| Politicians tend to define "middle class" as the group | | | | promises US automakers made to their own |
| of people most likely to listen to their latest sales | | | | workers, created the setting for their downfall. The |
| pitch for re-election. Recent studies done by the US | | | | US government is tempted to engage in |
| Census Bureau indicate that the middle half of | | | | protectionism to turn this around, but history has |
| household incomes falls between $25K and $75K in | | | | proven that this approach will not work. So no |
| the USA. Over the past two decades, the number of | | | | matter how many diatribes you hear about NAFTA |
| households in those brackets decreased by 3.9%, | | | | or "big companies moving jobs overseas", the harsh |
| from 48.2% to 44.3%. During the same time period, | | | | reality is that we are rapidly shifting to a global |
| however, the number of households with incomes | | | | economy. When the US was a true economic power, |
| below $25,000 decreased 3.5%, from 28.7% to | | | | we could have more influence on global trends. Now, |
| 25.2%, while the number of households with incomes | | | | we are a debtor nation. Like your Mom always said, |
| above $75,000 increased over 7%, from 23.2% to | | | | "Debtors can't be choosy." |
| 30.4%. (Income, Poverty, and Health Insurance | | | | 3. The growing cost of energy. Most people feel the |
| Coverage in the United States: 2006, U.S. Census | | | | cost of gasoline first, but the impact is also felt in |
| Bureau). So if the middle class is indeed shrinking, is it | | | | natural gas and electricity. High gas prices were |
| because more households are becoming wealthy or | | | | certainly impacted by the Iraq war, but the shrinking |
| upper middle class? Or has the data changed | | | | supply of "cheap" oil and the rising cost of "clean" |
| recently? There has been much debate (most of it | | | | energy production is driving the price ever higher. |
| political) on this topic. | | | | High energy prices strike at the very heart of job |
| Since this study was undertaken by the Census | | | | creation and personal finances. Most middle class |
| Bureau, some major economic changes have taken | | | | Americans drive their cars to work, to buy food, etc. |
| place in the USA. In late 2008, the simultaneous | | | | The price of food is also linked to the price of |
| collapse of the US automotive industry, the housing | | | | energy because of the high level of automation in US |
| market and major investment portfolios created an | | | | agriculture. |
| economic crisis that rapidly became worldwide. The | | | | Debt, economic globalization and high energy costs |
| US government responded by pumping large amounts | | | | have creation the "perfect storm" for economic |
| of money (roughly $1 trillion) into the banking system | | | | disaster. As Trump and Kiyosaki point out, a |
| and public infrastructure programs, hoping to speed | | | | disappearing middle class is a threat to democratic |
| economic recovery and stem the tide of job losses. | | | | capitalism itself. Well, enough of "bad news." How do |
| However, we are not out of the water yet. As this | | | | we fix this problem? They suggest some legislative |
| article is being written, the unemployment rate in | | | | and political solutions, but most of us are powerless |
| Ohio has topped 11%. In Michigan, it's even higher | | | | to force our own government to do a lot of |
| (15%). | | | | changing, at least as individuals. What can we do to |
| It is easy (and tempting) to get "partisan" and blame | | | | protect ourselves and our children/grandchildren? We |
| these events on one national political party or the | | | | like the answer Trump and Kiyosaki give: We can |
| other. Certainly both have made their contributions to | | | | choose to become wealthy. In today's world, the |
| the problem. But we believe the current economic | | | | choice may not be whether you want to be rich or |
| malaise is the result of the following trends: | | | | middle class - it's whether you want to be rich or |
| 1. Massive national and personal debt. The US national | | | | poor. |
| debt has risen more in the last five years than in the | | | | You can choose to become wealthy by enrolling in |
| entire history of the country. Even worse than the | | | | the school of hard knocks and gaining a "financial |
| debt are the unfunded obligations of the US | | | | education" - the kind that is (unfortunately) not |
| government in future years. Trump and Kiyosaki say | | | | offered in US high schools or universities. Rather than |
| that the unfunded obligations for Social Security are | | | | turn your hard-earned savings over to a "money |
| roughly $10 trillion, and those of Medicare are roughly | | | | manager" who will charge you whether he makes |
| $60 trillion. They compare these to the estimated | | | | money for you or not, you can learn to make your |
| value of the entire New York Stock Exchange at $35 | | | | own investment decisions. There is zero evidence |
| trillion. These massive obligations are the result of | | | | that professional money managers, for example, can |
| unfunded promises to the large generation of baby | | | | routinely outperform the Standard and Poors stock |
| boomers who are approaching retirement age. There | | | | index. So why should you pay them? Investing is not |
| is simply no way out of this morass that is without | | | | nearly as complicated as most would have you |
| significant pain. Second, personal debt is also at an | | | | believe. And certain types of investing have |
| all-time high. One of the reasons for so many home | | | | tremendous leverage and tax advantages. The only |
| mortgage foreclosures was homeowners using their | | | | reason not to become informed in the Age of the |
| home equity as a "piggy bank" to fund cars, | | | | Internet is laziness. |
| vacations, luxury items, home improvements, etc. | | | | We highly recommend reading Why We Want You |
| When the housing bubble burst, many of them could | | | | To Be Rich, but we also recommend you become a |
| not keep up with their mortgage and credit card | | | | serious student of your own wealth creation and |
| debt. | | | | preservation. Whether you are "middle class", "upper |
| 2. The true emergence of the "flat earth." Thomas | | | | middle class", or "wealthy", you are responsible for |
| Friedman's book, The World Is Flat, warned us that | | | | your own financial condition. Only the very poor can |
| this was coming. Many skilled jobs are being shifted | | | | afford to depend on the government to take care |
| from the US and Europe to emerging nations like | | | | of them. And as financial reality hits the USA, the US |
| China and India. This, as well as the unfunded | | | | government is going to be forced to disappoint us all. |