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The Destabilizing Truth: Only The Wealthy Can Afford A Middle Class Lifestyle

Tyler Durden's picture




 

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The "middle class" has atrophied into the 10% of households just below the top 10%.

The truth is painfully obvious: a middle class lifestyle is unaffordable to all but the top 20%. This reality is destabilizing to the current arrangement, i.e. debt-based consumerism a.k.a. neofeudal state-cartel capitalism, so it is actively suppressed by the officially sanctioned narrative: that middle class status is attainable by almost every household with two earners (a mere $50,000 annual household income makes one middle class) and middle class wealth is increasing.

It's not that difficult to define a middle class lifestyle: just list what was taken for granted in the postwar era of widespread prosperity circa the 1960s, four decades ago.

In What Does It Take To Be Middle Class? (December 5, 2013), I listed 10 basic "threshold" attributes and two somewhat higher thresholds for membership in the middle class:

1. Meaningful healthcare insurance (i.e. not phantom "insurance" with deductibles that cost thousands of dollars a year that offers no non-catastrophic care at all)
2. Significant equity (25%-50%) in a home
3. Income/expenses that enable the household to save at least 6% of its income
4. Significant retirement funds: 401Ks, IRAs, etc.
5. The ability to service all debt and expenses over the medium-term if one of the primary household wage-earners lose their job
6. Reliable vehicles for each wage-earner
7. The household does not rely on government transfers to maintain its lifestyle
8. Non-paper, non-real estate assets such as family heirlooms, precious metals, tools, etc. that can be transferred to the next generation, i.e. generational wealth
9. Ability to invest in offspring (education, extracurricular clubs/training, etc.)
10. Leisure time devoted to the maintenance of physical/spiritual/mental fitness

The higher thresholds:
11. Continual accumulation of human and social capital (new skills, markets for one's services, etc.)

And the money shot:
12. Family ownership of income-producing assets such as rental properties, bonds, etc.

The key point of these thresholds is that propping up a precarious illusion of consumption and status signifiers does not qualify as middle class. To qualify as middle class, the household must actually own/control wealth that won't vanish if the investment bubble du jour pops, and won't be wiped out by a layoff, college costs or a medical emergency.

In Chris Sullin's phrase, "They should be focusing resources on the next generation and passing on Generational Wealth" as opposed to "keeping up appearances" via aspirational consumption financed with debt.

I then added up the real cost of these minimum thresholds and arrived at a minimum of $106,000 annual household income--double the median household income in the U.S. According to Census Bureau data, only the top 20% earn this level of income.

Here is a chart of the real income of the lower 90% and the top 10%, which by definition cannot be "middle class":

The top 10% takes home 51% of all household income:

This suggests that the "middle class" has atrophied into the 10% of households just below the top 10%. Households in the "bottom 80%" are lacking essential attributes of a middle class lifestyle that were once affordable on a much more modest income.

Note that this $100,000+ household income has no budget for college costs, lavish vacations, boats, weekends spent skiing, etc., nor does it budget for luxury vehicles, SUVs, oversized pickup trucks or private schooling. Savings are modest, along with living expenses and retirement contributions. This is a barebones middle class budget.

So how have we maintained an increasingly unaffordable lifestyle? With debt:Wages have risen modestly while debt has increased enormously.

As I have described many times, the Federal Reserve's "solution" to the widening gap between income and expenses was to financialize the middle class's primary asset: the home. I have explained this in depth: The Fed's Solution to Income Stagnation: Make Everyone a Speculator (January 24, 2014)

Fed to the Sharks, Part 2: Housing and the Death of the Middle Class (April 9, 2014)

But turning everyone into a speculator via financialization had an unintended consequence: widening wealth inequality. It turns out most people are poor speculators, believing "this time it's different" again and again. In addition, financialization favors those with the most capital: this is the essential take-away from Thomas Piketty's book Capital in the Twenty-First Century.

The conclusion is inescapable: What's the Primary Cause of Wealth Inequality? Financialization (March 24, 2014).

As a consequence, net worth (i.e. ownership of assets and wealth) of middle income households has been reduced to a sliver:

The widening wealth gap cannot be entirely explained away as the result of some innate force of capitalism; the rich have gotten richer as the direct result of central state/central bank policies introduced since the heyday of the middle class forty years ago.

So where does this leave us? To answer that, we need to examine the systemic causes of the higher costs and reliance on speculative bubbles that have eaten the middle class alive. We'll address those tomorrow in Part 2.

 

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Tue, 05/06/2014 - 08:24 | 4731307 Bill of Rights
Tue, 05/06/2014 - 08:26 | 4731312 Winston Churchill
Winston Churchill's picture

Watch out below.
Dollar or stawks ?
The FedRes's decision time.

Tue, 05/06/2014 - 08:27 | 4731319 negative rates
negative rates's picture

Then it's not a middle class life style, it's a life style for the soon to be rich crowd.

Tue, 05/06/2014 - 08:37 | 4731343 SoilMyselfRotten
SoilMyselfRotten's picture

Isn't gold supposed to rise in the face of a dollar shellacking? Hmmm...

Tue, 05/06/2014 - 08:40 | 4731351 Winston Churchill
Winston Churchill's picture

There you go being logical again.
Take two tabs of LSD, and call me in the morning.

Tue, 05/06/2014 - 08:43 | 4731359 negative rates
negative rates's picture

Inbetween should have been, visit your yoga instructor, otherwise enjoy your trip to the moon.

Tue, 05/06/2014 - 09:01 | 4731427 PR Guy
PR Guy's picture

 

 

Yep, the American dream is dead.

 

https://www.youtube.com/watch?v=LT0_FzwKvD8

 

Tue, 05/06/2014 - 09:24 | 4731518 max2205
max2205's picture

Some how I think this is sugar coating. ..the bottom 65% have negative net worth

 

FSA is the new middle class

Tue, 05/06/2014 - 09:24 | 4731515 SoilMyselfRotten
SoilMyselfRotten's picture

Down-arrowed myself for asking a silly rhetorical question

Tue, 05/06/2014 - 08:44 | 4731364 bigbucksr
bigbucksr's picture

This article gives a ridiculous definition of middle class. The article describes a family with a net worth of easily 1 million dollars....middle class to me, is defined by someone with an increasing net worth and net worth between 100k to 500k....

Tue, 05/06/2014 - 09:13 | 4731468 Okienomics
Okienomics's picture

I credit CHS for offering a definition, but also agree his seems generous. Compare middle class of 1950-1970, when the norm was a <1,500 sqft house, one car, one television, a little savings and generational wealth in the form of a few pieces of jewelry and some home furnishings. Luxury Vacation? Load up the woody and visit family, the state park or the big city.

I'm not saying that wealth inequality isn't a problem, just that things for the 50th percentile income family are actually still pretty decent if you don't piss it away on stupid stuff like $200 sneakers for jr., fake nails every week for Mom and a debt laden BMW for Dad. Those families who practice being thrifty are doing all right.

Tue, 05/06/2014 - 09:31 | 4731538 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Charles, I don't know how you were raised or where you live in Cali, but your definition of middle class is warped. This reminds me of the guy who claimed he was raised middle class when his father was a successful medical doctor. Delusion has no ends.

Tue, 05/06/2014 - 09:32 | 4731542 TrumpXVI
TrumpXVI's picture

Yeah...good point...the one about "increasing net wealth".  That's my problem.  I'm easily "Middle Class" by CHS's definition, but I don't feel middle class.  This is really mainly because although I'm still better off than many, many people....I'm getting poorer.....and poorer....every day.  And I'm working a half decent, full time job.

Wed, 05/07/2014 - 22:59 | 4738488 gimme-gimme-gimme
gimme-gimme-gimme's picture

I think the "middle class" benchmark was set in the 50's and 60's during an anomalous era.

From what I understand this was only possible because we eat other peoples lunch. i.e we steal prosperity from developing nations to live better.

Guess things are slowly reorganizing globally.

Better get with the program or get left behind!

Tue, 05/06/2014 - 09:58 | 4731650 yogibear
yogibear's picture

The Federal Reserve has already made it's choice. It will attempt to print out of debt.  Zimbabwe style in a controlled manner.

Russia and China can change the controlled to a panic.

Tue, 05/06/2014 - 09:58 | 4731652 yogibear
yogibear's picture

The Federal Reserve has already made it's choice. It will attempt to print out of debt.  Zimbabwe style in a controlled manner.

Russia and China can change the controlled to a panic.

Tue, 05/06/2014 - 08:30 | 4731323 Headbanger
Headbanger's picture

Thanks for heads up! 

Here's a longer term (10 day) view:

http://www.marketwatch.com/investing/index/DXY/charts?symb=DXY&countryco...

Even moar scary is the one year DXY chart!

http://www.marketwatch.com/investing/index/DXY/charts?symb=DXY&countryco...

Oh the humanity!

Tue, 05/06/2014 - 09:00 | 4731423 Fuh Querada
Fuh Querada's picture

Yeah but Kyle Brass said buy USD. He said the yen is going to 115 by end-year.

Tue, 05/06/2014 - 08:26 | 4731313 madcows
madcows's picture

i guess i'm not middle class... must be a wage slave class-er

Tue, 05/06/2014 - 08:28 | 4731321 negative rates
negative rates's picture

You are right, it's called being a slave to money.

Tue, 05/06/2014 - 08:33 | 4731333 Sudden Debt
Sudden Debt's picture

Over here in Belgium, making money  is one thing...

paying 55% taxes on all income...

paying a 21% VAT on almost everything you buy...

and pay your bills to be able to make money...

that's the hardest part... and if there's money left... you buy silver with it :)

no kidding... I need to make at least 14K a month as a independt per person just to pay the bills.

 

 

Tue, 05/06/2014 - 08:46 | 4731368 Edward1290
Edward1290's picture

gotta blame the Rothchilds for that.........they named a street after those aszholes in Tel Aviv.....

Tue, 05/06/2014 - 08:48 | 4731373 Sudden Debt
Sudden Debt's picture

so you get to drive over them every day :)

Tue, 05/06/2014 - 14:12 | 4732684 StandardDeviant
StandardDeviant's picture

Yeah, that's it: it was the Rothschilds (with an 's') who elected all those socialist politicians in Europe.

Sure is nice to have someone else to blame, isn't it?

Tue, 05/06/2014 - 14:39 | 4732824 AGuy
AGuy's picture

14K * 12 = 168K Euro or $232K USD!

 

Tue, 05/06/2014 - 15:35 | 4733087 Monty Burns
Monty Burns's picture

I'd agree with the poster.  You'd need that kind of pre-tax money anywhere in northern Europe to raise a family of 4 or 5 in comfort.  The tax to pay for bloated public sectors and the FSA is the killer.

Tue, 05/06/2014 - 08:35 | 4731340 drendebe10
drendebe10's picture

For enabling this in just 5 short years, a standing ovation for the coerupt atrogant narcissistic lying sociopathic illegal alien fudge packer in chief living its grand imperial golf lifestyle on the backs of taxpaying US citizen serfs and peasants. Saps.

Tue, 05/06/2014 - 08:43 | 4731362 pods
pods's picture

Guess you didn't really look at the article or charts?

He certainly plays his part, but this is a wee bit bigger than him.

This has been progressing for a hundred years.  Exponentially.

pods

Tue, 05/06/2014 - 08:44 | 4731367 SoilMyselfRotten
SoilMyselfRotten's picture

You have to be rich to live in Belgium so you can afford all those US Treasuries we're dumping on you.

Tue, 05/06/2014 - 09:11 | 4731461 Canoe Driver
Canoe Driver's picture

CHS: your class distinction discourse has a glaring error. The affluent want and need PRECISELY a high-quality health insurance which guards against financial catastrophe. The top 20% of American society neither wants, given proper understanding of the issues, nor needs to pay, either directly or through taxation, for health coverage which takes, say $600 per month in premium, and gives back, say, $150 for an office visit, or $90 for a medication. This tragic misconception, which is essentially a blunder by the mathematically disadvantaged, is the true root of the American healthcare crisis. Once you subtract these ridiculous exchanges of premium dollars for reimbursement on petty medical expenses, what is left, even for the best healthcare policies, is coverage against financial catastrophe, i.e., catastrophic coverage, which is the purpose of all insurance.  Earthquake insurance, for example, does not seek to replace the Limoges that fell off my bookshelf during Loma Prieta. The idea is to prevent a bankruptcy. Why is this so difficult for the sheeple to grasp? We need public healthcare for the poorest 80% of the people, and true catastrophic coverage for everyone else. You see, the need for private health insurance is based on the protection of private assets. Similarly, the need for public health insurance is based on the protection of public assets.

BTW, pre-exisiting conditions should default into the public system, with the affluent patient presenting a denial of coverage letter from their carrier, unless there is evidence that the insured willfully neglected to pay premium, in which case the insured pays for treatment of pre-exisiting conditions in accordance with ability to pay.

That is the solution, but greed prevents it from being implemented, absent the understanding of the general public, which clearly includes you, CHS.

Tue, 05/06/2014 - 09:22 | 4731510 Chuck Knoblauch
Chuck Knoblauch's picture

Do the affluent want to live in a Chinese economy and society?

I think they do.

Tue, 05/06/2014 - 09:48 | 4731573 Canoe Driver
Canoe Driver's picture

Corrected: Pre-existing conditions should default into the public system, to the extent the insured's solvency is at risk, with the affluent patient presenting a denial of coverage letter from their carrier, unless there is evidence that the insured willfully neglected to pay premium prior to onset, in which case the insured pays for treatment of pre-existing conditions in accordance with ability to pay.

Where private carriers are compelled to cover pre-existing conditions, the result is not "insurance" at all: it is a transfer payment scheme. Insurance is the paid assumption of a measurable risk. For a medical condition which pre-dates binding of the policy, the "risk" is 100%, so the actuarial calculation means the associated premium must be the full cost of care. Calling this "insurance" is absurd.

 

Tue, 05/06/2014 - 10:58 | 4731749 homonohumanus
homonohumanus's picture

Which is why any states has to fund it-self using its central banks without paying interests...

The bunch of the state activities can be at best "balanced" as far as budget is concerned. There is no room for paying interests even in properly managed system.

 

Americans are so misslead about everything... the Cold War has been the excuse used to remove any sense to the right US worker gained through UNions and the fight for workers right and state run programs...

 

People brains has been crushed before their wealth...

Now Americans spend too much, my american wife agrees go figure... In most EU countries people have saving, that is why they are hammering us with taxes, they are still money to be stolen.

Most Europeans manage to do that with lesser incomes, higher taxes pressures, etc.

Americans should give them selves a good look in the mirror before they even start to complain. They've been on the best end of the shaft for a long while, still are.

 

 

Tue, 05/06/2014 - 11:34 | 4732027 bagehot99
bagehot99's picture

A first class precis of the enitre health insurance racket, exacerbated and enshrined in law by Obamacare.

Using your car insurance for new brake pads, or wiper blades, or an oil change would strike every motorist as laughable and absurd.

As it should for a routine office visit, or getting a Z Pack.

Tue, 05/06/2014 - 14:14 | 4732702 StandardDeviant
StandardDeviant's picture

All excellent points -- but, sorry, an automatic -1 for the puerile, condescending, smug, and incredibly annoying "sheeple".  Can we kill this tired meme already?

Tue, 05/06/2014 - 08:26 | 4731314 Sudden Debt
Sudden Debt's picture

well... seems like that internet economy isn't really paying off for everybody he?...

 

Tue, 05/06/2014 - 08:44 | 4731365 pods
pods's picture

My friend's mom makes $83 an hour on the internet.

Just don't ask what she has to do for it.

pods

Tue, 05/06/2014 - 08:29 | 4731317 sondernauch
sondernauch's picture

This paradigm of wealth = class is tiresome anyway. Some families are very well educated and have lots of class though they have little money. Nothing wrong with money, of course, but let's stop limiting our thinking to the narrow mindset of the currently ruling merchant class. If we cannot think outside of their box we will always be imprisoned by it.

Tue, 05/06/2014 - 08:27 | 4731318 Skin666
Skin666's picture

Deflation - Good for savers and the productive

 

Inflation - Good for debtors and the unproductive

 

Case solved

Tue, 05/06/2014 - 08:28 | 4731320 buzzsaw99
buzzsaw99's picture

so many people are living middle class lifestyles on working class income it isn't even funny

Tue, 05/06/2014 - 08:41 | 4731354 Sudden Debt
Sudden Debt's picture

a while ago, there was a advertising on TV that said: "Even unemployed people deserve to go on vacation".

And that was for a vacation bonus for the unemployed from the government to go on vacation...

now that's sick...

EVERYBODY DESERVES....

Tue, 05/06/2014 - 08:30 | 4731325 J J Pettigrew
J J Pettigrew's picture

Higher real estate taxes, higher health care costs, higher energy costs,
and not a fair return on savings....all serve to trim the disposable income
from the middle class. And ours being a 'service" economy bodes ill for
that sector. Sure, the uber rich will support some of it, but the lions share
will suffer. All factors mentioned decided by Central Planning from the G.

Tue, 05/06/2014 - 08:50 | 4731380 Dr. Engali
Dr. Engali's picture

I don't understand "humans".

Tue, 05/06/2014 - 08:57 | 4731410 pods
pods's picture

Heard the local news run a story about the Odessa firebombing.

Said the US is worried about clashes and people were killed when a "government building" was set on fire.
Nothing about who was in there and who set the fire.  I am sure that was by accident.

Smart people will be able to decipher this.

Media whores, doing DC's bidding.

pods 

Tue, 05/06/2014 - 11:17 | 4731976 Bloody Muppet
Bloody Muppet's picture

That's sick, sick, sick.

Tue, 05/06/2014 - 08:33 | 4731329 fonzannoon
fonzannoon's picture

My wife calls me yesterday and tells me she had her review. they gave her a 5% raise and told her she should be happy, because it's more than most people got (prob true). I made a wiseass remark about how even after her raise she is not making any more than last year. So she gets off the phone with me and marches back in ( i would not have advised this) and asks for more money because she is not making more money than last year. They tell her to illustrate what she is saying. so i took her raise, subtracted taxes, subtracted (the absurd) rise in healthcare premiums, and then showed her a chart of food prices. she is marching back in there with it today, and will probably get fired. It will be a great example of how inflation leads to deflation, and divorce.

Tue, 05/06/2014 - 08:39 | 4731348 d edwards
d edwards's picture

Look on the bright side, bro: if she gets fired she will be "freed from job lock" (so says Nancy Pelosi)-then you can get on the gov't gravy train!

 

Seriously, eliminating the middle class is a basic tenent of marxism and the marxist regime in DC from Barry on down is doing a bang-up job. bastards!

Tue, 05/06/2014 - 12:39 | 4732258 Babaloo
Babaloo's picture

"job lock" has to do with having to keep your job for the health insurance.

And it's "tenet," not "tenent."

Turn off Fox and get an education.

Tue, 05/06/2014 - 08:39 | 4731349 drendebe10
drendebe10's picture

If mama aint happy, nobody happy. I am trying to learn to keep my mouth shut but it aint easy.

Tue, 05/06/2014 - 08:48 | 4731372 ElvisDog
ElvisDog's picture

Right, but then she'll be mad that you're not talking as much or mad that you're trying too hard to make her happy.

Tue, 05/06/2014 - 08:59 | 4731419 JackT
JackT's picture

Glad to see I'm not the only one.  

Tue, 05/06/2014 - 09:47 | 4731606 Mark Carney
Mark Carney's picture

You guys too!

 

We should be like brothers and have chat time.

Tue, 05/06/2014 - 08:39 | 4731350 Smegley Wanxalot
Smegley Wanxalot's picture

More proof that in the corporate world, intelligence will not be tolerated.

Tue, 05/06/2014 - 08:43 | 4731358 Dr. Engali
Dr. Engali's picture

Well just look at all the benefits of being divorced. As a single mom she can probably make more being a stay at home mom taking advantage of  all the government assistance programs and not have to deal with that pesky work thing than she would once you figure all the expenses that come along with the job. After all Fonz ... it's for the children.

Tue, 05/06/2014 - 08:47 | 4731370 fonzannoon
fonzannoon's picture

good points all around. Hey Doc you think twtr will hold support at 0?

Tue, 05/06/2014 - 08:53 | 4731392 HardAssets
HardAssets's picture

I don't know about your wife's job, but a lot of people go to work and lose money.

I know families who pay big bucks to have grandma in a nursing home (no medical issues - just old). The wife works but after gas, parking, work wardrobe, taxes, etc, etc  they would be far ahead if grandma stayed with them and the wife looked after her. And grandma would love being around her grandkids.

Tue, 05/06/2014 - 09:13 | 4731470 madcows
madcows's picture

I lot of people go to work, and come home to a tin shack hovel.  just wait.

Tue, 05/06/2014 - 09:30 | 4731537 LawsofPhysics
LawsofPhysics's picture

You and me both Fonz. 

Unfortunately, I m my wife's "boss", so I am really fucked.

Tue, 05/06/2014 - 09:51 | 4731624 Hulk
Hulk's picture

I would also recommend that she be asked to be paid in Gold too !!!

that is all for now...

Tue, 05/06/2014 - 08:34 | 4731334 Quinvarius
Quinvarius's picture

We need to accept that only blood is bringing the USA back to a prosperous Constitutional republic of fair laws and property rights where only hard work and intelligence are rewarded.  The current government is a completely criminal mafia organization that your grand children will wonder why you ever supported.

Tue, 05/06/2014 - 08:42 | 4731355 drendebe10
drendebe10's picture

Start with sandpapering the skin off the fudge packer in chief and burying it in salt.  Fudge packer jerky!

Tue, 05/06/2014 - 08:44 | 4731366 drendebe10
drendebe10's picture

BTW I just reread the Declaration of Independence. Every tax paying US cituzen serf and peasant shoukd too. Fat chance.

Tue, 05/06/2014 - 08:45 | 4731360 OC Sure
OC Sure's picture

"I think a general Government necessary for us, and there is no form of Government but what may be a blessing to the people if well administered, and believe farther that this is likely to be well administered for a course of years, and can only end in Despotism, as other forms have done before it, when the people shall become so corrupted as to need despotic Government, being incapable of any other."

- Benjamin Franklin, 1787 speech prior to signing the Constitution.

 

The Republic was not kept. The people are so corrupted.

Tue, 05/06/2014 - 11:09 | 4731940 homonohumanus
homonohumanus's picture

Well defined corrupted?

 

It is a bad things to look at the past with nowadays glasses so to speak.

THe industrial revolution changed a lot of things, really a lot of things.

It changed the social network of all the countries that went through it among other things.

Increased added value alo helped the process of concentrating wealth too, and that is only one effect of technical progress.

 

People are self absorbed, that is it. They have to, it takes a lot of time to work, take care of kids, house, etc.

We only have the pretense to be citizens, it takes a lot of time to be a citizen, time people don't have.

Tue, 05/06/2014 - 12:24 | 4732202 plane jain
plane jain's picture

Something to be said for this:

People are self absorbed, that is it. They have to, it takes a lot of time to work, take care of kids, house, etc.

We only have the pretense to be citizens, it takes a lot of time to be a citizen, time people don't have.

Then add the apparent pointlessness of voting or protesting and it is easy to understand many deciding civic participation isn't a worthwhile investment of time.

Tue, 05/06/2014 - 09:17 | 4731486 Chuck Knoblauch
Chuck Knoblauch's picture

Make a list.

The government has a list.

I don't think the same names are on both.

Tue, 05/06/2014 - 08:36 | 4731342 AdvancingTime
AdvancingTime's picture

Most people do not  have at their disposal many of the investment options those fully engaged in the markets have developed. The learning curve to investing is both long and hard even though we are often lead to believe shortcuts exist. Simply reading a book, taking an investment course, learning a new charting or technical system is no guarantee you will make money.

Most investors only learn after a series of mistakes and errors how difficult this learning curve really is. A lack of investment options means that many people are left unable to react if and when a trend dramatically shifts. This leaves the bulk of society extremely vulnerably when a shift does occur. More on this subject in the article below.

http://brucewilds.blogspot.com/2014/03/few-people-really-understand-econ...

Tue, 05/06/2014 - 08:43 | 4731361 Fuh Querada
Fuh Querada's picture

have you considered that your perpetual pimping of your silly blog could piss people off?

Tue, 05/06/2014 - 09:58 | 4731654 Cthonic
Cthonic's picture

Moreon this ...

Tue, 05/06/2014 - 08:48 | 4731375 negative rates
negative rates's picture

You captain too many hedge fund ships, one of those suckers is going to sink while your still on it.

Tue, 05/06/2014 - 09:09 | 4731456 Chuck Knoblauch
Chuck Knoblauch's picture

Gambling is the way to happiness?

I thought it was hard work?

Tue, 05/06/2014 - 10:44 | 4731852 homonohumanus
homonohumanus's picture

hum... tyou are naive about gambling, hard work and happiness :)

Tue, 05/06/2014 - 08:38 | 4731346 HardAssets
HardAssets's picture

Its all comes down to the bankster money system folks.

They stole more than 97% of the value of your earnings & savings over the last century through long term inflation.

Is it any wonder that there are universal two paycheck families and high debt now ?  They freakin' stole 97 cents out of every dollar from you !

Everything else follows from that.

P.S. - of course they didn't teach you this in 'school'. They took over 'education' a century ago too.

Tue, 05/06/2014 - 08:56 | 4731402 sondernauch
sondernauch's picture

What is that 97% in absolute dollars?

Tue, 05/06/2014 - 09:32 | 4731528 HardAssets
HardAssets's picture

Think of it in terms of real wealth, that is real 'stuff' & real human effort that will support X number of people X number of forward years.

They printed up their fiat 'money' and used that to acquire those real assets and real labor. (Just like any other counterfeiter.)  And when we, at the end of the line, finally got those 'dollars' there were so many of them out there bidding on goods, - that the value of each one of them is greatly diminished. The counterfeiter gets the most from the printed up money in his initial transactions. These counterfeiters used their fiat over the last century to buy up industry, real estate, media, and the politicians.

The whole fiat money printing system is a slave system. It steals labor and real physical resources from those trapped in it. It is a clever system using pieces of paper (or computer entries) rather than a whip to command behavior.

P.S. - and thats why, of course, they go to war against countries who are tired of being paid in dollars which are constantly diminishing in value. "All wars are bankster wars" (well, if not all - a lot of them are fought for that reason)

Tue, 05/06/2014 - 08:42 | 4731356 Fuh Querada
Fuh Querada's picture

Nothing that an analysis of the Coppock Indicator won't cure.

Tue, 05/06/2014 - 08:58 | 4731416 Poor Grogman
Poor Grogman's picture

So the end result is that the banks own everything that the 90% used to own.

While trying to lay blame for it on the 10%

Instead of these simplistic charts of income brackets. I would like to compare bank ownership of assets, with people's ownership of assets.

The banks hold all the winning cards, while everyone else waits for a good hand, that never gets dealt.

Tue, 05/06/2014 - 11:45 | 4732055 HardAssets
HardAssets's picture

Well the crooks don't really hold all the winning cards.

 

Think of all those old western movies. A poker game is being played and the other players discover that the card shark has a bunch of aces up his sleeve. His 'winnings' aren't legit. One of the players draws his Colt and puts a nice new hole in the card shark.

The game only goes on as long as the other players fail to recognize that they're being cheated.

Tue, 05/06/2014 - 09:19 | 4731449 Chuck Knoblauch
Chuck Knoblauch's picture

Question for all those who don't believe in Conspiracy Theories -

After they take out the middle class, who's next?

Even SC Justice Scalia is calling for a revolt!

Is Scalia a dissident or a Jesuit infiltrator?

 

Tue, 05/06/2014 - 09:19 | 4731490 Jstanley011
Jstanley011's picture

Boiled frog! Mmm....

Tue, 05/06/2014 - 09:22 | 4731511 FreeNewEnergy
FreeNewEnergy's picture

I would say something like, "middle class is, as middle class does," but that might compose a pandering to a pejorative.

As sondernauch expressed above, we should endeavor to rise above class distinctions and linear projections.

As for fonz and his wife, well, maybe that new career as a home horticulturist may be dawning.

I took CHS's list of middle class attributes with a large grain of salt, especially the initial volley of healthcare, which I regard as a complete canard.

Let me put this into perspective. Good health is much more important to a middle class lifestyle than having health insurance. Honestly, if I was in my 30s (I'm actually 60, and have had HC coverage for a full two years of my working life - before that, as a kid, we went to our own doctor and my parents paid the doctor directly, remember?) with a couple of kids and a healthy wife, I'd forego healthcare completely and find a doc outside the system who could handle our modest needs for settlement in cash.

Ideally, the kids would be engaged in sports and have an active lifestyle. I'd ban the i-shit until after schoolwork and at least 1 1/2 hours of physical activity - shooting some hoops, backyard baseball, soccer, you name it. The wife and I would, in addition to maintaining a vegetable garden, do our best to eat well and stay fit - it's the best insurance against disease and illness known to man. Excuse me for saying so, but FUCK the AMA. They just issue pills and write papers espousing more of the garbage science that masquerades as research and science these days.

OK, so tossing healthcare, I assert that the title of CHS's essay is slanted and non-factual, relying upon his very own - and somewhat spurious - calculations. There are many middle class people in America, much more than 10-20% of the population.

Anecdotally, my high school class is almost all middle class or better. They've worked their entire adult lives, put kids through college, pretty much own their homes F&C ad have what some might call excessive retirement funds. Multiply those 250 or so people by all the HS graduates from 1971 nationwide, plus the 10 years prior to that and the 10 years after, and you've got a pretty good sampling of the middle class - lots of people between 50 and 70, a pretty large segment of the population.

Then there's the people of earning age in their 20s, 30s and 40s who are making good money - admittedly fewer than there were 10-15 years ago, but still a large number of teachers, cops, other government types, small businesspeople, mid-level management, engineers, etc.

Here's my guideline for a middle class adult:

$1500/month or more take home pay

Functional vehicle

25-50% or more equity in home

anything over 50,000 in savings (more if kids are in college, obviously, and more the closer one gets to age 62)

spiraling costs of everything from food to taxes is noticeable, but not yet distressing.

Good health.

That's pretty much it, and there are lots of those types out there. A couple with no kids making a combined $60k + can live pretty damn well. Personally, I live on much less, and part-time girlfriend makes $54K a year. Together we can pretty much do what we like with our disposable income and eat well. As we're aging, like it or not, we eat less, but, we find small luxuries like good wine, keeping our TWO houses in good repair, going out on occasion (staying home is usually more fun) and vacations more than once a year.

While it's not the same middle class as in the 60s or 70s, there's still plenty of middle class left in America, which is why Wall Street and Washington continues to skim at every open opportunity.

We should have reined in the bastards years ago, but it's still not too late. And it's never too late to make some meaningful lifestyle changes to assure yourself of keeping more and losing less.

I've been glooming and dooming since 2007, and have come to the conclusion that TEOTWAWKI is not on the horizon, but the fleecing continues at a rapid pace. The affluence of Americans has morphed into apathy and the KLEPTO-Class of politicians, corporations and bankers continues to rape and pillage almost unfettered. It's up to all of us to act individually to stop it. I suggest anyone in good health just cancel their health "insurance." (God, I hate insurance. It's the purest scam ever.)

Tue, 05/06/2014 - 09:47 | 4731589 Chuck Knoblauch
Chuck Knoblauch's picture

Hopefully, you'll be dead before TEOTWAWKI happens.

Happy trails, MF.

The FED cannot control inflation anymore by fucking with the employment rate!

The employment rate becomes more irrelevant and distorted each month.

 

Tue, 05/06/2014 - 10:35 | 4731819 SamuelMaverick
SamuelMaverick's picture

$1500 month take home pay = destitution and poverty. 

Tue, 05/06/2014 - 11:35 | 4732030 Tulpa
Tulpa's picture

Depends on where you live.  You can live pretty comfortably in Nebraska on that budget, while in SF that might not cover your rent even if you live in a shitty neighborhood.

Tue, 05/06/2014 - 11:56 | 4732101 FredFlintstone
FredFlintstone's picture

"Part-time girl friend"... tell me more. Does your wife know?

Tue, 05/06/2014 - 09:31 | 4731540 RaceToTheBottom
RaceToTheBottom's picture

Must be the red team, Must be the Blue team.....

 

The problem is in the mirror

Tue, 05/06/2014 - 09:36 | 4731558 F.A. Hayek
F.A. Hayek's picture

Every chance I get, I am drilling into the younger generation that there is a huge difference between wanting something and needing something. I also teach how to never spend on credit what can't be paid off at the end of the month, and that 50% is the minimum amount that should be saved each month. We ourselves are screwed, and the kids today have no idea what they are in for. I just hope I can stay employed long enough to plan for the future, and that my kids apply what I'm teaching them.

Tue, 05/06/2014 - 11:40 | 4732046 Tulpa
Tulpa's picture

I'm seeing this attitude increase at an alarming rate (thanks to dolts like Dave Ramsey) and it's almost as destructive as the opposite attitude of addiction to debt.  Debt is not an inherently bad thing as long as you have a feasible plan for paying it off in a reasonable amount of time.  Our entire modern civilization was built on the availability of credit -- sometimes you have to borrow to build something.

Tue, 05/06/2014 - 12:09 | 4732140 F.A. Hayek
F.A. Hayek's picture

Credit card companies hate me. I have never paid interest to them and I put all expenses I am able to on the card, and they float me each month, gratis. My point with the younger generation is that anything short of doing just that is financial suicide. Debt is good, only when it's used to your advantage.

Tue, 05/06/2014 - 09:47 | 4731610 no life
no life's picture

You can't financialize a non-existent economy forever.

Tue, 05/06/2014 - 09:50 | 4731619 yrbmegr
yrbmegr's picture

You can look at this two ways.  Either the lifestyle formerly enjoyed by the middle class is now only attainable by, at minimum, the upper middle class, or the middle class lifestyle has moved down-market.  I prefer the latter view.  Middle class in America is no longer comfortable.  It is increasingly desperate and needy.  These days, the middle class is just able to sustain short-term necessities (food, water, shelter, basic clothing, power most of the time) and, at the upper end, a basic car and a basic phone.  In the lower middle class, food security becomes an issue.

Tue, 05/06/2014 - 11:50 | 4732083 FredFlintstone
FredFlintstone's picture

"food security"...that term makes me wanna gag especially when applied to an American context. The only ones who have food insecurity in the US are kids with mommas who overeat or spend it on shit they don't need. Putting their needs against their kids' needs. Go to the hood and see all of the fatsos. 

Tue, 05/06/2014 - 09:55 | 4731642 yogibear
yogibear's picture

I'm doing my part to slash expenses. You find out how little you really need.

 

Tue, 05/06/2014 - 10:00 | 4731663 laomei
laomei's picture

Nothing changed, it's just that "middle class" has been diluted and redefined to fool the majority into believing they were still "middle class".  Simple fact is, that they are not.  Add in inflation and living costs and everything else, and yep, to be "middle class" means a BARE MINIMUM of $100k.  More realistically around $250~$400k annual income.  If you don't have that, sorry, you're not "middle class", you're poor.

Tue, 05/06/2014 - 10:05 | 4731683 Species8472
Species8472's picture

Definition of middle class is and always has been, those in the middle!! and they can always aford the middle class life style. what is really going on is the standard of living for the middle class has been going down.

Tue, 05/06/2014 - 10:12 | 4731707 I Write Code
I Write Code's picture

Funny, but I seem to have missed:

#0: A job.

#00: A stable job.

#000: A stable job that provides 90%+ of a family's income (or two jobs for two member)

#0000: A stable job(s) with reasonable chance for advancement.

I suppose you can have a middle-class life in retirement, or by living off the coupons of about $1,500,000 in bonds or stocks, but these are secondary, as there is more to the job than just money. 

I might add something to this "middle class" description besides a job, along the lines of a reasonable voice in government via the ballot but also other organizations from a neighborhood association to service clubs and bowling leagues.

Tue, 05/06/2014 - 10:19 | 4731753 AustrianJim
AustrianJim's picture

Why meaningful health insurance? I don't have any, and I can assure you I'm still living the middle class lifestyle. Some of us don't want overpiced and pointless insurance.

Tue, 05/06/2014 - 10:22 | 4731768 Freewheelin Franklin
Freewheelin Franklin's picture

Don't fret. We've got Odumbocare to take care of us and milk even more money out of what's left of the middle class.

 

Don't forget, a citzen that is reliant on the government is a citizen that is more receptive to government tyranny.

Tue, 05/06/2014 - 10:29 | 4731795 viator
viator's picture

Gap Inc. (NYSE:GPS) operates its Banana Republic stores in North America, Europe and Asia. Although we estimate the segment to contribute less than 18% to the company’s overall value, its stores have been quite productive for the apparel retailer. Banana Republic stores generate revenue per square feet of around $500, which is significantly more than Gap’s $400 and Old Navy’s $280. So what makes these stores so productive and why is it an important business segment for Gap?

Banana Republic’s business is somewhat different from Gap and Old Navy stores. While the latter two brands are value focused, Banana Republic offers products at slightly higher price points. This adds an affordable luxury business to Gap’s arsenal. Additionally, most of Banana Republic stores are in the U.S., where demand for affordable luxury merchandise isn’t impacted as significantly by a weak economy than other regions.

Guess the Banana Republic shoppers heven't read this article.

Tue, 05/06/2014 - 12:41 | 4732264 plane jain
plane jain's picture

Mostly unrelated IMO.  

Quality at Old Navy and Gap is mostly unacceptable at any price now.  BR still has some decent quality clothes and you are better off shopping clearance/coupon sales there.  I don't know how ON stays in business.  Sizing has been all over the place for awhile.  Tees in the women's section are a hot mess of cheap thin fabric, lousy construction and poor cut.  

Wandered into one this weekend just because I was killing time and tried on one striped v-neck tee.  See through, but I liked the color and figured the thin fabric would be nice when it is hot.  The v-neck opening ended at the band of my bra...not flirty, or even trashy; just looked like the person who designed it didn't have a clue, or give a damn.

Tue, 05/06/2014 - 11:19 | 4731981 Tulpa
Tulpa's picture

"It's not that difficult to define a middle class lifestyle: just list what was taken for granted in the postwar era of widespread prosperity circa the 1960s, four decades ago."

When are you geezers going to understand that the 50s/60s US economy was a historical anomaly produced by cheap oil and our industrial competitors being leveled by the most destructive war in history?  Those days aren't coming back, sorry.

Tue, 05/06/2014 - 11:33 | 4732023 Zerozen
Zerozen's picture

+1000 if I could

More Americans need to understand this. Kind of hard to do if you haven't lived abroad though and/or don't have a good grasp on history.

I keep saying this...WW2 was one of the best things that ever happened to the U.S., ever. Got to play on the winning team, no damage to the homeland, and all competition wiped out, plus a massive war booty reward (including the installment of the petrodollar). 50s to the early 70s were a golden age in the U.S.

Tue, 05/06/2014 - 11:46 | 4732066 Tulpa
Tulpa's picture

I especially like the people who complain about Chinese and Koreans "stealing" our good-paying jobs.  It takes a special kind of self-centeredness to demand that other people go back to living on dirt floors and eating 1000 calories a day like their ancestors, just so Americans can pay off a house by turning a bolt all day and retire at 55 with a fat pension.

Tue, 05/06/2014 - 13:16 | 4732414 Zerozen
Zerozen's picture

I don't think it's self-centeredness per se so much as it is lack of worldliness. The kind of people who complain about this stuff mostly don't travel and don't take an interest in the world at large and world history. So, how should they know that the last 60 years, and especially the 50s and 60s, were an aberration that can't last forever? All they see is falling living standards and jobs moving offshore and to them it's dismaying. I view it as reversion to the mean. If you want to stay ahead economically, you have to keep moving up the value chain and produce new things - evolve or die!

Or you could foment war and division abroad to try and trip up the competition, a la Syria and Ukraine </snark>

Tue, 05/06/2014 - 13:17 | 4732420 MeelionDollerBogus
MeelionDollerBogus's picture

By definition the 'middle' class should be whatever's in the 'middle'.
Can of beans & toast for dinner ONLY 1 day of the week!
the New middle class. the new-new-new deal!

Tue, 05/06/2014 - 13:30 | 4732489 Zerozen
Zerozen's picture

You, sir, win the prize of one (1) internets for what appears to be the History Channel's alien astronauts guy in your avatar!

Tue, 05/06/2014 - 13:53 | 4732596 Totentänzerlied
Totentänzerlied's picture

That "guy" is the distinguished Ancient Alien theorist, gentleman, and scholar, Dr. Prof. Giorgio Tsukalos.

Wed, 05/07/2014 - 15:48 | 4737102 MeelionDollerBogus
MeelionDollerBogus's picture

large size version:

https://flic.kr/p/dvWcaT

in reference to how the supreme dickwad MillionDollarBonus_ kept referring to Libertarians as being the fault "the economy" wasn't recovering at this/that time and otherwise saying it was recovering and that silly "Libertarian extremists" here on ZH could never admit it, etc. etc.

Tue, 05/06/2014 - 13:51 | 4732584 Totentänzerlied
Totentänzerlied's picture

This is the best advice anyone will ever give anyone: "[focus] resources on the next generation and [pass on] Generational Wealth". Economically educated people will be incensed if you say most wealth, and credit, are utterly wasted. If discretionary funds are not being used, in the manner of CapEx, toward one's family's future (defined on a scale of years and decades, not hours and days, thank you), then, sorry, 99 times out of 100, it's wasted.

7. The household does not rely on government transfers to maintain its lifestyle. Ability to invest in offspring (education, extracurricular clubs/training, etc.)

Item 7 covers FAR more people than most imagine.

I've never seen "middle-class" defined this way. It sounds much more like "nouveau riche" to me, about 3 steps above middle-class. If you take all 12 items, and bar people who were either born into a higher class, won the lottery, or have negative real net wealth, you'd be hard pressed to find more than a few million who really fit all these criteria, ever. It is simply unrealistic. Defined as it is here, "Only The Wealthy Can Afford A Middle Class Lifestyle" is merely tautological: only the wealthy, on a worldwide basis, can even afford a lower-class Western lifestyle. If this is one's idea of "middle class," and held up as a practical goal, only bitter disappointment awaits.

This is what growing up in the most prosperous place in the most prosperous time does to one's perspective. This is your brain on purely incidental, accidental, historical privilege.

Tue, 05/06/2014 - 14:34 | 4732787 CTG_Sweden
CTG_Sweden's picture

 

My impression is that the American middle-class in the 1960s was people like auto workers. It also seems as if they still get about the same pay as in the 1960s, adjusted for inflation. A UAW member makes $28 an hour (unless he or she is a new hire) and the health care is paid for by the employer. $28 an hour equals slightly less than a $60,000 annual income.

Saving for the kids´college education is more expensive than in the 1960s. On the other hand consumer electronics and clothes are less expensive.

So I reckon that a UAW member can enjoy a lifestyle which is similar to what was the case in the 1960s.

But butchers seems to make less than half of what they did in the 1960s and early 70s. That´s a consequence of supply and demand in the labour market. I suppose that the US could have enacted laws that made non-unionized meatpackers illegal. But then the taxpayers would have been forced to support the excessive labour. If they wouldn´t have done that the excessive labour would probably have stolen food and clothes in order to survive. In any case there is a consequence if you have excessive supply of something in a market. But most people fail to understand that. Even many Zerohedge readers, who should understand basic economics, just don´t seem to understand consequences of supply and demand. I really wonder how these people make their investment decisions. 

 

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