The U.S. has "asset feudalism" (propping up the S&P), while China has "factory feudalism" (subsidizing exports). All these systems concentrate wealth and power, leaving the bottom 90% of the population with little capacity to consume, which leads to global stagnation.
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Instead of a universal productivity boom, AI will eliminate repetitive white-collar jobs. This will shrink the consumer base, reducing overall demand and creating a powerful deflationary force, further entrenching a feudal economic structure with fewer 'lords' and more 'serfs.'
The primary driver of wealth inequality isn't income, but asset ownership. Government money printing to cover deficit spending inflates asset prices. This forces those who understand finance to buy assets, which then appreciate, widening the gap between them and those who don't own assets.
To counter the economic threat from China's state-directed capitalism, the U.S. is ironically being forced to adopt similar strategies. This involves greater government intervention in capital allocation and industrial policy, representing a convergence of economic models rather than a clear victory for free-market capitalism.
The current system is locked in because policymakers fear the consequences of letting asset prices fall. A genuine shift will only occur when a political figure gains power with a mandate to help the middle class, even if it means 'suffering the consequences' of a market crash.
When government policy protects wealthy individuals and their investments from the consequences of bad decisions, it eliminates the market's self-correcting mechanism. This prevents downward mobility, stagnates the class structure, and creates a sick, caste-like economy that never truly corrects.
The U.S. is shifting from industry supporter to active owner by taking direct equity stakes in firms like Intel and U.S. Steel. This move blurs the lines between free markets and state control, risking a system where political connections, not performance, determine success.
There are two distinct economies operating simultaneously. Those with a capital base (equities, real estate) can use financial engineering and leverage to thrive. Meanwhile, individuals relying solely on wages are being crushed by inflation, as their income fails to keep pace with rising costs.
U.S. economic policy is no longer aimed at broad prosperity but at ensuring the S&P 500 index continues to rise. This singular focus creates negative side effects, like suffering for the majority of the population who rely on wage growth rather than asset appreciation.
The U.S. economy can no longer be analyzed as a single entity. It has split into two distinct economies: one for the thriving top tier (e.g., AI and tech) and another for the struggling bottom 60%. The entire system now depends on spending from the rich; if they stop, the economy collapses.
With the top 10% of earners accounting for half of all consumer spending, the U.S. economy has become dangerously top-heavy. This concentration creates systemic risk, as a stock market downturn or even a minor shift toward caution among this small group could trigger a sharp recession, with no offsetting demand from the rest of the population.
