This video explores a potential revolution in US monetary policy and central banking, focusing on the concept of a "silent depression" affecting the American middle class. The video analyzes the current economic situation, highlighting the disconnect between economic growth and stagnant real wages, and sets the stage for a discussion of proposed solutions in part two.
Stagnant Real Wages: The video argues that real wages for the average American have declined for at least 25 years, significantly underperforming GDP growth. This is supported by data comparing average hourly wages to GDP, M2 money supply, and gold ounces per hour worked.
Shifting Dollar Creation: Private bank credit creation, once a significant driver of the money supply, has dramatically declined since 2008. This shift has been replaced by increased government spending and deficits, leading to a higher debt-to-GDP ratio (currently over 125%).
Consequences of High Debt: The increased government debt burden, coupled with rising interest rates, threatens economic stability. The video emphasizes the importance of keeping interest rates below nominal GDP growth to manage debt effectively.
Wealth Inequality: The video connects the trade deficit (and resulting capital account surplus) to wealth inequality. Foreign investment in US financial assets has benefitted the top 1% disproportionately, while the average American's purchasing power has stagnated or declined.
Need for New Monetary Policy: The current economic situation, characterized by stagnant wages, high debt, and wealth inequality, challenges traditional central banking approaches. The video previews a discussion in part two on radical new visions for monetary policy proposed by figures like David Malpass.
