The ruling class has failed, and their failure is now becoming obvious to everyone

Eye opening moment: when I heard former Federal Reserve Board Chairman Janet Yellen proclaim that the U.S. economy's natural growth rate was 2% and that the ideal inflation rate was 2%. 

This was her gospel and these were the goals of Federal Reserve policy under her watch.

I was briefly dumbfounded that someone with a doctorate in economics and with the great power of the most central of central bankers should have such simplistic and dogmatic of ideas about two fundamental aspects of a great nation's economy.

Why should nations be content to grow their economies at 2%?  

And what's the benefit of 2% annual inflation when that degrades the purchasing power of currency for those on fixed incomes?  At 2% inflation a dollars today will lose 33% of it's buying power in 20 years. 

When did the loss of buying power for middle Americans become a good thing? 

Here's one perspective: those with wealth and power are just fine with a stagnant economy and the slow erosion of purchasing power when they have more than enough to live in great comfort.  Not so for  those who live closer to the economic edge.

Roger Salus at Seeking Alpha opines:

• Western countries are demarcating into two distinct economies, consisting of higher- and lower-tiered earners.
• With the shrinking of the once-strong middle class, the political intelligentsia loses credibility and legitimacy in the eyes of increasing numbers of voters.
• As unconventional parties and candidates gather popularity, our elites grow increasingly defensive, enraged, and unable to constructively deal with events occurring beyond their bubble.
• As the bubble surrounding mainstream politics deflates, economies will be affected, along with assets ranging from currencies to stock markets to precious metals. Nothing is exempt. Be warned.

As promised, dear readers, your humble author concludes his look at the "two economies" phenomenon by discussing the inevitable political consequences that are already unfolding. The growing class divide within developed economies has been happening since at least the 1960s, but it was the Great Financial Crisis (GFC) of 2008 that shook the political status quo to its core. Whether that will be good or bad remains to be seen, and open to interpretation. What's not in doubt is that our political class is mortally wounded, and there will be consequences for asset values, whether stocks, precious metals, or even currencies.

Until now, the political elites of developed nations have been either ignorant of, or in outright denial about growing class divisions. In my previous three articles (see here, here, and here), I discussed how outdated economic indicators, like GDP, inflation, and unemployment have disguised the slow stratification of society into two classes due to disappearing job opportunities, punitive living costs, and decreasing social mobility.

Since 2008, the chasm between grass-roots voters and mainstream political elites has grown wider. The result has been the rise of unconventional political parties and candidates in the West and worldwide. This will inevitably affect our investments and asset values.

Brexit, for example, demonstrated how political earthquakes can affect national currencies and precious metals. The Trump White House attests to the fact that previously sacrosanct notions, like freer trade, are no longer sacrosanct. The latest Italian standoff proves that unconventional governments now have the popular backing to challenge the political establishment....

In a two economies world, the net result has been that for high earners wage-increases have kept up rather well with living standards and living costs, but bottom-tiered earners are being crushed. All the hedonic adjustments in the world can't disguise the fact that 50 years ago a sole bread-winner could support a family and still hope to retire. Today, for much of the population, two bread-winners are needed if families are to merely keep up with advancing technologies and living costs, and even then, ever fewer can realistically hope to retire.