Last Updated on February 25, 2025 by Bertrand Clarke

George Gammon – Rebel Capitalist – February 25, 2025

In a recent discussion with financial analyst Greg Manarino, a stark and unsettling picture of the American economy emerged—one that challenges the conventional narrative of resilience and growth. The conversation, which will be available on Rebel Capital’s interview channel, delved into the precarious structure of the U.S. economy and the growing dependence of everyday Americans on a system that may be fundamentally unsound. While the stock market soars and asset prices reach unprecedented heights, the underlying reality for the average American—Joe and Jane—is far less rosy.

At the heart of the discussion was a critical question: What is truly propping up the U.S. economy? On the surface, it appears robust, driven by innovation, entrepreneurship, and consumer spending. But when you peel back the layers, a different story emerges—one of artificial stimulus, distorted asset prices, and a growing divide between the wealthy and the rest of society. The COVID-19 pandemic, with its unprecedented lockdowns and economic shutdowns, served as a stress test for the global economy. Yet, against all odds, the U.S. economy has not collapsed. Instead, it has continued to chug along, fueled by massive government intervention and monetary policy. But at what cost?

Consider this: If someone had told you in 2019 that the government would lock down the economy, shutter businesses, and distribute trillions of dollars in “free money,” what would you have predicted? Most would have foreseen economic catastrophe—a recession, depression, or worse. Yet, here we are, years later, with the stock market near all-time highs and unemployment rates relatively low. How is this possible? The answer lies in the extraordinary measures taken by policymakers to paper over the cracks in the system. But these measures, while staving off immediate disaster, may have only delayed—and exacerbated—the inevitable reckoning.

The U.S. economy has become increasingly reliant on asset price inflation to sustain itself. From the stock market to real estate, the value of assets has skyrocketed, creating a wealth effect that props up consumer spending and economic activity. But this growth is not rooted in genuine productivity or innovation. Instead, it is driven by easy money policies, low interest rates, and speculative behavior. The result is an economy that is increasingly disconnected from the realities faced by ordinary Americans.

For the average Joe and Jane, the situation is dire. While asset owners have seen their wealth balloon, those without significant investments in stocks or real estate have been left behind. Wages have not kept pace with inflation, and the cost of living—particularly housing—has soared. The dream of homeownership, once a cornerstone of the American middle class, is now out of reach for many. Meanwhile, the burden of debt—whether student loans, credit cards, or mortgages—continues to weigh heavily on households.

This divergence between asset prices and real economic conditions is unsustainable. Historically, when asset prices have become detached from fundamentals, the result has been a correction—often a painful one. The 2008 financial crisis, triggered by the collapse of the housing bubble, is a stark reminder of what can happen when speculative excesses go unchecked. Today, the cracks in the system are once again visible. The price-to-income ratio for housing is at historic highs, and the cyclically adjusted price-to-earnings (CAPE) ratio for the stock market suggests that equities are significantly overvalued. These are not signs of a healthy economy but rather red flags signaling potential trouble ahead.

The question, then, is not whether the current system is sustainable—it clearly is not—but rather how and when the reckoning will occur. Will it be a sudden crash, as in 2008, or a slow, grinding decline, as Japan experienced during its “lost decade”? Either scenario would have profound implications for the average American. A sharp correction would likely lead to widespread job losses, bankruptcies, and a contraction in consumer spending. A prolonged stagnation, on the other hand, would erode living standards over time, leaving future generations worse off than their parents.

The role of government and central banks in this dynamic cannot be overstated. By flooding the economy with liquidity and keeping interest rates artificially low, policymakers have created an environment in which asset prices can continue to rise despite weak underlying fundamentals. But this approach is not without consequences. It distorts market signals, encourages risky behavior, and exacerbates inequality. Moreover, it does nothing to address the structural issues that plague the economy—issues such as stagnant wages, rising inequality, and declining productivity growth.

For the average American, the implications are clear. The current economic system is not working for them. While the wealthy benefit from rising asset prices, the poor and middle class are left to bear the brunt of inflation, debt, and economic insecurity. The solution, however, is less clear. Some argue for a return to sound money and fiscal discipline, while others advocate for more aggressive government intervention to address inequality and promote sustainable growth. What is certain is that the status quo is untenable.

As we look to the future, it is worth remembering that true wealth is not measured by the value of our stock portfolios or the price of our homes. It is measured by our ability to access goods and services, to provide for our families, and to build a better life for ourselves and our children. By that measure, the U.S. economy is failing far too many of its citizens. The cracks in the system are growing, and ignoring them will not make them go away. The time to address these challenges is now, before the dam breaks and the consequences become irreversible.

In the end, the American economy is not a Ponzi scheme, but it is a house of cards—one that is increasingly vulnerable to the slightest breeze. Whether it collapses suddenly or slowly erodes, the outcome will be the same: a reckoning that will reshape the economic landscape for generations to come. The question is not if, but when—and how we will respond when the time comes.