Error: Embedded data could not be displayed.




The Increasingly Fragile Upper-Middle Class

February 8, 2016

Many of these apparently high incomes are completely absorbed by high-cost upper middle class expenses.

Since the top 10% takes home 50% of all household income, it follows that this top slice has most of the discretionary cash, i.e. net income left after taxes, servicing debt and paying for essentials such as food, utilities and housing.

It also follows that the discretionary spending of the top 10% is supporting much of the economy that is dependent on discretionary spending: tourism, eating out, personal trainers, etc.

The top 10% includes the thin slice of Financial Oligarchy (top .01%) and the top 1%. This skews the income and wealth of the top 10%. But if we set aside the top 1%, the next 10% still earns the lion's share of household income.

The top .1% can prop up Maserati sales and buy $5 million vacation homes, but there simply aren't enough super-wealthy to support the U.S. economy. As for the top 1%, they can prop up the local Porsche dealership and pay dock fees at the yacht club, but there aren't enough of them to support the entire economy, either: around 1.5 million qualify as top 1%.

So that leaves the upper-middle class, the roughly 12 million households that earn a disproportionate share of household income, with the task of spending enough discretionary cash to prop up an economy that depends heavily on consumer spending.

Many of these upper-middle class households are far more financially fragile than their substantial incomes suggest. The vast majority of these high-income households depend on two earners, each making substantial salaries, bonuses and benefits such as 401K retirement contributions.

Many of these apparently high incomes are completely absorbed by high-cost upper middle class expenses. $250,000 a year may look like a lot until you throw in a couple of kids attending private prep schools or college, healthcare costs that aren't covered by insurance, an enormous mortgage and sky-high property taxes.

The upper-middle class includes many people with wealth, but it also includes many people who have saved very little, and what they do have is in IRAs and 401Ks trapped in the stock market. Their slide to insolvency can be very quick once one high-earner loses their job and can't find another equally lucrative position in a few months.

Many of these people are vulnerable to a downturn because they own/operate small businesses in discretionary spending sectors--the ones that will get creamed as people cut discretionary spending. Others are sandwiched between kids in college and elderly parents, and their seemingly big incomes are fully allotted to essentials and the generations they are sandwiched between.

One job loss will crumble the entire house of cards. As local government revenues start crumbling along with corporate profits, many high-cost jobs in both thr public and private sectors will suddenly be vulnerable as managers are forced to seek the largest possible savings from job cuts.

The upper-middle class that's supported the "recovery" with massive discretionary spending is far more vulnerable to implosion/insolvency than is generally appreciated.

Subscribers: If you did not receive your Musings Report this week, your subscription has expired. If you would like to resubscribe, you can do so via this page: How to Contribute, Subscribe/Unsubscribe to Of Two Minds.com.

Admin note: I will be busy with family commitments until mid-month. As a result, blog posts will be sporadic and email responses will be near-zero. Thank you for your understanding.



A Radically Beneficial World: Automation, Technology and Creating Jobs for All: The Future Belongs to Work That Is Meaningful (Kindle, $8.95)(print, $25).

The print edition is $25, but there's a $6 discount through my publisher's page for the book: use the code JPW86XRB to get the $6 discount. Note this does not include shipping, and requires purchasing through Createspace.

Here is the link to the book's Amazon.com listing,     Introduction     and Chapter One (free PDF).

"Certainly the author is decades ahead of his time. Humanity will eventually adopt the author's principles written in all of his books. Currently, humanity lives in delusion that the system will continue to serve them. We will see massive changes even in the next decade. Don't waste your money on college--buy the author's books and succeed." Book Reader (via Amazon.com)



Recent entries:

The Increasingly Fragile Upper-Middle Class February 8, 2016

The Chart of Doom: When Private Credit Stops Expanding... February 5, 2016

The Opaque Process of Collapse February 4, 2016

Why We Won't Have a "Lehman Moment" in the 2016 Crash February 3, 2016

The Global Economy Could Fall Farther and Faster Than Pundits Expect February 2, 2016

Stupor Bowl 2016 February 1, 2016

Be Your Own Medicine January 29, 2016

Success Is a Source of Destabilization January 28, 2016

The Illusion of Safety: Index Funds Are Not Low-Risk January 27, 2016

The Self-Serving Apologists for Student Debt-Serfdom January 26, 2016

Top-Down "Solutions" = Institutionalized Serfdom, Bottom-Up Solutions = Reviving Opportunity January 25, 2016


January 2016 entries           2015 Archives           Archives 2005-2014




Discover why I’m looking to retire in a SE Asia luxury resort for $1,200/month.





Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency. All contributors are listed below in acknowledgement of my gratitude.

Thank you, Sarah M. ($50), for your wondrously generous contribution to this site -- I am greatly honored by your steadfast support and readership.

 

Thank you, Clyde D. ($50), for your monstrously generous contribution to this site -- I am greatly honored by your steadfast support and readership.




Kindle, $9.95           print, $25

Automation is upending the global order by eliminating human labor on an unprecedented scale--and the status quo has no solution to this wholesale loss of jobs.

What if we could hit the reset button on the way we create money, work, commerce and community? What if we could design a social economy rather than a merely financial one? These are not idle questions, for technology now enables us to hit that reset button and organize the creation of money, work, commerce and community in new ways.

If we could start from scratch, what would a new system look like? Clearly, we need a system that offers what the current system cannot: meaningful work for all.

This book is the practical blueprint of a new system that offers opportunities for meaningful work and ownership of the sources of prosperity not just to a few, but to everyone.

In this system, every individual has the power to change the system for the betterment of themselves and every other participant. Being at the top of the heap is no longer a prerequisite. Everyone who is powerless in the current arrangement is empowered in the new system. Empowered to not just better themselves and their family, but better their community and the larger community of Planet Earth.

A radically beneficial world beckons—what are we waiting for?     Introduction     Chapter One (free PDF)



Get a Job, Build a Real Career and Defy a Bewildering Economy
(Kindle, $9.95)(print, $17.76)   audiobook, $19.95 (Audible.com)
go to Kindle edition

"Don't give this to a recent grad. Read it when your kids are born and then read it with them around eighth grade."

"Finally a book that gives practical career advice. The author does an excellent job describing the current economic and political system and how this affects employment opportunities. Times have changed dramatically, and will continue to do so faster than ever. I'm glad I stumbled upon this excellent book, and will begin preparing myself accordingly." Joseph

"I want to thank you for creating your book Get a Job. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated." Laura Y.         Test-drive the first section and see for yourself.



Of Two Minds Site Links

home     musings     my books     archives     books/films     policies/disclosures     social media/search     Aphorisms     How to Contribute, Subscribe/Unsubscribe     sites/blogs of interest     original music/songs     Get a Job (book)     contributors       my definition of success       why readers donate/subscribe to Of Two Minds     mobile site (Blogspot)     mobile site (m.oftwominds.com)


HUGE GIANT BIG FAT DISCLAIMER: Nothing on this site should be construed as investment advice or guidance. It is not intended as investment advice or guidance, nor is it offered as such.... (read more)

WHY EMAIL TO THIS SITE IS READ BUT MAY NOT BE ACKNOWLEDGED: Regrettably, I am so sorely pressed for time and energy that I am unable to respond to the vast majority of emails. Please know I read all emails, but I can only devote a very limited number of hours to this blog and all correspondence....



Contributions

Contributors and subscribers enable Of Two Minds to post 275+ free essays annually. It is for this reason they are Heroes and Heroines of New Media. Without your financial support, the free content would disappear for the simple reason that I cannot keep body and soul together on my meager book sales alone.

How to Contribute, Subscribe/Unsubscribe to Of Two Minds

SPECIAL APPEAL TO READERS OF OFTWOMINDS from longtime correspondent Cheryl A.:

I don't recall exactly how I discovered Of Two Minds in late 2005, but it is hard to express how grateful I am that I did. As a result of the insight I have gained from the information Charles has shared over these past 9 years, I have been able to navigate this turbulent period much more successfully than most of my acquaintances. I'm sure that those of you who visit OTM with any regularity have similarly benefitted in numerous ways.

The addition of the weekly musings has been an extra bonus for supporters that has provided further insight into the markets, as well as the world around us (often providing a much needed smile).

I have no doubt that those who generously contribute to this site recognize the value that it offers. I hope that those of you who visit, but have not yet contributed, will consider doing so. Your support is essential in helping to maintain such an important resource.

10/20/14 P.S. Over a year ago, Charles wrote about the coming rise in the dollar, a story that is just now gaining traction in the mainstream media. He was also early to recognize that the price of oil was going to fall. For readers who want foresight into where we are headed, these are further examples of why Charles deserves your support.

Thank you, Cheryl, for this vote of confidence. I can only promise that I will continue to do my best.

"This guy is THE leading visionary on reality. He routinely discusses things which no one else has talked about, yet, turn out to be quite relevant months later."
--Walt Howard, commenting about CHS on another blog.

"You shine a bright and piercing light out into an ever-darkening world."
Jeremy Beck




Or send coins, stamps or quatloos via mail--please request P.O. Box address.


Contributions in any amount are greatly appreciated.



Subscriptions to the Weekly Musings Reports

Subscribers ($5/mo) and those who have contributed $50 or more annually (or made multiple contributions totalling $50 or more) receive weekly exclusive Musings Reports via email ($50/year is about 96 cents a week).

Each weekly Musings Report offers six features:
1. Exclusive essay on a diverse range of topics
2. Summary of the blog this week
3. Best thing that happened to me this week
4. Market Musings--commentary on the economy & global markets
5. From Left Field (a limited selection of interesting links)

At readers' request, there is also a $10/month subscription option. (Everyone at the $10/month rate has the opportunity to add another person to the Musings email list for free.)

What subscribers are saying about the Musings (Musings samples here):

"What makes you a channel worth paying for? It's actually pretty simple - you possess a clarity of thought that most of us can only dream of, and a perspective that allows you to focus on the truth with laser-like precision." Jim S.

The "unsubscribe" link is for when you find the usual drivel here insufferable.

How to Contribute, Subscribe/Unsubscribe to Of Two Minds

 
 

PayPal and Dwolla members can also subscribe to the weekly Musings Reports with a one-time $50 payment: please email me if you use Dwolla, as Dwolla does not provide me with your email.





Extra-Special Bonus Aphorisms:

"There is no security on this earth; there is only opportunity."
(Douglas MacArthur)

"We are what we repeatedly do." (Aristotle)

"Do the thing and you shall have the power." (Ralph Waldo Emerson)

"Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius and a lot of courage to move in the opposite direction." (E.F. Schumacher, via Tom R.)

"He who will not risk cannot win." (John Paul Jones)

"When we drink coffee, ideas march in like the army." (Honore de Balzac)

"Progress is not possible without deviation." (Frank Zappa, via Richard Metzger)

"Victory favors those who take pains." (amat victoria curam)

"The man who has a garden and a library has everything." (Cicero, via Lee Bentley)

"A healthy homecooked family meal and a home garden are revolutionary acts." (CHS)

"Do you know what amazes me more than anything else? The impotence of force to organize anything." (Napoleon Bonaparte)

"The way of the Tao is reversal" Or "Reversal is the movement of Tao." (Lao Tzu)

"Chance favours the prepared mind." (Louis Pasteur)

"Success consists of going from failure to failure without loss of enthusiasm." (Winston Churchill)

"Where there is ruin, there is hope for treasures." (Rumi)

"The realm of gratitude is boundless." (CHS, 11/25/15)

"History doesn't have a reverse gear." (CHS, 12/22/15)

click here for more Extra-Special Bonus Aphorisms.


                                                                       

Heroes and Heroines of New Media

Outrageously Generous Supporters

Into this category fall those kind contributors who not only overlook the peculiar mix of topics and inconsistent quality of the site but who have perversely chosen to reward this anachronism with contributions of $100 or more.

Astoundingly Generous Supporters

Into this category fall those kind contributors who are so insanely generous that they have supported the site with contributions of $200 or more.

Thank you all for your ongoing support and encouragement.

Of Two Minds subscribers and contributors



Error: Embedded data could not be displayed.
   

Terms of Service:
All content on this blog is provided by Trewe LLC for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information. These terms and conditions of use are subject to change at anytime and without notice.

Our Privacy Policy:
Correspondents' email is strictly confidential. The third-party advertising placed by Adsense, Investing Channel and/or other ad networks may collect information for ad targeting. Links for commercial sites are paid advertisements. Blog links on the site are posted at my discretion.

Regarding Cookies:
This site does not collect digital data from visitors or distribute cookies. Advertisements served by third-party advertising networks such as Adsense and Investing Channel may use cookies or collect information from visitors for ad targeting; if you have privacy concerns relating to advertisements, please contact the advertisers directly.

Our Commission Policy:
Though I earn a small commission on Amazon.com books and gift certificates and gold (BullionVault) purchased via links on my site, I receive no fees or compensation for any other non-advertising links or content posted on my site.



   
   
   
    home     email me (no promise of response, sorry, here's why)     mirror site