The Decline of Middle-Class America: A Financial Wake-Up Call
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Chapter 1: The Disappearing Middle-Class
The reality of being impoverished is stark; however, being impoverished while working over 75 hours a week is an entirely different struggle.
In the complex landscape of politics, economics, and life, true happiness often resides in the middle ground. It remains a mystery why our society seems intent on erasing that happiness. As it stands, only three regions in the United States—Arkansas, West Virginia, and Puerto Rico—still provide a glimpse of middle-class existence. The reason? These areas are the last bastions where a minimum-wage job can actually cover housing costs. Across the rest of the nation, we're grappling with job scarcity and an avalanche of debt. According to CNBC, mortgage rates are on the rise, auto loan interest rates are increasing, and savings interest rates are stagnant, effectively pushing the middle class into poverty. The middle class as we knew it ceased to exist around 1980; now, only its remnants linger.
After World War II, America experienced an unprecedented population boom, welcoming approximately 78 million babies over two decades. This surge led to a 40% increase in the U.S. population and a notable 30% rise globally. Why is this significant? It resulted in an oversaturation of the labor market.
American wages have remained largely unchanged since the 1970s, crushing any hopes for a flourishing economy for everyone. While wages stagnated, asset prices—like stocks and real estate—soared, forcing many into debt as they chased after the dream of retirement. Real wages are barely keeping up with inflation, according to the Economic Policy Institute. The vision of a modest home, a stable job, and resources to raise a family has morphed into a new American dream: envisioning money as water and pouring it into a bucket riddled with holes.
The era of relatively easy wealth accumulation is behind us. As a member of Generation Z born in 1997, I often hear from family members that the pinnacle of civilization was the 1990s—a decade I missed. It was a time characterized by affordable goods, an economic bubble, the defeat of the Soviets, and a general sense of prosperity. Today, couples earning $500,000 a year often feel average due to soaring inflation and living costs, with rental prices continuing to climb in major U.S. cities.
My greatest concern is "currency debasement."
I first learned about the insidious nature of currency debasement through a fascinating video game called Bannerlord. Imagine having the ability to print unlimited money for you and your friends, yet if you create coins with inferior metals, you're essentially counterfeiting. This practice devalues the currency and impoverishes citizens, while also alienating other nations that utilize it. This scenario is currently unfolding in the United States.
Affluent individuals are safeguarding their wealth by investing in stocks, cryptocurrencies, and other assets to escape debasement, causing prices to skyrocket. Meanwhile, savings accounts yield little interest, a consequence of the same debasement, compounded by stagnant wages. Other countries are even developing alternative currencies due to their frustration with the U.S.'s ongoing currency devaluation.
Bitcoin might hold potential, but I can also foresee governments seizing or banning it out of fear that it could challenge traditional currency.
What's on the horizon?
Allow me to draw a parallel. During the decline of the Roman Empire, we witnessed:
- Currency debasement
- Centralization of government
- Overextension of the empire, leading to conflicts
- Increased rioting as poverty and debasement took hold
In our current era, we observe:
- Currency debasement
- Centralization of government
- Rising tensions with China and Russia
- Increased civil unrest
It's up to you to interpret what this means. However, it's clear that America requires its middle class for survival.
The term "middle class" technically refers to the middle 60% of income distribution. Ironically, under this definition, the middle class cannot shrink; it can only improve or worsen—currently, it is worsening. Since 2019, American millennials in their 30s have amassed an astonishing $3.8 trillion in debt, a staggering 27% increase, according to the New York Fed. Presently, the only way for Americans to feel "middle class" is to be in debt.
In the aftermath of COVID-19, where small businesses and entrepreneurs faced devastation, we find ourselves returning to a 1920s-like scenario, characterized by a pronounced divide between the wealthy, the impoverished, and a small middle class.
A Silver Lining?
The slow demise of the middle class has been ongoing since the 1980s. However, following the 2008 financial crisis and the pandemic, the government's response has been deeply flawed. Instead of bailing out banks, direct cash payments to small and mid-sized businesses could have averted the current disaster.
Student loans have also contributed to the chaos. Young adults were misguidedly assured that no major was a poor choice and that earning potential would justify student loans. Those who propagated this myth either misled or were mistaken, but the outcome remains the same: youth today face unmanageable debt in a climate of inflation, recession, conflict, and a pandemic.
It would be one thing if debt was their only burden, but the cumulative challenges they face make it nearly insurmountable.
Despite financial constraints, individuals are increasingly seeking personal fulfillment outside of work. Gone are the days of mindlessly consuming "self-help" books. We are now compelled to define what truly matters in our lives. It is lamentable that poor governance and Federal Reserve policies over the past four decades have led us to this juncture. Yet, here we are.
As always, thank you for your attention! If you're interested, join over 4,000 readers on my Substack for access to my new eBook, "Gold2.0."
Chapter 2: Currency and Economic Trends
The Age of Making Money is Over. The Middle-Class is Done.
In this video, we explore the shifts in economic paradigms that have left the middle class struggling.
The Age Of Making Money The Old Way Is OVER (Middle-Class Warning)
This video delves into the alarming realities of today's financial landscape and the consequences for the middle class.