💡 America's Growing Separation of Wealth (And What You Can Do About It)

Issue 151

✌️ Welcome to the latest issue of The Informationist, the newsletter that makes you smarter in just a few minutes each week.

🙌 The Informationist takes one current event or complicated concept and simplifies it for you in bullet points and easy to understand text.

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👉 And you can always check out the archives to read more of The Informationist.

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Today’s Bullets:

• What is happening

• Why it is happening

• Why it will keep happening

• What you can do about it

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Inspirational Tweet:

You hear it all the time: “The rich get richer.”

You can sense it. If you’re not in the top 1%, you can feel it. Some people are just not struggling.

But how bad is it, really? Are you exaggerating it in your own mind, or is it absolutely true? And how can we measure the growing divide?

And most importantly, what can we do about it?

All great questions and ones we will answer, nice and easy as always, here today.

So, grab yourself a big cup of coffee and settle into a nice comfortable chair for a hike across the growing continental-financial divide of America in this Sunday’s Informationist.

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🧐 What is happening

You can see from the chart above, posted by @unusual_whales on X, that the richest 50% of the population gained trillions of dollars of wealth over the last few years.

How many trillions?

Would you believe that the top 50% of the population gained over $54 trillion of wealth, their net worth moving up from $102 trillion to $156 trillion?

Gains so large that they dwarf those of the bottom 50%, which amounted to expanding their “wealth” from $2 trillion to 3.9 trillion, for a gain of just $1.9 trillion.

Economists would say, that’s great, look the bottom 50% nearly doubled their net worth! The system is working!

Then you look at the charts of those gains, and that narrative collapses.

Unless of course, you have a PhD in economics.

Then you ignore that divide.

And you especially ignore the divide that has been and continues to grow at the upper most wealthy of the demographic.

You know, that despised Top 1%.

Because those people amassed $19 trillion of wealth in the last four years.

That’s right, the Top 1% wealth grew from $30 trillion to $49 trillion.

In four years.

The obvious and sensible question is, what in the literal f* is happening? And why?

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🤔 Why it is happening

Let’s be honest, inflation is no secret anymore. The cat is out of the bag, so to speak. Prices have been going up far too fast and wages have not kept up.

Or wait, those PhD economists claim they have kept up.

And they point to this very chart to prove it.

Yeah, well, there are so many problems with the CPI (Consumer Price Index) calculation, that we need a whole newsletter to cover that. Good thing we have one.

If you have not yet read The Informationist take on CPI or you just want a refresher, you can find it here:

CPI and How the Measure of Inflation is 'Inconsistent'

And another one with some updated insight here:

The New CPI: A Wilderness of Mirrors

Bottom line, the CPI is terribly flawed at best, and we cannot trust that the measure is actually showing what is going on with prices that people pay at grocery stores, for health insurance, rent or other vital items.

And so, the above chart is a bit of nonsense.

So, what should we use?

Well, my friend Lyn Alden and some other extremely intelligent economists have pointed out that it’s pretty simple. The rate of actual inflation is extremely closely tied to the expansion of the money supply.

Of course this makes sense. More dollars in circulation equals more dollars chasing after goods and services, which means the prices of those goods and services rise.

Duh.

And what has been happening with the money supply, often measured as M2?

Oops. It appears earnings have not, in fact, been ‘keeping up’ after all, have they?

And now, getting back to the rise in wealth that is caused by all this inflation, we have to look at a few key indicators to understand what is going.

Why are the wealthy getting wealthier? It’s obviously not from wages…