This blog is about many things, but, foremost, it is about living a life of freedom. Intellectual capitalism means freedom of choice -- in the marketplace, in the home, in our thoughts. But being middle class isn’t what it used to be. Even though we have more technology and gadgets, are always looking for a nicer home, enjoy speedier cars, things couldn't be more different than in the past. The middle class of the 1950s and 1960s could afford to have stay-at-home wives, were content with smaller homes for more children. For mort households, it takes more hours of paid labor and more borrowing, to support a lifestyle we've grown accustomed to.
A suitable inaugural post references this Financial Times article [ http://www.ft.com/cms/s/0/ee3f4c28-07f4-11dd-a922-0000779fd2ac.html ]. It would seem America’s economic fluctuations are part of a new business cycle that has emerged in the last 20 years. This new cycle is based on financial booms and cheap imports. Upswings provide collateral that supports debt-financed spending. Borrowing in the recent past was supported by an easing of credit standards. Interesting new financial products increase leverage and widen the range of assets that can be borrowed against -- think "jumbo loans" and mortgage-backed securities. The dollar promoted cheap imports, which offset the effects of wage stagnation.
Before 1980 the business cycle seemed to be based on wage growth tied to productivity and strong employment. Wage growth, rather than borrowing, provided the basis for inflation. This reasonable inflation might have been a foundation for the public's renewed interest in investment spending, which in turn drove productivity gains and output growth.
In the second decade of the new millennium, we as individuals face new choices -- in consumption, in how we live our lives, and more.
