The Long Death Of America's Middle Class

I have been writing a book on Korea's rising inequality problem.  The following post addresses the reason for the middle class of America hollowed out and how to secure your spot among the "haves" in a moment.

From Zero Hedge:

In 2015, it dipped below 50% of the population for the first time since data collection started on the issue. It’s now an official minority group.

Meanwhile, nearly half of Americans don’t have enough money to cover a surprise $400 expense. Many are living paycheck to paycheck, with little to no cushion. And US homes are less affordable than they’ve been in decades—possibly ever.

I’ll tell you why this is happening and how to secure your spot among the “haves” in a moment. But first, let’s take a look at the America that was.

...In short, the average American’s standard of living has taken a huge hit over the past generation or so.

...Notice that the downtrend starts in the 1970s. More on that shortly…

Clearly, home prices have risen much faster than income levels since 1970.

That debt has helped hide the slump in the average person’s standard of living.

Cars are another large expense for Americans. Debt has helped camouflage a big price increase there, too.

Americans are now over $1.1 trillion in auto debt. This figure has skyrocketed 2,954% since 1971.

Americans have also racked up more than $1 trillion in credit card debt. This debt explosion also started in the early 1970s. Credit card debt is up 14,281% since 1971.

So why are Americans going deeper and deeper into debt?

It’s simple: The cost of living for the average middle-class family has risen dramatically faster than its income.

Since 1971, there’s been a dramatic—and growing—split between work and wages. As the next chart shows, the average person’s real wages have more or less stagnated since the early 1970s.

With higher expenses and stagnating wages, people have made up the difference with debt.

Eventually, I think this trend will lead to a genuine crisis. And it won’t be pretty.

In the meantime, a perfect storm of economic pressures will further hollow out the middle class. Tens of millions of Americans will be kicked down the ladder.

As Doug Casey puts it:

Most middle-class people will end up joining either the upper or lower classes—mostly the lower—and that’ll be a moral disaster for the country.

If you want to firmly establish yourself in the world of the “rich,” I recommend…

1. Owning hard assets like physical gold, silver, and certain real estate.
2. Owning the highest-quality, elite businesses. Think businesses with attractive dividend yields—even better if you buy these standouts at bargain prices.
3. Holding some speculative investments. They can leapfrog your wealth. Think transformative technologies like cryptocurrency and blockchain, the booming cannabis industry, and natural resource stocks.
4. Protecting what you’ve earned from taxation, inflation, and other forms of confiscation by internationalizing your assets. This reduces the threat any one particular government poses to your wealth.

These are the four tenets of lasting wealth. They’re time-tested strategies. And they work.

https://www.zerohedge.com/news/2018-05-18/long-death-americas-middle-class