A few days ago, the website of The Washington Post ran a story with this headline–“Happy Days No More: Middle-class families squeezed as expenses soar, wages stall.”  No shit, Sherlock.  The article tells us the following:

“Wages for millions of American workers, particularly those without college degrees, have flat-lined. Census figures show the median household income in 2012 was no higher than it was 25 years ago. Men’s median wages were lower than in the early 1970s.

Meanwhile, many of the expenses associated with a middle-class life have increased beyond inflation. This includes college tuition, whose skyrocketing cost has laid siege to a bedrock principle of the American Dream: that your children will do better than you did.”

Did you get that part about median household income?  It is no higher than it was 25 years ago, back in 1987.   That was when mullets ran free, “Happy Days” the TV show had ended just three years earlier, Ronald Reagan was still in office, and the Nixon Shock of 1971 was just 16 years old but already the financialization it caused was wreaking havoc on us in the form of Black Monday and the ongoing (at that time) S&L crisis.

So median household income hasn’t risen in 25 years, but debt has soared.  As Charles Hugh Smith of “Of Two Minds” points out about wages versus debt since 1983:

“Wages also rose—but household debt rose at a much higher rate than wages.“

See the link for a chart showing this; Smith goes on to point out that “wages tripled but household debt rose sevenfold.”

So what’s the solution?  Financialization has to be undone.  Crony capitalism–a more pleasant term for fascism–must be dismantled.  Or we could try the most egalitarian, radically equalizing solution of them all–self-issued currency.  The first reaction to such an idea might be to recoil in horror and protest that such a thing would be unworkable, but as an article at The Air Standard points out:

” …keep in mind that all money is fictional.  In fact, all money is already self-issued, as will be shown below.  Money must be created by someone, somewhere, because money does not exist in nature–except to the extent that a natural item like gold or salt might be assigned the properties of money.”

How is money currently self-issued?  The article explains:

“The Federal Reserve itself tells us that “banks actually create money when they lend it.”  The emphasis in that little nugget is on the role of the bank in the money-creation process, but that emphasis is completely misplaced.  That’s because what is implied in that statement is that for a bank to “create money,” someone first has to come to the bank and ask to be lent money.  In other words, a bank is powerless to “create money” unless a “borrower” comes along.

Now, how does the all-important “borrower” get money from the bank?  The borrower writes a check for the amount requested, signs his name, and presents it to the bank.  This check (which is one form of a “note”) is called a “promissory note” in modern parlance (and, to be sure, in less-than-modern parlance), but in reality, the “borrower” is self-issuing the currency he needs, yet he is being forced by law to treat his self-issued currency as though it were issued by the bank (and then having to “pay back” the bank with interest)!  In fact, when you think about it, the ramifications of this completely typical scenario are absolutely insane: the bank doesn’t have the money to lend the borrower until the borrower–who also “doesn’t have the money”–writes the check (i.e., the “promissory note”) to the bank to create the money, which is then called a “loan” from the bank to the borrower.”

This is not crazy talk, either.  All of this was recently confirmed by a press release from the Bank of England, which described the way banking works not just in England but also in the United States:

“When a bank makes a loan, for example to someone taking out a mortgage to buy a house, it does not typically do so by giving them thousands of pounds worth of banknotes. Instead, it credits their bank account with a bank deposit of the size of the mortgage. At that moment, new money is created.”

As David Graeber (author of the seminal “Debt: The First 5,000 Years) pointed out in an article about the Bank of England press release:

“There’s really no limit on how much banks could create, provided they can find someone willing to borrow it.”

It’s an idea whose time has come: cut out the middleman who creates fake money and let each individual create his/her own fake money.  No more financialization=no more inequality.  Simple as that.

Oh, and happy Cinco de Mayo!  Don’t let your margarita consumption make you forget that we have to end financialization ASAP!