Standard of Living is Falling

If I only could
I'd make a deal with God
And I'd get him to swap our places
--Kate Bush

Richard Russell claims that American standard of living has declined since he was a teenager, meaning since the late 1930s/early 1940s. This seems a preposterous claim on the surface. After all, today's Americans live longer and enjoy goods and services that people could not even imagine 70 years ago.

But RR's point is that the average American has to work much more now to enjoy a similarly comfortable lifestyle of someone then. What took a single parent's income then now requires two parent's income + borrowing today.

Families from Russell's era commonly lived off the single breadwinner's current income only. They were reluctant to borrow to extend their lifestyles beyond their production.

Not so with today's families. Even with two parents working, families feel compelled to borrow to make up the difference between their desired lifestyle and the lifestyle defined by current income.

"Debt," Russell observes, "is the modern family's way of keeping up their standard of living." They have "little in the way of savings and a lot in the way of debt."

The implication is that productivity for average Americans is falling, not rising.

Left unrestrained, market forces would be correcting this situation. Consumption would be falling, debt would be paid back, and eventually savings would rise as production and consumption regain balance.

Policymakers, of course, are going all in with a bet that they can circumvent the natural re-balancing effect of market forces and force prosperity from ever more borrowing and consumption.

Russell believes that these policymakers are playing a fool's game. He notes, "It's immoral to create money without working or assuming risk. Real, moral money is a call on someone's labor. The current monetary system is immoral and an outrage. As such, its years are numbered."

Sagely said.