leveraged ourselves up” since we collectively have become rich enough to take significant more risks without endangering our basic needs. Leveraging up allowed us to live even beyond our “wealthy” means for the last 20+ years.
This leverage was enabled by the government (ourselves) and by our creditors. This living beyond our means provided us with even more “wealth” and with it amazing lifestyles…
SUV’s, McMansions, Vacations in Fiji, etc… Unaware of the implications we leveraged our future and apparently did not care that the end point would mean great hardship as we get back to reality.
Yes… our American way of life has been pushed to the maximum leverage point. We have now leveraged beyond our ability to pay back with ease… Predictably just as the wealthification process has reached its APEX, we have all coincidentally become unmotivated to work hard and lost our political will to change. Who would have thought? As results of all this luxury we have “gotten soft”… We have lost our hunger, and our “mojo”. We have become mere profligate consumers.
As of now our politicians and corporations are expectedly trying to prolong the “party”. It’s a foolish effort. Instead of prolonging the party we need to halt it immediately. Perhaps gradual slowdown is best… But halting the party is extremely difficult since we have all become indoctrinated that we all are “special” and that the good life our “right” for living here. Its time to give it up folks.
This period will be a long and painful process. It will take as long as it takes to change our views, beliefs, and our lifestyles. This will likely take 5–10 years.
This is now the era of Dewealthification. The era of backward mobility… As I see it this is healthy and absolutely necessary to bring us back to strength. By understanding it via self observation; we can stop being stressed out completely by it. We should recognize that we individually did not cause this party nor the ensuing collapse. We did this collectively as a society. We all took part and no doubt enjoyed it…
The purpose of this site is to explain and document this dewealthification process. This site aggregates other’s experiences and presents views of the process so that we may feel OK about ourselves.
I appeal to our politicians to stop fighting it. We must now let it happen. Thankfully they cannot control it… The Genie is out of the bottle… We now need to accept it and watch the process without bitterness…
Our society’s goal should be to learn from this “bad behavior” and pay for the overspending… and come out reformed and replenished for the next era…
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