The Great Divide: Why Housing is a Pipe Dream for the Bottom 90%

Ah, the American Dream! A white picket fence, 2.5 kids, and a home to call your own. But hold your horses! That dream is fast becoming a mirage for the vast majority of Americans.

Getting back to the disappearing dream.

Why, you ask? Well, let’s dig into the nitty-gritty, shall we?

The Elephant in the Room and the Playground for the Rich

Before I go any further, I want to point out that I am a free-market capitalist, but what we are operating under is crony capitalism run by the FED, Federal Reserve.

First off, let’s talk about the big kahuna—The Federal Reserve. These folks have been pumping money into the economy like there’s no tomorrow. And guess where most of that money ends up? Yep, you guessed it—in the pockets of the already wealthy. It’s like giving a starving man a crumb while serving a full-course meal to someone who just had dinner.

This leads us to the Bubble Economy, a playground where the rich get richer, and the rest of us are left picking up the crumbs. The top 10% own between 85% and 95% of all income-producing assets. Talk about hoarding the pie! This creates an artificial sense of wealth, a bubble that’s bound to burst sooner or later. But until then, the rich are having a field day, especially in the housing market.

The Domino Effect and the Upper-Middle-Class Scramble

Remember the dot-com bubble? When that burst, the wealthy needed a new playground, and they found it in real estate. With interest rates at rock-bottom, thanks to our friends at the Federal Reserve, housing became the new gold rush. And just like that, the Housing Bubble #1 was born. Fast forward to today, and we’re in the midst of Housing Bubble #2, inflated by even more Fed stimulus. It’s like déjà vu, but on steroids.

Now, let’s not forget the upper-middle-class. These folks are not billionaires, but they’re doing pretty darn well. They’ve also been riding the wave of rising stock and bond prices, and they’ve joined the housing frenzy. They’re snapping up second homes, vacation rentals, and investment properties like kids in a candy store. It’s a free-for-all, and the bottom 90% don’t even get a look-in.

Rent Prices Vs Income

People are struggling to pay the rent due to inflation which I think is a better sense of inflation than CPI. Below is a comparison showing rent up 147% vs CPI up 89%. Notice the dips, that is where the economy dropped.

Rent prices serve as a reliable indicator of inflation for a multitude of reasons. They have a broad economic impact as a significant monthly expense for many households, making any changes in rent a sign that other costs may also be on the rise.

Unlike volatile commodities like oil or seasonal goods, the demand for housing remains relatively stable, making rent a consistent measure.

The Bitter Truth and Final Thoughts

Here’s the kicker: the bottom 90% can’t compete with the financial firepower of the top 10%. The immense wealth created by the Bubble Economy has created a class of millions who can outbid the average person any day of the week. It’s a sad state of affairs, but that’s the reality we’re living in.

So, there you have it. The dream of owning a home is slipping through the fingers of the bottom 90%, all thanks to a system that’s rigged in favor of the wealthy. It’s a bitter pill to swallow, but unless there’s a seismic shift in economic policies, the divide is only going to widen.

For a deeper dive into this issue, check out the original article by Charles Hugh Smith via OfTwoMinds blog.

So, the next time someone talks about the American Dream, maybe ask them, “For whom?” Because as it stands, it’s more of a dream for some and a nightmare for others.

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