Our society exists because of hope.
It's the idea that even if you're poor and
come from a s**t place no one can pronounce-
you still have the chance of becoming great.
Take that hope away, and you end up with
riots in the street or total economic collapse.
That's concerning.
So I needed to find out,
Things feel pretty bad right now.
Everything's expensive.
Politics are a mess, and TikTok's getting,
like, a little bit too entertaining.
But we can't just use "feel" to gauge this.
Every media outlet in the world has real
monetary incentives to get you to feel something.
So first off, I need to take my existing
feelings about inequality and put them on pause.
There's no other way to objectively
look at the facts here.
And then after I have proper facts, I'll be
able to see what's ahead of us and what
we should look out for and what we can
personally do to increase our own wealth and freedom.
Trust me, you want to watch this entire video.
Now, if I'm trying to forecast the future,
I'd be dumb to ignore the past.
The 1940s are an extremely important
time when it comes to equality.
World War II ended, and
the American economy absolutely erupted.
Industry was at full speed, jobs
for everyone, and almost zero unemployment.
Believe it or not, if you were born
in the 40s, you'd have a 90% chance
to make more money than your parents did.
That's insane.
Now, how many parents do you think around that
time chalked up their kids' success to good parenting,
not, you know, like, the exploding of the US
into the golden age of wealth?
My guess is all the parents.
But anyways, between the '40s and '60s, things went quickly.
From Charlie Chaplin to Don Draper with a house,
two wives, and a Cadillac, everyone felt
like they had a shot at success.
The American dream.
But, as we know from looking at
the markets, booms can't last forever.
Prices for homes and colleges started shooting up.
And through the decades, that fat
90% chance dropped like a stone.
By the 80s, there was already a less than
50% chance of you out earning your parents.
Here's the glitch in the matrix.
According to the Fed, the richest 1% of
Americans own about $45 trillion, while the bottom
half of the country owns just $4 trillion.
That fact alone is terrifying.
Like, how far can that stretch
before everything goes up in flames?
- You got 90% of the American public out
there with little or no net worth.
I create nothing.
I own.
- Now, we do have a safety net underneath
this massive gap between rich and poor.
It's far from perfect, but it helps
spread the wealth a little bit.
It's our Social Security system.
Social Security is a tax on current workers that
gives assistance to the retired, unemployed, and disabled.
It's like a finger in the dike
that keeps the economic party going.
But if everyone is consistently making less than their parents,
how long can that system possibly last?
It turns out this thing's pretty fragile.
Until 1935, America was one of the
only developed countries without Social Security.
If you couldn't work, you had to
fall back on family, church, or charity. It was a mess.
And it meant most working people couldn't
retire, essentially working to the grave.
Now, fast forward to 2022.
If today's people earn less than their parents
and that trend continues, we could see a
vicious cycle of lower incomes unable to keep
the Social Security system alive.
So securities cash surplus is expected
to run out around 2035.
So what does that mean?
Retirement and disability benefits totally dry up in
about a decade before you probably retire?
No, it just means the system will have to
run on same year tax collections, meaning benefits will
absolutely decrease, but not synced to zero.
And don't get me wrong, this is not good news.
It will make equality worse, and you will have to
figure out how to survive without these full benefits.
But it's not total collapse.
Total collapse comes when incomes drop lower
and lower, year after year, generation after
generation, eventually spiraling to nothing.
But let's wait a moment, because this is
when I came across some real hope.
I was digging into the research, and of
course, we have a cocktail of market selloffs.
Pandemic, inflation and war in Europe.
Our economy is under attack.
And according to the Fed,
- the burdens of high inflation fall heaviest on those
who are least able to bear them.
- Correct.
So, in other words, if you're in
the bottom half, you should buckle up.
That's when something completely unexpected
came out of the data.
According to Bloomberg, the poorest half of Americans are
in the best financial position in a generation.
It sounds too good to be true.
It doesn't sound real, but the average
household net worth for the lowest income
earners literally doubled since 2019.
So how can this be?
And why isn't everyone talking about this?
Well, there's two pieces of the story
the good part and the bad part.
Let's start with the good.
In the past year, the richest dudes in
the upper middle class saw almost 10% of
their wealth go down the drain.
But at the same time, the
working class actually got 3% richer.
The simple reason being the rich are
far more exposed to the stock market.
And when the recession came knocking,
they had more to lose.
And we can't forget about the Pandemic.
This was an atomic bomb for our economy.
But in a way, it kind of had the Robinhood effect.
The stimulus checks from Washington gave a lot
of oxygen to the lowest income earners.
And even though the Pandemic wasn't great, the US
still had one of the strongest
job markets in the world.
From my personal experience, I've owned
businesses my entire adult life.
And while it's never easy to find good help,
post pandemic was on a whole another level.
Finding people was nearly impossible for
a while, and wages skyrocketed.
This was great for the average worker.
It meant you could be picky.
You could choose a career instead of going for
whatever pays the bills, even if it sucks.
However, it's true that inflation is eating
up a lot of that newfound wealth.
But according to the Fed, the salaries for the
bottom half are actually rising faster than prices.
Again, this seems insane.
These factors help double wealth in just two years.
Finally, some good news that doesn't make
us feel like we're absolutely doomed.
So what is there to worry about?
There's a lot to worry about.
We still have to get to the bad part of the story.
After seeing wealth is increasing,
I needed to verify what's going on.
So I started checking records from the Fed.
This chart is the total wealth
of the bottom 50% of Americans.
You'll probably notice what I did right away.
The share of US wealth owned by the
bottom half has been in decline
since the then the '90s, and then the 2000s brought crisis.
The dotcom bubbles hit.
But the real deal was the 2008 housing collapse.
When it exploded, the bottom half was hit the hardest.
There was a moment when the bottom half owned
less than 1% of the country's entire wealth.
And by moment, I mean five year period.
The absolute lowest was Q2 2011, when the
the bottom half of all Americans owned just
0.3% of all the wealth.
So the bad news is, even though there's definite
improvement, there's still a very long way to go.
It's kind of like you took $100 at the
casino, then you made some bad bets and quickly
saw your cash go down to like, $7.
However, through a massive amount of effort,
you turn your $7 into $28. You 4X.
Time to celebrate, right?
But that's when you look around and you
realize you've actually been in a Chuck E Cheese
for the last decade, and it
costs a $1000 to get into the real casino.
And that casino seems to be
getting more expensive by the day.
Say your millennial or a very ambitious Gen Zier,
and you want to buy a house?
Then take a baby boomer like your parents
or that weird dude down the street.
For you, the price of that house will be 40% higher compared
to what it was for your dad when he was your age.
And that's because the housing market
has been on steroids for decades.
Or take college.
This is now twice the price boomers paid.
And this wouldn't be the end of the world
if it weren't for the fact that wages have
been stagnating since the '70s, with the exception of
the last two years trying to play catch-up.
This means that trying to move from the lower half
to the top 50% of income earners is a bit
like running uphill with a parachute on your back.
That the idea you can be born dirt poor, but
die rich is nothing but a lie?
I personally don't think so.
I think we need a perspective shift.
They won the generational lottery.
They were born at peak growth
of the world's largest superpower.
Of course it was easier.
What they lived through is not normal.
It's the extraordinary.
We just cannot compare ourselves to that.
And we now live in this postindustrial world of wealth.
A world where simply following the system laid for you
isn't going to guarantee wealth.
You need to stretch and grow and be as competitive as
the world around you if you want to get ahead.
And that's just the unfortunate truth.
So, no
But it's far from easy.
What we have is a major barrier
to entry into the world of wealth.
It's kind of a weird concept, but
it's become expensive to get rich.
Think about it.
For decades, the most popular way the middle class
built their net worth was through home equity.
You go to college, you get a job, you buy a house,
and your job pays for the house and your tuition bills.
Then the house goes up in value
and your net worth increases, simple.
Eventually you become rich.
That equation just doesn't work anymore.
Average wages can't afford average houses.
So what do you do if the easiest way
to build wealth is no longer an option?
How does one transition from unwealthy to
wealthy when the system just doesn't work?
Stocks?
That can be good, but it's unlikely to
make you rich in a short period.
That's better for super long-term strategies.
I think we've come to a point where
the world is so competitive you literally cannot
take the common path and get wealthy anymore.
You just can't.
But again, that doesn't mean it's impossible.
This is not meant to be doom and gloom.
The key is to think outside of
the system that's handed to you.
Let me tell you my first experience with this,
and then we can dissect it.
I grew up in rural Minnesota, a tiny town
where my graduating class was just 50 kids.
When I was around twelve years old, I worked
on a farm, literally shoveling *** for $6 an hour.
I hated it.
It gave me a parasite that made me sick for months.
I needed out, so I took what I knew
general labor, and I made this little flyer up
that I printed on my school's computer lab saying
I'd do any labor work for $15 an hour.
I was totally desperate.
I put it in my neighbor's mailboxes, not
knowing that that's actually illegal to do, oops.
But I actually got a few hits.
And just shortly after I was earning nearly three times
more per hour than I was at the farm.
This was a revelation for me.
Within a couple of summers, I was making $40
an hour doing lawn care while most other kids
my age were still working for minimum wage.
Now, I didn't fully realize at the time, but
I had established the fact that, oh, you can
literally dictate the quality of your life if you
just learn, think long term and try stuff.
So I use this, starting several small businesses
over the next year, learning everything I could,
failing plenty of times, and saving every penny
I had for the next big opportunity.
And finally, that opportunity came
when I was turning 19.
I purchased a struggling business.
I had previously worked at part-time
while I was building another business.
It was a moving company, and I poured everything I
had into that business and it exploded like a rocket.
By the time I was 21, I had
more than 90 employees, millions in revenue.
And that enabled me to purchase my first
home that same year when I was 21,
which has since more than doubled in value.
But when I go back to analyze what worked
for me, it always came down to trying things
outside of the box that I was placed within.
being as competitive as I could,
and keeping my emotions in check long
enough to see things actually pay off.
Now, following my exact path would
be unreasonable for most people.
You don't have to shovel turds
to learn this kind of stuff.
But there are many things that anyone
can do if you're just starting out.
Placing your money into passive investments is
not the way to explode your wealth.
Some is fine, sure, but investing really
is best when you already have wealth.
Instead, you should focus on your own earning power.
What can you do on top of your regular job
that can make you earn an extra $1,000 a month?
The answer is selling your skills.
Is it labor?
Is it book-keeping, copywriting, coding?
You need some skill.
If you don't have one, you need to learn one. That's it.
Take something that interests you and
do a free course on YouTube.
Then start advertising that thing as a freelancer.
If you're good enough, you will get work.
If you're not, go and take another course.
Practice refine your skills more.
Eventually, you will be good enough
to get paid for that thing.
Now, here is where the really tough part starts.
You're selling your skill.
You're making more money than ever, but you're tired.
However, you cannot slow down.
You need to keep learning and pushing.
This could be tripling down on your
skill, finding an adjacent skill that actually
makes more money, hiring help.
Or maybe it's figuring out what to do with
all the extra money that you're making, like investing
that into rental properties or something else.
The first success is a checkpoint, not a finish line.
Don't celebrate too soon.
I see this so often.
Do not celebrate.
You must delay the gratification.
Talk to any truly successful person, and
they're constantly pushing and delaying gratification.
If you can do this long enough,
there will finally be a tipping point.
A moment where you realize the
uphill battle is actually over.
A moment where you become a magnet for money.
People will pay top dollar for your time.
Your money and your investments will
grow rapidly, almost seemingly without effort.
Finally, this miserable machine is working for you.
You broke out of the inequality trap.
This is the goal.
For me, it took about eight years of intense
effort to finally hit that point and
realize, whoa, money is no longer hard.
Money flows to me.
It gives me chills even thinking about it.
That's the kind of freedom I wish everyone could feel.
It's true personal agency, being able
to dictate your own life.
So back to the original question.
And the answer is yes.
Despite obvious inequality, despite the fact that it would
be easier 60 years ago, despite it being so
expensive to become wealthy, it's still possible.
To me, the real inequality scam isn't that it exists.
It's that we're led to believe there's no way out.