Bubbles Eating The Middle Class
Despite the focus on health issues in 2020, we've just lived through the greatest economic recession in a lifetime. The effects are still working their way through the system, and as it does, it knocks out leverage, knocks our insolvencies, knocks out jobs, knocks out businesses, knocks people out of their homes and halts productivity that isn't cost-effective.
The so-called engine room of any economy is the consumptive powers of the middle class. When more people in an economy move into this stage, it provides a band for productivity that can sustain more debt and pull others out of poverty, or so we've been sold.
In the past year, we've seen the global middle class has been eviscerated to the tune of 150 million people. These people are not pushed into the elite class but deeper into poverty. If we erode our middle class across the world, and a portion of that middle class is too young to work or too old to work, we create more dependants who cannot access resources.
These frustrations begin to manifest in discontent, uprisings, crime, protests, immigration, populism and even civil war. So why are the middle class having such a bad time after we've seen the biggest rise of the middle class in the last century?
The TLDR is mo money printing, the end, but if you want to dive deeper, follow me.
The middle class rely on wages
The middle class is a broad generalisation. You get subsets in it, lower, run of the mill and upper-middle class, so it's not the same situation for everyone. You could be living in a middle-class neighbourhood on your cash reserves or because you're heavily overleveraged, and to the outsider, you're seen as pretty much the same.
The middle class is seen as a step up from the working class, the blue-collar, into the white-collar, and even with all the luxuries they can afford, one thing remains the same, they rely on wages to maintain their lifestyle.
It only takes a few months to a few years without wages to completely ruin many of the middle class; they need to keep working to remain in the cosy position they find themselves in. This precarious position is normalised in today's consumer-led world, and to make it worse, is cash earner s and cash holders aren't exactly getting the best deal these days.
When you rely on one method of income, you open yourself up to a massive single point of failure and when that earning potential is kept in something that devalues, you're essentially working for less each year.
Getting into assets isn't always possible
As more money is pumped into the system by central banks and credit creation through consumer banks, it dilutes the money supply even further. The old money loses value, as does the newly created money divvying up the worlds productive capacity in a trickle-up approach.
Those in the know try to get into assets while their money still holds some value, such as real estate, collectables, stocks, fine art, index funds, precious metals, EFTs and bonds.
The problem is getting into assets isn't always possible for those in the middle class, even if it seems like they are people of means. Buying assets requires a certain amount of free cash flow to either service the debt or buy it outright, and there's often a minimum buy-in that is well above many of the middle classes disposable income.
Apart from collectables and precious metals, many other assets are hard to own for the middle class and secure a good deal.
Bitcoins ability to divide itself up into 100 million satoshis allows anyone with cash flow to enter a position and secure their value regardless of the size of the order. This asset class can be acquired by someone with the modest of means and allow them to keep contributing at a fee they feel comfortable with allocating.
It is the ultimate savings mechanism and ideally poised to assist many middle-class people who are in desperate need of an asset they can acquire without breaking the bank.
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