Why The Middle Class Is Shrinking Fast
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- Опубліковано 19 вер 2022
- The US middle class is being destroyed and yet very few people know why this is happening. In this video we analyze the economic data behind the United States' growing wealth inequality.
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Masterful job here. Putting exactly what's wrong with our economy in a concise and easy to understand video. Well done!
You don't know how good you are at not only story telling, but the ability to explain esoteric concepts in an understandable fashion.
This guy is the dude.
He’s him
He's that dude
Our dude
dude, thanks.
@@EPBResearch you are superb in your research my friend 👏
Great points about the debt and its impact on all of us. I would definitely argue that a change in how corporations invest in their employees the last 60 years has been the biggest driver in shrinking the middle class. We all want cheap goods, but to get those cheap goods, it's a race to the bottom on how to cut costs, which includes paying relatively low wages over time. Sure, companies and people would all love to pay less federal income tax, but corporations take those savings and invest it.
The middle class is shrinking because wage growth hasn't kept up. What about corporate profits? Have they suffered because of the debt?
I love how apolitical, concise, and digestible your videos are. Very impressed with how much easily understandable information you packed into less than 6 minutes.
it is easy to be apolitical in this debate, because these problem were never part of political discourse and real problem were always covered with some BS cultural wars.
These videos are amazing, are EPB is doing great work making this important information digestible - but it is absolutely political. Very political!
With all do respect this video is anything but apolitical. He might now be sensationalist but talking about the death of middle class is inherently political.
@@Pinkydoodle2_ Of course anything and everything can be political. Non-partisan was what I meant.
Declining housing affordability is directly translated to lower birth rates, in return deflation in housing markets due to lack of affordability. supply and demand will deflate the housing market in the future at a huge cost
you mean wage inflation is not keeping up with asset inflation. when you bid on equities, debt, even crypto , the loosing bidder doesnt go homeless. we have allow banks and govt to monetize our homes into atms. if there was a market for mortgage back vehicles then your car would "appreciating" asset.
also if you measure asset to asset ...stonks to real estate, bitcoin ot real estate..it tells the real story............the USD is dying.
In the great reset the housing market will hopefully be fixed
nah. lower birth rates always following wealth increases everywhere it has happened
What I’ve learned is that our national debt affects us in so many ways that we don’t even realize from shrinking middle class to home prices to birth rates
Our national debt isnt the problem and its not the reason for high home prices or shrinking middle class. The US national debt is the reason for all our economic growth. The government employs ppl and stimulates whole industries with the money that comes from that debt.
It is important to be very clear when you use the term "national debt". The debt discussed here is not "national debt" in the form of US government debt, it is the total debt held by US citizens and private institutions within a specific nation. This debt problem was caused policies that have promoted over leveraging in the Privately Owned US Financial Markets by banks and the federal reserve. This is not related to government spending vs. tax revenue.
@@hauntedmoose411 Is that the way this UA-camr is using the word debt though. Debt for people and state governments definitely matter. But I feel like a lot of this is fear porn anyway. If we get into giant debt bubble that threatens the economy. The federal government could just buy the bad debt using national debt. Economic crisis averted.
@@superaids5946 And what is the top end percent of tax collections you are comfortable paying in debt service? 100%?
@@baronwill5939 I don't really understand the question. We don't need taxes to pay off the national debt. We've been lowering taxes for decades while the national debt has been skyrocketing. And that's not necessarily a bad thing either. The national debt is the total amount of money the government has injected into the economy to stimulate growth. If we were to try to pay the national debt off it would collapse the economy.
Very nice analysis. Keep,it up…….we need more people dissecting the economy that fails to work for the middle & under class. This gives rise to populism, and we have seen what happens when people get desperate for change. We pick leaders with massive baggage.
You explain these processes so well and provide the visual data to back it up. Even I as a man from the Netherlands am hooked, because while your focus is on the economics of the USA I still learn a lot.
Your best video yet. So articulate and concise. Well done.
Great content as usual
Great explanation, as always informative video!
Clean editing and concise break-down of the data allows me to quickly absorb material. I greatly appreciate this.
another awesome video! thanks!
impeccable video that is short and to the point. brilliant visuals as well. love this!
And the worst thing is that as soon as the middle class starts buying assets the markets crash
Well done!
Thanks Eric. Good job, as usual.
I am so thankful for the information you provide.
incredible work
Easily my new favorite channel.
Awesome video. Very clear and easy to understand. Thank you for this!
Great video! I subscribed
They try to make government expenditure look like an investment when it is simply consumption of public goods or frivolous.
This the most concise explanation I have seen on this issue.
very solid research !
Love you content dude. For the life of me I don’t understand why you don’t have more subscribers
Awesome work! It's interesting that Real GDP Per Capita only started to go down in the 2008 time frame, even though I thought our faulty low-interest regimes have been in existence since the Alan Greenspan days. What did start around 2008 was QE, so maybe QE and not our low-interest regimes were responsible for the permanent decline in Real GDP Per Capita? 🤔
In 2008, like 1929 you had a fundamental failure of the global banking and monetary system.
Since then, banks have strongly preferred to buy safe and liquid instruments; government bonds, FAANG /megacorp bonds, etc. lending to Main Street dried up.
People think low interest rates mean money is easy/cheap, but it’s actually a side effect of financial institutions piling into safe&liquid government debt, implying tight money everywhere else!
In the 1930’s the Germans got out of it with state-run banking directing credit into industry, while the US didn’t get out of it until war forced the US into an industrial policy for war.
Amazing video
Fantastic video as always.
Wow, ty, what a great job done.
Outstanding!
Your channel is gem on the internet.
Another great video!!
Amazing !
Very well done videos
Awesome
Probably one of the best explanations I've heard.
Your animations are really great
This channel is awesome 😎
👍👍👍👍👍Thank you
You're quietly impressing me with every video I watch.
Clear, concise, insightful. Please consider a follow on presentation on how to solve the debt problem. Great job describing the problem. The tougher job is proposing the solution. What is the right thing to do to get back to growing productivity? If we keep interest rates high can we incentivize debt holders to eliminate non productive debt?
more on Business Cycle please Eric
you're pretty good at this youtube stuff.
Killing it bro. I watch alot of Real Vision and this beats anything they do.
Good study.
Great video. I was like "I need to subscribe to support this guy". Wait. I already did last week. Take my like! well done man.
Excellent presentation. No wonder the middle class is losing wealth. It doesn't pay to save when interest rates are next to nothing, while those who can borrow at next to nothing rates can afford to spend the savings of the middle class to enrich themselves.
The video does a good job answering *HOW* is the middle class disappearing. Stagnant wages harm life quality if all assets are becoming more expensive.
But it does not answer the *WHY* is the middle class dissapearing.
1- It is a willful policy, by design and choice.
2- This method (the HOW, inflate asset prices while wages remain flat) was chosen among other possible methods
3- The middle class is the mortal enemy of tyrants, thus they have to be eliminated
4- Rich people line up with the politicians holding the guns (armed forces and police)
5- Poor people are busy living paycheck to paycheck to challenge the politicians and their guns
Only the middle class is a danger to tyranny, that si WHY it has to be eliminated
The middle class is disappearing due to people's income rising and putting them above middle class. It's a complete statistical illusion
this channel is Gold
Informative, concise, and understandable. Great video as always!
All correct. The only way out of this I can see is to go back to the Gingrich-Clinton-Gore type of federal budgeting and taxation. That is increase the taxes on the wealthy by closing loopholes, doing away with carried interest, and doing away with a preferred capital gains tax rate WHILE cutting federal spending and waste dramatically.
We had the formula in 1999-2000, and then proceeded to completely blow it.
As an economist I'm delighted how well you describe complicated economic phenomena. Your channel will explode soon.
most underrated and undersubbed channel
Really great videos! Can you please make a video making future predictions?
Wow, absolutely 👍
How you presented and broke this topic so well is commendable! Enjoyed watching this informative content! Keep up!
What an EXCELLENT presentation, young man!!! Fantastic work! My old granny brain gets it!
You could argue that lobbying plays a big role in all of this, as they are definitely a major driving force in the policies which have contributed to wages staying stagnant while asset prices rise.
This is a great program. Concise and intuitive. Pls keep up the good work. You should be able to obtain 1 mil subscribers soon. Cheers.
This is very much in line with what an analysis of Austrian economics would posit.
Super underrated channel
Very nice presentation, thanks for sharing it. But ignoring the cheap labor outsourcing that fueled corporate profits at the expense of the middle class workforce seems a missed opportunity.
Eric, what do you know about the Eurodollar system and will you ever do a video on it?
Please do a video on why productivity growth has outpaced wage growth. Best macroeconomics channel on youtube btw.
A video about this topic has no business being this good. Hats off!
Businesses want to maximize profit and return profit to the share holders. None of that will help workers keep up with inflation or cost of living expenses. A lot of companies also pay in stock options to avoid taxes. So they buy back stock, giving themselves a raises without a tax. Then you can go to the bank, take out a loan against your assets for cash because loans are tax free because you are taking on debt. Rinse and repeat , the rich get richer while the workers are on the hamster wheel.
Something like that ,
not enough know not enough people are mad enough
Awesome! What software do you use for all of the animations?
Where did you learn to build the graphs and animate them?
Remarkable
As always, the humble accountant is the most important person in the building.
This video should be shown mandatory in every senior highschool classroom before graduation.
I appreciate how you call out QE and its flawed logic from inception. Bravo.
Your videos are great, so much information packed into 6 minutes. I appreciate the time you take to share this information with us. I don’t want to play the ‘what if’ game, but could you explain what would happen if the US were to solve the debt issue? I only ask because this seems like the most logical solution, whether policy makers come to their senses or not.
I think an important parallel question would be how is the debt crisis solved? What does he mean by extreme short term pain and long term prosperity?
It’s happening all over the world.
Another banger EPB. I have the ques though. If the wage growth experienced from GDP growth is concentrated amongst small number of high earners a lot of which get a portion of their salary in equity and stocks, then you can't assume an increase in GDP would shrink the income/wealth gap. The liquidity provided by QE never made its way into the real economy, What about direct fiscal policy aimed at increasing liquidity in the middle class and small business, I understand this would create inflation but wouldn't it also create wage growth and GDP as well?
No one in the US is willing to trade short term pain with long term prosperity. Sad reality
Agree with these commentators: Eric puts out useful, high quality, data-driven content. It seems the Fed has changed their tune and is willing to compromise asset values for this shot at real income growth. It's worth a bet at least because it isn't clear they could save asset values even if they wanted to (dropping interest rates and QE). And let's hope they pursue long term growth--the past 20 years has produced social catastrophe.
Hey man, I want to tell you that you're doing an incredible job here. These are very well put together, I can see you seem to have a fairly knowledgeable video editor as well (unless the art and graphics are you, which would be even more impressive). Just one note, though - every so often you peak the mic which is a little uncomfortable to listen to. You may want to back it up just 2 or 3 inches away from you or lower the input gain on it by just a tiny bit. Just my 2 cents. Love the stuff still though, great channel
"fairly knowledgeable"
I know more than Eric ;)
We are working on a new mic setup.
- The Editor
@@EPBResearch Haha! Perfect, glad to see my ears aren't just playing tricks on me. Looking forward to it. Cheers
Great video. It's an unfortunate sign you have to make such a vid as are the consequences of what you speak about in it. "Labor does not contribute to profits" they said. "Inflation will be transitory" they said. Damn so many dumb, ignorant and greedy people at the controls, it's insane. Some other youtuber commented on the current economic situation: "luckily wages haven't increased so much that it led to a feared wage-price spiral." 🤦♂
This video again reinforces my belief that inequal/uneven/heterogeneous wealth distribution is one of the if not the biggest fundamental problem in economies/societies (not implying it should be 100% homogeneous)
Hi Eric this is such a well research video. Could also make one on the economics of bitcoin, its incentive for middle class and how debt problem can be solved by it.
Would you please do a follow up video explaining how the current fed policy to increase interest will affect the debt burden? Is my intuition correct that the fed is raising rates to encourage a lessening of the debt burden at large?
Real wage growth in aggregate may be tied to real GDP growth, but real wage growth per capita is not. Going forward, the worker shortage will get worse, pushing up real wages per capita, and even more so when you count only working-age people. This will transfer wealth from older and wealthier citizens to younger working citizens. Real GDP is likely to stay flat during this period, due to reasons you've mentioned in other videos.
3:37 and today bernanke received the economics nobel prize. lol
Great. I have a question:
How can we deal with the debt ? I mean 30 Trillion debt right now.
How do we find yearly surplus ? And how long it will take to drive down the debt to a safe level ?
Higher taxes and spending cuts. Itll hurt but compared to other countries our tax %of gdp is relatively low. Id also cut healthcare spending which is a large part of the budget yet seems could easily be offset by loosening regulation. Not ideal but it might hurt the least. Military spending cuts can be helpful without too much impact on quality of life but their impact on the budget is low in comparison to healthcare and social security.
Let's see, which group are the policy makers in?
Absolutely agree. One thing I would like to mention, however is in a declining population per capita is likely more relevant. I am not sure you took this into account when determining the middle class decline. The perpetual increase in the national debt known as deficit spending, seems to be an erroneous republican policy, is the culprit as well as consumer debt as you mentioned. It is not rocket science. If you lower your debt, you will pay less interest and have more income. As you correctly mention as well, this will have a positive effect on wages and suppress inflation making decreasing debt easier; then, the snow ball effect in a positive direction will begin as it did in the 1990's. Good video.
So what does asset deflation really look like? I don't see how that pain could possibly be any worse than the current situation.
No discussion of robots, decline in unions, increased monopsony power, increased college wage premium, globalization, and of course the decline in the top marginal income tax and capital tax rates. These are all the leading empirical explanations for the growing inequality. Debt is high, but debt servicing as a share of the economy is within historically normal levels.
When you say "correcting the debt problem" what do you mean specifically? Unless I'm mistaken, you're not talking about 'The National Debt' but rather the collective amount of debt/liability held by the population and businesses. Is this correct? How would the issue need to be fixed?
how many are moving into the upper class?
As a result, the Gini coefficient, which measures income inequality, also increases. When this happens, crime and violent crime, specifically, increase as well. The determinate level is roughly .8 or .9, between the two variables, depending on the study you utilize.
Almost forgot to mention that an actual representative model for a sustainable inequality distribution is a pareto distribution. As this distribution begins to skew in favor of a small minority obtaining the most resources, so too does the fragility of the system increases. This is because there are greater amounts of people that are hurt than benefit from the system, and the norm among the populace then becomes aggression towards said system and its benefactors. Most people then do not sustain the system, and a small percentage actively fight against it successfully.
So we need to find a way to decrease the growth rate of assets? Raising interest rates comes at a large cost also to the middle class, those of us with adjustable rates will take longer to pay off our houses, and in return make us in debt deeper, and longer. Not sure i see an easy solution here. if someone has an answer please share.
Is the 1% growing?
So, in other words, the middle class is disappearing because the government is subsidizing large corporations with huge loans and low interest rates while leaving the rest of us out to dry? Is a viable solution to this problem to stop subsidies of large corporations and increase spending on public services targeting low-income areas?
The key is to ensure we aren't funding wasteful things. What is useful and what can be tossed out? It's sort of like someone hooking up a power strip to another power strip without plugging anything else in. Eventually the underside of your desk gets cluttered, you stub your toe on one too many things and you get an ingrown nail. This power strip mentality for the government is ridiculous.
@@shanekeenaNYC Ok sure, I agree that we shouldn't waste money. The questions are "how do we translate this into policy?" and "how do we ensure that the debt that we do generate induces productivity?"
As I currently understand it, the PPP loans were a massive waste of debt because most of them just went into profits for corporations and were totally forgiven without actually generating any productivity. But investing in things like public infrastructure, child tax credits, healthcare, etc. should be good use of public funds because it places money back into the hands of low-income people, who are actually going to spend it in the economy, generating productivity. Is this a correct assessment?
@@sweetcornwhiskey Productivity is the name of the game. Housing crisis? Build another housing project. Public health emergency? Build hospitals bigger than you need. I'm big into the physical improvements side of things and I am going to school for my engineering degree and I am a stones throw away from my real eatate license. We need boots on the ground for this stuff.
@@shanekeenaNYC Cool! Thanks for the info! And yeah physical improvements are things that a lot of us take for granted, but they're invaluable to our society.
Is there any major economies where this isn’t taking place?
"Once the debt levels became excessive, there was a sharp drop in economic growth", this is presented as a given, but what is the causality between these two?
So you’re telling me tax loopholes that shift the burden strictly on the 95% has nothing to do with it?
I think my brain is still exploding from seeing that graph that the FED didn't really have anything on the balance sheet before 2002 and stayed that way for quite a while. From that to where we are at now that 2002 might as well be 1892..
it all makes sense now 🤔🤔
So, what should we do? Europe is facing the exact same problems.
Dumb but serious question - wouldn't a simplier solution just be to tax assets? Particularly aimed at the top 1%? Its another bandaid solution, but negates the short term pain you mentioned in trying to solve the debt problem
If you tax assets too much, their owners may decide to permanently move those assets elsewhere.