The Real Reason the Bottom Half of Americans Are Poorer Than Ever

According to a recent report by Congress’s nonpartisan budget analyst, the bottom 50% of Americans have not fared well in the years prior and especially since 2008.

After 15 years, we can see what happened during the financial crisis of 2008: People who entered terrible mortgages because they wanted a home ended up paying for it — as did those who knowingly bought one to flip.

In the 2014 movie “The Big Short,” investments were front and center, examining greed and flawed thinking that led to the 2008 financial crisis. A simple summary is this: there was an investment product called a mortgage-backed security (MBS), comprised of groups of mortgages engineered to pay investors

The bank had given out bad loans and incurred a responsibility to pay them back (with varying high-interest rates), promising investors above-average investment returns.

The prevailing narrative, however, tended to blame individuals for taking out mortgages they couldn’t afford without explaining how these loans had come into existence in the first place or why people repackaged them.

Investment Architecture

A product architecture interwoven through the global economy was bound to impact everyone.

The housing crisis peaked in 2007 and continued through 2009; it was one of the most devastating financial events in American history.

It caused a loss of $9.8 trillion in personal wealth and resulted in over 10 million Americans losing their homes.

The stock market lost $8 trillion during the same period, and unemployment peaked at 10% in October 2009.

Fast forward to present times, and the information is just as depressing.

· The top 40% of Americans control more than a quarter of the wealth in the country, but it’s no secret that there’s a vast disparity between the rich and the poor.

· The bottom 50% of Americans account for only 2% of total wealth, decreasing two percentage points.

· The bottom 25% of Americans have an average wealth of -$11,000.

So what accounts for most of this disparity?

It turns out that Defined Contribution plans and Home Ownership are responsible for most of the wealth creation in the top 40%.

These two factors are responsible for 83% of all wealth creation in those who make up the top 40%.

However, both retirement plan access and homeownership continue to be areas where there are systemic and process barriers that impact millions of families.

We are all worse off.

But why does this matter? Well, there’s been much debate about whether or not we should be looking at income inequality as a problem that needs fixing.

Some people argue that income inequality isn’t a problem; after all, if someone works hard enough and achieves success, shouldn’t they get to reap the rewards?

Others argue that income inequality is a problem because it creates an unfair playing field where some people have access to more opportunities than others.

I think this data shows clearly that income inequality is problematic — not just because it creates an unfair playing field. But because it also makes us all worse off.

Statistically, inequality in America is alarmingly high. Wealth and income inequality have been on the rise since 1980.

The top 0.1% of Americans earn more than 20% of the national income. Most Americans are burdened with debt and rely on credit to make ends meet.

The system is rigged towards the extremely wealthy, and the middle class barely hangs on.

When a large proportion of the population has little or no access to the resources they need to meet their basic needs, this creates an environment where everyone suffers.

People struggling just to make ends meet can’t contribute their full potential to society; instead, they’re forced into survival mode and must devote their energy to ensuring that they and their families don’t go hungry.

Mindset Shift

Now, imagine a world where we don’t have this kind of imbalance. Imagine a world where the opportunities for all are abundant, and the economic playing field is truly leveled.

We can make this happen.

The economy is only stable when everyone has enough money to live on.

That’s why I believe we need a new vision of economics and a new way of thinking about the problems that we’re facing.

Help me spread the word

Everyone can enjoy financial empowerment by learning the money basics and the emotional relationship you have with money. Let’s spread the word and show them how.

Give me an hour to listen, and I’ll give you some great ideas on how to rethink your financial future and build wealth in today’s uncertain markets

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George Blount coaches individuals to navigate and react to economic change and financial stress in their lives. Organize your financial life, nurture your money mindset, and learn what to know about money concepts. Learn more at https://georgeblount.com/