by Doug Casey, Casey Research:

Justin: Nick, you talked about how a permanent underclass is forming in the latest issue of The Casey Report.

What exactly do you mean by “permanent underclass”? And how long has this been going on?

Nick Giambruno: The US once had the largest and most prosperous middle class in world history. Today, it’s shrunk to its smallest size in generations.

In 2015, the American middle class reached a demographic tipping point. It dipped below 50% of the population for the first time since data collection started on this issue. Today, it’s an official minority group.

In the years ahead, if economic and political trends continue, I expect that tens of millions more Americans will be kicked down the ladder.

Welfare and government dependency is cementing them to the bottom of society—in effect, making them a permanent underclass.

This is a trend that has been going on for decades. But today, it’s really starting to accelerate.

Justin: And what’s behind this?

Nick Giambruno: It’s a clear consequence of the US abandoning sound money in the 1970s.

As you know, this allowed the Federal Reserve to print money at will.

It’s no coincidence that, by many metrics, things started to go downhill for the US middle class at the same exact time.

For example, wages in real (inflation-adjusted) terms have been basically flat since the 1970s. Meanwhile, housing, medical care, and education costs have soared.

So yes, the average person might have gotten a nominal pay raise. But their expenses have gone up much faster.

The average person’s standard of living has been slowly eroding over decades. It’s why people are feeling more and more pinched.

Justin: If this has been playing out for decades, why is it such a big problem now?

Nick Giambruno: Because it’s now reaching a tipping point that’s clearly expressed in current political trends.

In short, more and more people are feeling the economic pain of their costs rising much faster than their incomes.

That’s a big reason why support for socialist politicians promising freebies is skyrocketing.

Polls suggest that a majority of millennials (people born 1982–2004) now favor socialism. And a growing number favor outright communism.

By next year, millennials are expected to surpass baby boomers as the nation’s largest living adult generation. This is one of the reasons Bernie Sanders and other socialists are growing in popularity.

In fact, the chair of the Democratic Party recently declared a young, millennial socialist who won a primary in New York City as “the future of our party.”

Justin: I imagine that will lead to more dependency on the state, rather than less.

Nick Giambruno: This is not a surprising development. It’s the natural endgame of the toxic combination of democracy—which is, in reality, just mob rule—and a fiat currency system.

The average person feels the economic pain of inflation every day. They know it’s becoming harder and harder to maintain a middle-class lifestyle.

They just don’t understand why, so they succumb to the siren’s call of freebies.

Perverse as it is, the socialist policies demanded by people suffering from inflation create even more inflation… since the socialist policies invariably are paid for with the printing press. That’s how inflation perpetuates itself. That’s what has happened in Venezuela and numerous other countries. And that’s what is happening in the US today.

At this point, I’m afraid this trend is unstoppable.

The reason is simple: A growing majority of US voters are addicted to the heroin of government welfare.

These people, who depend on the government, guarantee that these policies will continue and (likely) accelerate.

There’s no way a meaningful number of these people would ever vote to stop their government benefits. No one voluntarily breaks his own rice bowl.

The notion that a significant number of people living off of government largesse will come around to a libertarian way of thinking is a pipe dream.

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