The Slow Death of the American Middle Class Started in 1971
Chart of the Week #2
Today's chart offers a glimpse into the history of the American middle class. It shows how wages, adjusted for inflation, and productivity rose side by side during its heyday. The harder you worked, the more you earned. It was the key to social and income mobility. And it nurtured a healthy middle class.
This was the golden age of the middle class in America. The cost of living was low and economic opportunities were plentiful.
Then something major happened in 1971. It caused an ever-widening split between work and wages. The chart clearly shows how the real wages of the average person have essentially remained stagnant since the early 1970s.
That’s no coincidence.
In 1971 – or more precisely, on August 15, 1971 – President Nixon killed the last remnants of the gold standard.
I say "remnants" because while the U.S. had already left the gold standard in 1933 for domestic dealings. But non-U.S. people and governments could still exchange dollars for gold at the U.S. Then, in the late 1950s, it became only foreign central banks. That was the last discipline against wild borrowing and spending.
When Nixon ended the dollar's last tie to gold in 1971, it triggered the gradual decline of the American middle class (which is what the graph above illustrates).
Have a lovely weekend!
Lau Vegys
I know that we often say that 'Nixon closed the gold window' or that Secretary of the Treasury Connally made that happen... not to split hairs, but Nixon, Connally and the rest are essentially figure-heads that occupy puppet posts. They are selected and installed at the behest of those that occupy the various global financial houses within the international banking cartel. The incremental ratcheting of monetary inflation is engineered, by design, to diminish the wealth and power of individuals and remove their sovereignty over their respective futures. Given this understanding, it's important to take steps to reduce or eliminate as many tentacles that the State uses to trap the individual and develop relationships with others in terms of the mutually beneficial exchange of value for value.
It's not a wonder that both my husband and I worked our entire lives and never seemed to get anywhere. We finally were able to retire and thanks to a large inheritance, pay off our remaining debts including our mortgage. We are now debt-free but struggling a little because of inflation. Most of our equity is in our home. So, we are a little better off, thankfully, but it took until we were 64 years old... Now the young people here don't have a prayer. Getting ahead in any way, without a lot of family support, is next to impossible.