1971 was an important year for the monetary system… and the labor market
As we can see, the goods trade deficits began to widen by the mid-1970s. With regards to the widening trade imbalances, the catalysts for this long-term trend were established and set in motion 50 years ago, in 1971.
Let’s look at the changes to the demographics of the labor pool since then.
Our government sellout; The 50-year transformation of the labor market pool and the destruction of the middle-class
When it comes to analyzing the long-term demographic trends in the labor market, we should consider the causes behind the long-term trends in the goods trade balance as the independent variable, while everything else depends on these causes to the changes to the goods trade balance.
I submit that the causes of the long-term explosion in the goods trade deficit were directly responsible for the transformation of the United States’ labor market and college industry, while degrading its citizens’ standard of living relative to the rest of the world.
When I compare the 1971 middle-class lifestyle to today, I’m being deliberate in the selection of this time frame. Of course, the lifestyles of 1971 pertain to those of 50 years ago. But 1971 was also a watershed year for our monetary system and the global economy.
The United States throws the American worker under the bus
In 1971, President Nixon shut the gold window to international transactions, while Henry Kissinger began to hold secret meetings with Zhou Enlai, with the express purpose of building up CCP China and its economy.
Subsequent to Nixon’s meeting with the heads of the CCP in 1972, the global corporations were encouraged to begin offshoring manufacturing jobs to mainland China. In return, China would accept US dollars for as long as the globalists demanded.
Around the same time, Kissinger cut a similar deal with OPEC for global oil supplies. Thus, during the early 70’s, the world began to be flooded with U.S. dollars. Although these international dollars were no longer guaranteed with gold; theoretically speaking, if these dollars could remain overseas, domestic price inflation would not rise as quickly as monetary inflation. Although investor resistance to these new programs resulted in rising price inflation throughout the 70s, these experiments ultimately worked, and by 1980, price inflation and interest rates/bond yields began to ebb.
In essence, the United States elite were willing to accept ever widening balance of payments and trade deficits in return for transforming the U.S. dollar into the global reserve currency. This phenomenon is featured as the cornerstone of the Triffin paradox. We could say that the elites running the United States were more than eager to throw the American workers under the bus in order to achieve the objectives of the new world order.
The Triffin dilemma or Triffin paradox is the conflict of economic interests that arises between short-term domestic and long-term international objectives for countries whose currencies serve as global reserve currencies. This dilemma was identified in the 1960s by Belgian-American economist Robert Triffin, who pointed out that the country whose currency, being the global reserve currency, foreign nations wish to hold, must be willing to supply the world with an extra supply of its currency to fulfil world demand for these foreign exchange reserves, leading to a trade deficit.
Wikipedia – Triffin paradox
As anyone can see, the trade deficits here in the states began to widen in the mid 1970s, and by the end of the Carter regime, these trade and balance of payments deficits began to grow for the first time in the nation’s history.
A demoralized labor pool and how the college industry was born
The middle-class lifestyle from 50 years ago is now worth a million bucks, and two income earners can no longer achieve the lifestyle that one wage once provided.
When comparing middle-class lifestyles over various time frames, we should consider both the quantitative and qualitative aspects in our analysis. When we view through this lens, it becomes increasingly clear that the qualitative advantages that people enjoyed previously are now very costly in monetary terms today.
Supply-side economics is a macroeconomic theory that postulates economic growth can be most effectively fostered by lowering taxes, decreasing regulation, and allowing free trade.
Wikipedia – Supply-side economics
With the advent of the supply-side shenanigans and Reaganomics, which were just bogus theories that enabled the globalists to offshore the dollars and transfer the wealth and power to ChiComm China, the media and government began to promote job retraining and college education as a way for the American worker to stay competitive in an ever evolving workforce.
By the time the early 80s rolled around, high school students who previously didn’t need a college degree, were actively being encouraged to attend college. Previously to all of this, a college education wasn’t required to succeed in the workforce. The jobs that had been offshored to China and the other developing nations were previously available to Western citizens. For most of these jobs, there was no need obtaining a college education. But in order to achieve the objectives of the new world order, while masking the monetary inflation of the Western fiat currencies, the elites needed to export inflation while importing deflation. As a result, these once precious jobs were exported to cheaper global outposts, where cost-advantage arbitrage became the objective of free trade.
For example, living the middle-class lifestyle of 1971 meant that the family could afford to let the mother stay home and care for the children. When I was a young child 50 years ago, my mother didn’t work, nor did any of my friends’ mothers. Perhaps a couple mothers worked part time 15-20 hours a week, but they were always home for the children when school got out.
My friends’ mothers were the cub scouts den leaders. None of my friends’ parents had college degrees, nor did my parents. My father dropped out of high school at 16, and we were able to make ends meet and still own a house on Long Island. We had large families and plenty of food.
Today, in order to achieve these goals, both parents normally need at least a bachelor’s or graduate degree, and if the mother stays home, the husband better make good money, and have plenty saved up for retirement, because the defined benefit plans and pensions are gone. Moreover, the purchasing power of the monthly Social Security payment has been nibbled away over the decades.
Thus, based on just domestic temporal changes to PPP, I estimate that by the time the primary income earner has reached his mid to late-40s, the balance of a household’s defined contribution assets should be about $500k to make up for these retirement benefit changes.
Thus, the genesis of the current dilemmas we face regarding escalating college costs and the degradation of the wage base can be traced all the way back to the early 70s with the transfer of the country’s manufacturing base to our existential enemy.
While the manufactured feminist campaign during the 70s encouraged women to leave the house and enter the workforce, the transformation of housewives into working drones was borne out of necessity. Fathers could no longer earn enough to maintain the same middle-class lifestyle of just several years prior. To make matters worse, women and men now both compete for the same jobs, which just works to suppress wages further. Adding mass immigration into this mix just creates an additional burden that impacts wage base growth. It is no longer uncommon for some family units to possess three wage earners.
So, how do we turn this around? The answer is, we can’t. But, if we recognize the dilemmas, at least we can work to overcome them. This was the primary reason why I always recommended owning income-generating assets.