Engineered for Inequality:
How Inflation and Debt Fuel a Rigged Consumer Economy
Consumerism Mandates That the Majority Stay Poor
That opening statement may make you gulp on your coffee this Friday morning as a bit too abrasive, but if you put all the gaslighting rhetoric from your politicians aside along with the 14,000 hours of education you got between Kindergarten and 12th grade (none of which was about money or the economy surrounding you) it is a fundamental understanding to escape the herd when it comes to your financial wealth.
Consumerism isn't just a cultural phenomenon; it's a fundamental driver of the U.S. economy and the global economies that supply it. It is also the linchpin of the rigged game you and I are playing in by default, that leads to the ever-expanding wealth gap in society.
As of the third quarter of 2024, personal consumption expenditures accounted for approximately 68.24% of the United States Gross Domestic Product (GDP).
This heavy reliance on consumer spending creates a system where continuous consumption is essential for economic stability. However, this system also perpetuates economic disparities, keeping the majority in a cycle of spending and financial insecurity.
The Role of Consumerism in the U.S. Economy
Consumer spending is the backbone of the U.S. economy, constituting nearly 70% of GDP. This means that the economic health of the nation heavily depends on the purchasing behaviors of its citizens. When consumers spend, businesses thrive, leading to job creation and economic growth. Conversely, a decline in consumer spending can lead to economic slowdowns and is when the Government steps in and accelerates their spending to fill the void (think Covid stimulus checks, war, environmental black holes, etc.) to keep the game going. During those declines in consumer spending our politicians pass bills with cute little names like the JOBS Act or the Inflation Reduction Act (which did nothing to reduce inflation or close the wealth gap).
This dependency creates a (print-tax-spend) cycle where the government and businesses encourage continuous consumption to maintain economic stability. Marketing strategies and banker-centric regulatory rules that provide easy access to credit, overdraft fees, and now normalized slap-on-the-wrist fines years after the fact when the banks repeatedly commit consumer fraud to deal us their drug of cheap credit, and the societal pressures fueled by user-generated content pushed through social media, all contribute to a culture of spending and our collective addiction to it.
While this may boost short-term economic indicators and make us feel richer in things and experiences in the near term, it often leads individuals into debt and prevents wealth accumulation. Just look at the data on household debt balances in the last 20 years (published by the Federal Reserve) while we are gaslit by media pundits and politicians that our economy is healthy and better than ever. 99% of the world is a pacified pawn with a bunch of shiny stuff and chronic stress in this rigged game, pretending to be happy and fulfilled. Money may not buy happiness, but debt will certainly rent it for a minute through the quick hit of cheap dopamine it provides.
The Government Stimulus Post-Covid Spiked Spending in 20
Global Dependence on U.S. Consumption
The impact of American consumerism extends beyond national borders. Many countries' economies are intertwined with U.S. consumption patterns. For instance, nations that export goods to the U.S. rely on American consumers to purchase their products, making their economic health dependent on U.S. spending habits. This global dependency underscores the far-reaching influence of American consumer behavior and how much of a house of cards the whole game is to a sudden shift in behavior.
Programmable Inflation and the Money Supply
The Federal Reserve (the world’s predominant crack dealer) aims for a 2% annual inflation rate, a policy designed to encourage spending over saving-purposefully and overtly debasing the purchasing power of the currency it creates. By controlling the money supply through mechanisms like quantitative easing and interest rate adjustments, the Fed influences inflation rates. Inflation is nothing more than a hidden tax programmed into the design that erodes our purchasing power. Think of it like running through a financial thorn bush and bleeding to death over 100 years. Increasing the money supply can stimulate economic activity but guarantees the devaluation of the currency over time, which then drives the assets denominated in that currency higher over time.
This devaluation erodes purchasing power, meaning consumers need more money to buy the same goods and services over time. As a result, individuals are incentivized to spend rather than save, perpetuating the cycle of consumerism. While this may drive short-term economic growth, it also contributes to long-term financial instability for the average person.
The Wealth Gap: Spenders and Savers vs. Asset Owners
In an inflationary environment, those who primarily spend or save in cash are at a disadvantage. Inflation diminishes the value of money saved, and constant spending prevents wealth accumulation. In contrast, individuals who own assets such as real estate, stocks, or businesses often see their wealth appreciate over time, outpacing inflation. The graphic below from Visual Capitalist shows the impact as the top 1% of U.S. households currently hold 31% of all wealth up from 23% in 1990 and the top 10% control 67% of all wealth up from 51% in 1990. The bottom 50% of households have dropped to controlling 3% of all wealth from 4% in 1990. The middle class (40% of society) has seen a drop to 31% control of total wealth from 36% in 1990.
In short, everyone in the world is in debt, but the wealthy borrow debt to consume hard assets and cash-flows from assets first, and 99% borrow debt to survive, enjoy experiences, or buy things that produce no cash flow and become obsolete in short order.
This dynamic exacerbates the wealth gap:
Spenders: Encouraged by societal norms and economic policies to consume, they often incur debt and have little left for savings or investments.
Savers: While they may avoid debt, the real value of their savings diminishes over time due to inflation, especially when interest rates on savings accounts are lower than the inflation rate.
Asset Owners: They benefit from asset appreciation and can leverage their holdings to generate additional income, further increasing their wealth. The wealthy also play by the lesser-known rules of the rigged design by borrowing and refinancing these appreciating assets to take cash out (in the form of new debt) without having an income tax effect, to then purchase more assets and compound their wealth.
Cheap dopamine: Consumerism’s grip on society is further compounded by algorithmic enablers designed to keep people hooked. Cheap dopamine, delivered through pervasive consumer electronics (smartphones) and social media, play a central role in this amplified problem. Every notification, purchase, and unboxing video feeds a fleeting sense of accomplishment, conditioning individuals to seek the next high. Meanwhile, the financing of nearly all purchases—whether through credit cards, buy-now-pay-later services, or low-interest loans—creates the illusion of affordability. This combination keeps the majority locked in a state of FOMO (fear of missing out) and materialism, with the entire world’s temptations literally in the palm of their hand. The utility provided by these tools often feels empowering but is deceptively hollow; it maliciously dehumanizes critical thinking and self-control, leaving individuals reliant on more frequent hits of cheap dopamine to maintain the illusion of prosperity. At scale, this vicious cycle feeds the consumerism machine while eroding true financial and emotional freedom.
Parallel Destruction of Health: It’s not enough that the majority are getting poorer in real terms, but society has gotten far sicker and fatter in parallel in this consumerism model and the supposed richest country in the world is also the most obese. This drives up the inflation of our healthcare system and causes even more to unwind as more than 50% percent of the U.S. Population struggles with morbid obesity. Source
This system ensures that wealth accumulates with those who own appreciating assets, while spenders and traditional savers fall behind and unknowingly play with an incomplete understanding of the rules.
Key Takeaway:
Don’t Hate the Players-Hate the Game, And Start to Play To Win.
Consequences of the Consumerism Model
The current economic model, driven by consumerism and sustained by policies like programmable inflation, has several significant consequences:
Planned Obsolescence: Companies design products with limited lifespans to encourage repeat purchases, leading to increased waste and continuous spending.
Offshoring and Cheap Labor: To meet consumer demand for low-priced goods, companies often outsource production to countries with cheaper labor, which can result in job losses domestically and exploitation abroad.
Environmental Impact: Constant production and consumption contribute to environmental degradation, as natural resources are depleted to create disposable or short-lived products.
These factors not only affect individual financial health but also have broader social and environmental implications.
Breaking the Cycle: Embracing Decentralized Alternatives
To achieve true financial stability and mitigate the effects of a consumer-driven economy, individuals can consider the following strategies:
Invest in Appreciating Assets: Rather than focusing solely on consumption or traditional savings, allocate resources toward assets that historically appreciate, such as real estate, stocks, or bonds. art, collectibles, Bitcoin, etc.
Educate Yourself Financially: Understanding how economic policies affect personal finances empowers individuals to make informed decisions that align with long-term financial goals.
Explore Decentralized Financial Systems: Cryptocurrencies like Bitcoin offer an alternative to traditional financial systems. Bitcoin, for instance, has a fixed supply, making it resistant to inflationary policies and programmed to be deflationary (the opposite of the system above) without a centralized authority that can change the rules without notice. By participating in decentralized finance, individuals can potentially protect their wealth from currency devaluation and have a place to save again that will over time likely offset the destruction of their purchasing power and be highly liquid.
Escape the Herd or Get Slaughtered
The consumerism model, heavily embedded in the U.S. economy and influencing global markets, perpetuates a cycle that keeps the majority financially insecure. Understanding the mechanisms at play, such as programmable inflation and the emphasis on continuous consumption, is crucial. By shifting focus toward asset accumulation, financial education, and exploring decentralized financial systems, individuals can work toward breaking free from this cycle and achieving true financial independence.
Yours in Wealth and Health,
~Chris J Snook