This is why you’re struggling!
This could be worth a long text and I want to explore this deeper but I was reading a book and came across these numbers.
1930 Great Depression (USA):
Inflation adjusted income: $87,744
Inflation adjusted taxes paid: $2,308
NEW inflation adjusted home prices $79,000
This is a 2.9% tax rate. and net income (yearly) totalled 1.08X the cost of a home
If 70% of ones income were to go towards expenses, food, cars, items, repairs, business, weddings, than one could still save for a house in a little over 3 years.
Please be aware that this is using the governments calculation of inflation so the numbers are likely slightly worse (especially weighting towards more recent years)–but remember, this was when GOLD was money.
Now? (2023 Depression):
Income: $56,000
Taxes paid: $16,615
New home price: $437,000
This tax is an amazing 29.5% and this is not including other taxes that you’d encounter throughout everyday living (ESPECIALLY as an entrepreneur or business person).
Holding the same expectation that 70% of your income went to expenses (allowing 30% of savings)–> this would take you… ready for it? TWENTY-SIX YEARS in order to purchase a house.
But its worse than that, because these are nominal numbers not real numbers which means that across the 26 years of saving you’re still falling behind because the dollar is losing more value. This is analogous to a swimmer trying to get to shore but the tide keeps taking them out to sea more and more.
AND how many do you know that either have 30% free cash flow (most live above their means and max out any extra earnings). Even if they do have 30% to spare…how many do you know that have the diligence and persistence to reliably put that 30% (which averages 16,800 a year) towards saving for a house every year…for more than 2 decades… it’s not even worth it.
And if you don’t believe me that inflation will worsen across the next 26 years… here’s a two little facts for you. Money Supply 2 (M2) which is Base money (M0) + Chequeable deposits + money in circulation + savings accounts and other easily convertible assets is 1776X that of dollars in cash. Okay what does that mean…
That means percentage wise, that cash in your wallet only constitutes 0.056306306% of ALL of the “money” in the USA. Let me rephrase that. ALL the cash that circulates, only constitutes 0.056306306% of the entire “money” that exists relative to M2 money supply. This is why a bank run, in the traditional sense cannot really take place. The central banks have the control over the value of the items in your wallet. Yet we continue to spend most of our waking lives hungry for something that is just fiat. My point being… the name of the game IS, and will continue to be, inflation.
The second fact is that 40% of all “dollar reserves” have been created in the last 3 years (coincidentally, that is going back to the year 1776).
25% tax unrealized gains 44% tax on capital gains 40% tax on income earned 99% loss of purchasing power 100% newly printed funds go to bombing runs
Depressed Workers Union
I often say that the USA is not the same country it once was about 90-100 years ago for all sorts of reasons; check the film, check the language used, the demographics, the employment, the values, the religion and 1820 relative to 1920 it was a wildly different country yet again. But this is another highlight showing that the American dream is truly dead. Like George Carlin said, “it’s called the American dream, because you have to be asleep to believe it”
What can you do?
But always, #StayOnTheBall
