We're back in the USA after 15 years of living in Europe.
Bethesda is one of America's wealthiest suburbs. Money from all over the nation rolls this way. The playing field is tilted in Bethesda's direction.
I was sitting in the Starbucks, having a cup of coffee, Elizabeth reported. One man next to me was on the phone. He was talking about some deal he had done with the US Army in Afghanistan. It sounded as though he was very happy with it. The man next to me on the other side was on the phone too. He was a jollier fellow, talking loudly about how much money he had made. I thought he was a stockbroker or something like that. Then, I realized he was talking about a contract with the government.
While the rest of the nation has suffered a setback over the last ten years...the Washington metropolitan area has boomed more than ever. Real estate prices are down...but less than other areas.
And when we looked for a house to rent, we expected to be able to name our price. We thought it would be a buyer's market. Not so. Nice houses in Bethesda are still being sought after. How so?
Wars...bailouts...boondoggles - this area loves them. Federal employees' earnings keep going up...and a higher portion of the US national income goes to Washington.
Aughts Were a Lost Decade for US Economy, Workers, says a headline in The Washington Post.
For most of the past 70 years, the US economy has grown at a steady clip, generating perpetually higher incomes and wealth for American households. But since 2000, the story is starkly different.
What was different about it?
There was zero net job creation in the first decade of this new millennium, compared to healthy job growth in each of the previous six decades, continues the report.
No decade going all the way back to the '40s had job growth of less than 20%.
How many jobs were created since 2000? None. Not a single one, net.
If new jobs are not being created, you can't expect working people to do very well. And they didn't. The Aughts were the first decade of falling median income since figures were first compiled in the '60s. And the net worth of American households - the value of their houses, retirement funds and other assets minus debts - has also declined when adjusted for inflation, compared with sharp gains in every previous decade since data were initially collected in the 1950s.
The Aughts were a nasty decade for investors too. Bloomberg reports that the value of all the world's public companies was a bit more than $60 trillion at the end of 2007. Stocks were cut in half in '08. In '09, after the March low, the bounce began. They recovered roughly half of what they lost to end 2009 with a total value of about $45 trillion.
What went wrong? According to the Post account, economists are scratching their heads wondering. What a bunch of morons!
Long-time sufferers of The Daily Reckoning already know what went wrong. GDP figures were positive throughout almost the entire period. But they were phony...they were a fraud. They just measured the rate at which Americans were ruining themselves - by buying things they didn't need with money they didn't have.
It was obvious to us and anyone who bothered to think about it for two seconds that you can't really get rich by spending money. It's NOT spending that makes you rich. It's savings. You have to save and invest...so that you can produce more. Everybody knows that.
But economists don't work for 'everybody.' They work for the government...or Wall Street. Both sectors have a keen interest in making people believe in what isn't so. 'We live in the greatest, most flexible, most dynamic economy the world has ever seen,' said the politicians. 'Yeah...and it will only get better,' added Wall Street.
But it was a fraud. It didn't get better. It got worse. And now, Americans pay the price. Ten years of work...and they're poorer than when they started.
The Aughts were ruined by Wall Street. Washington will ruin the next decade. It will take the lead in spending money it doesn't have on projects it doesn't need. It will lavish money on parasites: Those fellows in the Starbucks...39 million people on food stamps...AIG executives...much of Wall Street...most of the federal payroll.
Instead of competing actively in the world economy - providing goods and services to honest people who are willing and able to pay for them - these people depend on government.
And now, the whole US economy depends on government too - just like the Japanese economy. Now we need (or so we are told) big spending from Washington, or the economy will stop growing. But the 'growth' we are seeing now is not real growth - it is growth in government spending. And like all government spending, it rewards parasites, not the people who actually add wealth.
But heck...it's a New Year. We'll look ahead. What's coming up? Another ten years of backsliding? Or ten years of real growth? Better? Or worse? We'll bet on the backsliding... keep reading.