I keep returning to this theme of the struggling American middle class.  Of course, the lower class is struggling too, but that is really nothing new.

You could say that the upper class is struggling as well, but it is hard to feel sorry for people who have millions of dollars in the bank.  It all depends on how you define upper class.

But even what many would consider to be an upper middle class income is not going too far these days.  For example, a family of four earning $150,000 per year in an average big city (not New York or San Francisco) is not really that well off any more.  They are probably not stressing about money too much and I’m sure they take an occasional nice vacation and live in a decent place.  But my guess is that most families in this situation are not saving a lot of money.

I am a strong proponent of the free market.  A more voluntary society with limited state interference will produce great prosperity.  It is actually amazing how much prosperity we have in the U.S. despite government at all levels spending about 40% (or more) of the national income.

I am also a believer in the Austrian Business Cycle Theory.  Austrian followers can quibble over some details, but most will generally agree that artificially low interest rates and monetary inflation will misallocate resources and cause artificial booms.  I focus a little more on the monetary inflation side than the interest rate side.  Interest rates may not be artificially low right now in the sense that many people are scared of economic conditions and have voluntarily chosen to restrict borrowing and to buy bonds.

The Austrian Business Cycle Theory tells us that we may be in for some trouble in the near future.  The Fed nearly quintupled the adjusted monetary base from 2008 to the end of October 2014.  That is when QE3 ended.

While the monetary inflation has not translated into massive price inflation (much of it due to the huge excess reserves piled up by banks), there has still been asset price inflation.  We can see this in stocks and even in real estate in some areas.

Austrian economics tells us that when the loose money slows down or stops, it is going to lead to a popping of the bubble activity.  Of course, the tricky part is the timing.

It has been over a year since QE3 ended and it should not surprise us that the economy is appearing weaker.  The stock market’s poor performance for the first week of 2016 is starting to worry people.

Sometimes observation can be just as accurate as any theory though.  I don’t really need the Austrian Business Cycle Theory to tell me that something isn’t right in the world.  Just talk to your neighbor or your friend and you can get a decent picture.  For a good sample size, it might help to talk to at least 5 different people.

I was talking to a chiropractor the other day and he made the comment that kids are really expensive.  He was speaking from experience.  We discussed how expensive life is and how we can’t understand how somebody making $30,000 per year can possibly get by.

I get a general sense that people are just not happy, especially in their jobs.  While some people just don’t like their jobs, I think one of the frustrations is that they work hard and they don’t really have much to show for it.  I think that is why there is so much talk about playing the lottery.  It is an extreme long shot, but for some people, it is the only shot.

It is crazy that a family can earn close to a six-figure income and still feel like they are struggling.  Sure, we all have our cell phones and tablets, but shouldn’t we be able to have something today that our parents didn’t have?  It is sad to say, but people in the 1950s actually had it easier in terms of paying for basic needs.  Don’t get me wrong here; we are far better off in terms of choices because of technology.  But to pay for food, shelter, medical, etc., I think it is more expensive today.

Go out and talk to a few people and get their opinion.  I think you will find a similar story.  Tell them that you are feeling the pinch too.  Tell them that you think life is just really expensive right now.  Say this in order to get them to open up.  I think a lot of people are not open about it until they hear someone else.

This tells me that there is going to be a major correction.  The government is just taking too much of our resources.  Our wages are going up slightly (nominally speaking), but all of it and more gets eaten up just from health insurance premiums.

We need a correction.  It will be painful, but it is necessary in the long run.  That correction has to lead to something of a downsizing of government.

Things can always be worse, but I just get a general sense that there is a silent majority out there who are struggling in a major way.  Things seem to unsustainable.  We are going to see a correction.  Fear will spread quickly.

You don’t need Austrian economics to tell you this.  Just talk to a few neighbors.