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Most of these graphs can be explained by the Nixon shock as other people have mentioned. This also factored into what is considered backing a currency, in this

Most of these graphs can be explained by the Nixon shock as other people have mentioned. This also factored into what is considered backing a currency, in this case the global reserve currency. Leading up to the “Nixon shock” there was a decades long move away from direct gold to dollar conversion. The replacement was the petrodollar combined with the move to more of a fiat reserve currency. Then you had a geopolitical struggle over the 1970s with oil producing countries that exists to this day. By 1979, Iran’s revolutipn happened which pushed the U.S. closer to the Saudis, cementing the defense agreement that had been in place for decades, itself mirroring one the British had with the House of Saud. The petrodollar concept underpinned much of the next few decades and we have only begun moving away from it. Since the debate at the end of WW2 that led to Bretton Woods, which currency or the Bancor would handle reserve currency functions, in addition to the petrodollar, the U.S. bond and treasuries specifically have been closely tied to this system. Also during the 70s, you had China begin opening up, then as a way to kind of solve the trifflin dilemma, the U.S. would grow the world economy being an importer, so long as the money found its way back with treasuries and other foreign investments. Japan began playing a bigger role here too and as everyone continued industrualizing and globalizing, the U.S. economy grew along with it because of this system. It was also a great way to sort of export inflation along the way too. A big problem in the 70s that we are seeing again today. So if a big crash is coming, expect another Bretton Woods type agreement first with an attempt to control the strength of the dollar. The difference this time is that there really isn’t another China to bring into this system, and in fact, many foreign countries have looked to avoid using USD all together. Just ask Russia about that. Of course, these are just a few reasons for all of this. There are many factors, like the increase in productivity from computing, and advances in other industries that increased productivity and output. Historically you will see patterns like this, similar ones exist between 1929-1945, 1864-1918, and so on. Unfortunately, everytime this system is challenged, a sort of global reordering, there are economic crashes, and often large wars. We might be seeing another example of this now…

SahAssar 4y ago
How does that explain why only medium/lower class incomes have stagnated?
- mmarq 4y ago
  Because their productivity hasn’t increased as much as that of people with higher incomes. The productivity of surgeons and software developers increased significantly, and so their incomes, while cleaners and factory workers are not much more productive than 60 years ago.
  - Ekaros 4y ago
    How much more productive surgeons are? As in patients operated per working day or week? Outcomes surely have improved, but I'm wondering about speed in operation it self, not recovery.
    - mmarq 4y ago
      If outcomes have improved, productivity has increased by definition. You don’t measure the productivity of people working in intellectual professions only by measuring units produced per day.
      - Ekaros 4y ago
        Actually I think you should when that work is not scalable. Surgeons can very well be measured by how many patients they operate on. And quality improvements are a thing, but how much more productive is there? 1,1x or 2x or 3x? Probably not magnitude more. So really their pay should only be that much more...
        mmarq 4y ago
        If you can completely fix a hernia with 99% success at the first try without a hospital stay, you are significantly more productive than somebody that has a 50% success rate and that requires patients to stay in hospital for a week, even if you operate on the same number of patients.
    - Dracophoenix 4y ago
      Speed of operation or lumps of labor per second is not the only applicable metric and, outside of certain cases, it's not a very good one. Average patient health (arguably an ill-defined term) has many ways of being assessed: * Fewer deaths from preventable diseases * Breakthroughs in pharmaceutical research production * New and improved medical devices to counter chronically debilitating sicknesses * An increase in elective surgeries with fewer long-term effects * Increased longevity across the globe
confidantlake 4y ago
Why would an increase in productivity make people worse off?
- vineyardmike 4y ago
  Because people aren’t literally worse off. Just different-off. Housing is more expensive, but as others have said, there’s a growth in 2 income households so if you account for “percent household spend” instead of per capita spend it’s a more reasonable number. At the same time, a lot of that productivity has gone into leisure activités that weren’t available before. Growth in games and movies and travel etc.
  - diffeomorphism 4y ago
    > it’s a more reasonable number. No, absolutely not. House prices have grown much faster than inflation even if you introduce a fudge factor 2. > Growth in games and movies and travel etc. Is that like "eat cake"? Housing is incredibly more expensive, education is incredibly expensive, but don't worry movies are cheap and that more than makes up for it, right?
    - imtringued 4y ago
      Maybe you should stop with the hypocrisy. The people that complain about expensive housing are the most annoying because they are the ones who least care about making housing affordable, they just pretend that they care to strike up some virtue points. The moment you mention land value taxes people are going to argue how evil it is to give everyone enough housing and how the rights of a single family owner are more important than the rights of renters and how multi family homes are ghettos and how nobody should suffer the disgrace of living in one.
    - vineyardmike 4y ago
      > House prices have grown much faster than inflation even if you introduce a fudge factor 2. No prices have grown a lot in major metros where Software people work. I’m sure SF is insane. But also NYC according to the article has “only” grown by 200% - so it’s literally cheaper on a household level if you include wage growth (assuming you go from single income to double income), and I’m sure Cleveland has a lot less growth. According to (1) housing has only grown 150% nationwide. It’s not “eat cake”. Houses have grown bigger over time. They gained electricity and running water and 2 car garages and high efficiency water heaters. But people also replace their now 2 car often and buy new iPhones and stream high qualitymovies from their large high def TVs. At some point houses don’t need to get bigger and theirs no more room in Silicon Valley for single family homes but there’s always room for more consumerism delivered faster priced cheaper and plenty of businesses who will deliver. Proof is that housing is becoming a smaller part of the GDP (0) despite becoming “unaffordable expensive”. As a bonus, according to this article (2), houses are 150% larger and rentals are 200% larger since 1970s. So I guess you get what you pay for? (0) https://eyeonhousing.org/2018/04/housing-share-of-gdp/ https://eyeonhousing.org/2018/04/housing-share-of-gdp/ (1) https://listwithclever.com/research/home-price-v-income-historical-study/ https://listwithclever.com/research/home-price-v-income-hist... (2) https://www.propertyshark.com/Real-Estate-Reports/2016/09/08/the-growth-of-urban-american-homes-in-the-last-100-years/ https://www.propertyshark.com/Real-Estate-Reports/2016/09/08...
simne 4y ago
:)))))) You remembered me political talks in Ukraine around 2008. Most of them beginning with phrase "Timoshenko behavior leads to crisis", and I asked "are you going to say, Timoshenko called WORLD crisis?"

SahAssar 4y ago

How does that explain why only medium/lower class incomes have stagnated?

mmarq 4y ago
Because their productivity hasn’t increased as much as that of people with higher incomes. The productivity of surgeons and software developers increased significantly, and so their incomes, while cleaners and factory workers are not much more productive than 60 years ago.
- Ekaros 4y ago
  How much more productive surgeons are? As in patients operated per working day or week? Outcomes surely have improved, but I'm wondering about speed in operation it self, not recovery.
  - mmarq 4y ago
    If outcomes have improved, productivity has increased by definition. You don’t measure the productivity of people working in intellectual professions only by measuring units produced per day.
    - Ekaros 4y ago
      Actually I think you should when that work is not scalable. Surgeons can very well be measured by how many patients they operate on. And quality improvements are a thing, but how much more productive is there? 1,1x or 2x or 3x? Probably not magnitude more. So really their pay should only be that much more...
      - mmarq 4y ago
        If you can completely fix a hernia with 99% success at the first try without a hospital stay, you are significantly more productive than somebody that has a 50% success rate and that requires patients to stay in hospital for a week, even if you operate on the same number of patients.
  - Dracophoenix 4y ago
    Speed of operation or lumps of labor per second is not the only applicable metric and, outside of certain cases, it's not a very good one. Average patient health (arguably an ill-defined term) has many ways of being assessed: * Fewer deaths from preventable diseases * Breakthroughs in pharmaceutical research production * New and improved medical devices to counter chronically debilitating sicknesses * An increase in elective surgeries with fewer long-term effects * Increased longevity across the globe

confidantlake 4y ago

Why would an increase in productivity make people worse off?

vineyardmike 4y ago
Because people aren’t literally worse off. Just different-off. Housing is more expensive, but as others have said, there’s a growth in 2 income households so if you account for “percent household spend” instead of per capita spend it’s a more reasonable number. At the same time, a lot of that productivity has gone into leisure activités that weren’t available before. Growth in games and movies and travel etc.
- diffeomorphism 4y ago
  > it’s a more reasonable number. No, absolutely not. House prices have grown much faster than inflation even if you introduce a fudge factor 2. > Growth in games and movies and travel etc. Is that like "eat cake"? Housing is incredibly more expensive, education is incredibly expensive, but don't worry movies are cheap and that more than makes up for it, right?
  - imtringued 4y ago
    Maybe you should stop with the hypocrisy. The people that complain about expensive housing are the most annoying because they are the ones who least care about making housing affordable, they just pretend that they care to strike up some virtue points. The moment you mention land value taxes people are going to argue how evil it is to give everyone enough housing and how the rights of a single family owner are more important than the rights of renters and how multi family homes are ghettos and how nobody should suffer the disgrace of living in one.
  - vineyardmike 4y ago
    > House prices have grown much faster than inflation even if you introduce a fudge factor 2. No prices have grown a lot in major metros where Software people work. I’m sure SF is insane. But also NYC according to the article has “only” grown by 200% - so it’s literally cheaper on a household level if you include wage growth (assuming you go from single income to double income), and I’m sure Cleveland has a lot less growth. According to (1) housing has only grown 150% nationwide. It’s not “eat cake”. Houses have grown bigger over time. They gained electricity and running water and 2 car garages and high efficiency water heaters. But people also replace their now 2 car often and buy new iPhones and stream high qualitymovies from their large high def TVs. At some point houses don’t need to get bigger and theirs no more room in Silicon Valley for single family homes but there’s always room for more consumerism delivered faster priced cheaper and plenty of businesses who will deliver. Proof is that housing is becoming a smaller part of the GDP (0) despite becoming “unaffordable expensive”. As a bonus, according to this article (2), houses are 150% larger and rentals are 200% larger since 1970s. So I guess you get what you pay for? (0) https://eyeonhousing.org/2018/04/housing-share-of-gdp/ https://eyeonhousing.org/2018/04/housing-share-of-gdp/ (1) https://listwithclever.com/research/home-price-v-income-historical-study/ https://listwithclever.com/research/home-price-v-income-hist... (2) https://www.propertyshark.com/Real-Estate-Reports/2016/09/08/the-growth-of-urban-american-homes-in-the-last-100-years/ https://www.propertyshark.com/Real-Estate-Reports/2016/09/08...

simne 4y ago

:)))))) You remembered me political talks in Ukraine around 2008. Most of them beginning with phrase "Timoshenko behavior leads to crisis", and I asked "are you going to say, Timoshenko called WORLD crisis?"