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Language: en
The hashtag eat the rich racked up over
185 million views on Tik Tok alone. As
wealth inequality hits absolutely absurd
levels, there have been increased calls
to tax billionaires out of existence and
get wealthy people to pay more. AOC wore
a dress to the Met Gala that had tax the
rich emlazed across it. In July of 2025,
the three richest Americans, Elon Musk,
Jeff Bezos, and Mark Zuckerberg, had a
combined total of roughly 857
billion dollars. And they owned more
wealth than the entire bottom half of
the US population combined, which is
roughly 160 million people. But that's
wealth, not income. It's potential, not
reality. Taxing wealth would be like
charging you for a flight that you might
take one day to Paris. That's why tax
has always been on income, money you've
actually made. The question though is
are the rich paying their fair share?
Now, that question is complex. But the
question isn't should the wealthy pay a
lot? The answer is obviously yes. The
question is, are they paying their fair
share? It's so common for people to say
that the richest don't pay taxes or that
we could solve inequality by taxing the
rich more that it got me thinking, could
we? Would it actually work? Do the
wealthy pay their fair share? What story
would the numbers tell? Honestly, I was
shocked by what I found. I'm going to
walk through the reality of what's going
on in five easy parts. But the answer is
very surprising and you are not going to
want to skip part four because that's
where the bodies are buried. All right,
welcome to part one. Follow the money.
In 2021, the top 1% of American
taxpayers paid more than $1 trillion in
federal income taxes, nearly double the
amount paid by the bottom 90% put
together. Think about that. Fewer than 1
and a.5 million people collectively paid
almost twice as much as well over 100
million other people combined. That
statistic alone raises a question. What
do people think is fair? Because wealthy
people don't just pay more in taxes.
Paying more is a given. That's just how
percentages work. 20% of 10 is two, but
20% of 100 is 20. But US taxes are not a
flat percentage for everyone. They're
progressive system. The more you make,
the higher the actual percentage you
pay. According to the KO Institute, the
top 1% earned about 22.4% 4% of the
income generated in the US, but they
paid over 40% of all federal income
taxes. In other words, if the income pie
had 10 pieces, the wealthy earn two of
the 10 pieces, but they pay for four of
the 10 pieces. If you made $22 out of
every hundred, but were asked to pay $40
of every 100 in taxes, would you call
that fair, excessive, or not nearly
enough? Consider this. The bottom half
of taxpayers only pay roughly 3 to 4%
of their income in taxes. So while the
top 1% pay roughly 26% of their income,
the bottom half of taxpayers only pay 3
to 4%. To put that in plain terms, the
typical high earnner sends about 26
cents of every dollar they earn to the
federal government. Whereas the average
taxpayer in the bottom half sends just a
few pennies on every dollar they earn.
That means according to
taxfoundation.org, the wealthy carry a
tax burden 7 to eight times higher than
the median American. What's more,
according to the National Taxpayers
Union, over 56 million individual tax
returns had no federal income tax
liability whatsoever. And many
households even get money back due to
refundable credits. Let's widen our
focus out for a second to the top 10%.
This group starts at roughly 178,000 in
annual income per household. So it
includes not just the CEOs, tech
founders, and major asset holders people
think of when they think of the 1%, but
it also includes doctors, engineers,
trades people, and small business
owners. Collectively, these households
earn about 49.4%
of all income in America. And how much
do they pay? A whopping 72% of all
federal income taxes, according to the
KO Institute. Half of every dollar
earned in the country comes from these
families, but they don't pay half of the
taxes. They pay almost three quarters of
every tax dollar generated. Their
average income rate is about 27%
slightly higher than the top 1%'s rate.
And I know for many, this number is
still too low. Now, if that's you, if
right now you're thinking tax more, part
five is going to be the part you're
looking for where we explain exactly
what happens when you do that. But
first, let's put this all together. The
data of the top 20% of earners
challenges the simplistic narrative that
the rich don't pay their fair share. The
reality is the richest fifth of
Americans pay the vast majority of all
federal taxes and bear most of the
corporate and payroll burden. As well,
when you zoom out to the top half of all
taxpayers, you account for 97% of all
taxes paid. All government programs,
well 97% of them, are funded by the top
50% of earners. In other words, if
you're even slightly above the median,
you are part of the cohort carrying
virtually all of the entire federal
income tax load. On the other hand,
effectively half of all adult Americans
don't pay any tax at all. How much
further do people want to push it? Do
they want 20% to pay all the taxes, 10%?
Guess what happens when you do that?
We're going to cover that in more detail
later. But before we move on, it's
critical to say that just because the
bottom 50% only pay a minuscule amount
of taxes. It does not mean that they're
not working hard. They are. But the
middle class is disappearing. The
economy is indeed broken. It's just not
broken in the way that people think.
Here is the stark truth. Together, all
of the households in the bottom 50%
together only earned about 11.5%
of all adjusted gross income in 2022.
And that's down from an already horrific
14.4% in 2001. We are moving in the
wrong direction. And the answer
certainly isn't to tax the bottom half
more. The answer is to ensure they're
able to generate more income. This isn't
about the top half working hard and the
bottom half reloading, no matter what
anybody tells you. This is about the
breakdown of a system that can be seen
nakedly in the distribution of taxes.
Welcome to part two. The rise of
populism and a country in trouble. Paris
1793. Radicals enraged by inequality.
Whipping up mobs to drag a guillotine
through the streets. They promised
justice for the common man, but instead
created the infamous reign of terror
that saw thousands of people beheaded,
including the very revolutionaries who
originally fed the fury. Beijing 1966.
After starving 45 million people to
death by seizing the means of production
to eliminate hierarchies, Mao launched
the cultural revolution meant to retain
his iron grip on power when moderates in
his own government called for
market-based reforms. At Ma's urging,
teenagers would pull teachers from
classrooms and beat them often times to
death in public. Within a decade, 36
million people had been persecuted and
another 1.5 million were dead. Cambodia
1975, taking a page out a mouse
playbook, Pulpot murdered his way
towards a classless society where no one
was an equal. Merely wearing glasses or
speaking a foreign language could get
you shot, proving you really can
equalize everyone if you're willing to
equalize them in abject poverty. The
Cime Rouge killed about a quarter of
Cambodia's total population. This is
what happens when people actually decide
to eat the rich. When inequality gets
too high, the consequences really are
dire. Saying that people aren't paying
their fair share when in fact they're
paying way more than their share is the
beginning of a cycle of resentment that
when left unchecked becomes absolutely
murderous. The question becomes then why
do we instinctively target the group
that already foots most of the bill?
What is going so wrong? What is the
psychology of resentment? And how does
it perpetuate myths about wealth and
inequality? Remember, inequality is as
real as it gets. It is atrocious.
Inequality right now is a crushing
problem that must be addressed
immediately. That's not the question.
But the populist rhetoric pouring out of
the mouths of politicians and Tik
Tockers alike doesn't pose a real
solution. The things being said aren't
even accurate. So what is accurate?
Think back to the last time you scrolled
through your newsfeed or watched a viral
video. What images stick in your mind? A
friend on a gorgeous beach, a mega yacht
gliding around turquoise waters, Elon
Musk unveiling a rocket ship, Jeff Bezos
stepping onto a private plane, people
going into outer space. These spectacles
are hard to ignore and our brains are
wired to obsess over the gap between
what we have and what they have. There's
something called the genie coefficient
and it has to do with animals disdain
for inequality. If you want to know if
things are going to get violent, just
look at where you are on the genie
coefficient. It's a statistical measure
of income and/or wealth inequality
within a population ranging from 0 to 1
or 0% to 100%. A value of zero indicates
perfect equality. Everyone has the same
income or wealth. While a value of one
indicates perfect inequality. One person
holds all income or wealth and others
have none. For example, in the US, the
Ginny coefficient for income inequality
was approximately 41 in 2023 according
to World Bank and Census Bureau data
indicating moderate to high inequality
compared to other developed nations. It
was bad, but it's not insane. Our wealth
inequality however is truly grotesque
with a Jenny coefficient around 0.85 for
the US reflecting the concentration of
wealth among the richest individuals as
seen with the 857 billion held by the
top three billionaires again Musk Bezos
and Zuckerberg in 2025. The fact that
our wealth inequality is so much higher
than our income inequality is exactly
the problem. We're going to discuss this
in detail later, but for now, suffice it
to say that the distinction between the
two matters a lot and virtually no one
understands it. And that's the problem.
This is exactly why we continue to find
it impossible to solve this issue. In
addition to the fact that people don't
understand the difference between
income, real money, and wealth,
potential money, maybe somewhere down
the line, and what is causing the insane
discrepancy between the halves and the
have-s when it comes to wealth. There
are psychological factors at play that
are building resentment. The first one
is what psychologists call the
availability heristic. Namely, we judge
how common or important something is
based on how easily it comes to mind.
Given that social media floods us with
images of everybody doing better than us
all day every day, it's easy to see why
people are being conditioned to feel
left behind even more than they're
actually being left behind. Now again,
people actually are being left behind
for reasons we will go into in detail,
but the rage is being accelerated by the
availability heristic and other
psychological factors. The next
cognitive trap that people fall into is
known as zero sum thinking. It's the
instinctive belief that the economy is
like a single finite pie. If someone
takes a big slice, that means there's
less left for everyone else. This
mindset is deeply rooted in human
evolution. In small tribes, resources
really were finite. So, one person's
gain really did mean another person's
loss. But applied to a complex growing
economy, that thinking just isn't true.
You can hear zero sum thinking in
everyday conversations. Every dollar
these billionaires hoard is a dollar
somebody else doesn't have. Elon could
have solved world hunger, but instead he
bought Twitter. People actually believe
that if the rich have more, it means the
poor have less. What they miss is that's
not how economies work. In reality,
economies expand through innovation,
investment, and increases in
productivity. New wealth is literally
created rather than taken from a fixed
pie. Remember, wealth is potential
money. The pie can always be made
bigger, but it requires innovation. Yet,
because our brains default to zero sum
thinking, we interpret inequality as
theft rather than recognizing that
inequality is driven by value creation
through assets. But assets aren't
equally understood, so they're not
equally owned. Plus, they're not created
equally by different people. Now, anyone
could own assets or create them, but
roughly 40% of Americans simply don't
own any. They were never taught about
assets in school. They were never taught
about entrepreneurship. And right now,
the popular belief is simply that
capitalists are evil. So, people don't
ask, "How do I get on the winning side
of capital?" Even if I have very little
money, it is possible. But nobody's
asking how they do it. The third
cognitive pitfall stems from an instinct
that usually serves us well, the
fairness heristic. In most situations,
we intuitively equate fairness with
equal shares. If there are five cookies
for five kids, each child gets one
cookie. Anything else feels unjust. The
same impulse kicks in when we think
about how much the top 1% owns. Without
any context, our brain tells us that 1%
of the people should probably own 1% of
the stuff. When they own more, our
fairness radar screams, "That's not
fair." But, as I like to say, you're
arguing with God. For whatever reason,
God, evolution, the universe, whatever
you believe in, has seen fit to make
humans different from each other. We all
have different talents. And if economies
grow through innovation and ownership,
then the people who are most able to
innovate and have an intellectual
understanding of ownership, they're
going to be the ones who end up with
more of the pie. And every time
throughout history when we've tried to
even everyone out and make sure that
there were even outcomes, we have
discovered very quickly that the only
way is to kill a ton of people. But envy
is a powerful emotion. And truth just
isn't going to get in its way.
Psychologists have found that envy, not
a desire for fairness or compassion for
the poor, is what actually drives the
desire to continue to tax the rich more
and more. It comes from a desire to
punish. In a cross-cultural study
presented by the NIH spanning the United
States, the United Kingdom, India, and
Israel, researchers discovered that
while compassion actually does predict
generosity towards the poor, only envy
predicts what the study showed
specifically that people will tax the
rich even when it hurts the poor. In the
study, researchers presented
participants with hypothetical scenarios
involving wealth redistribution.
Participants were asked to choose
between a a lower tax rate on the rich,
let's call it 10%, which generates more
overall resources that significantly
benefit the poor, or b a higher punitive
tax rate, for example, 50%, which
results in fewer overall resources, thus
providing less benefit to the poor, but
substantially reducing the wealth of the
richest individuals. And guess what they
found? Across countries, people
preferred the more punitive scenario
even though it offered fewer benefits to
the poor. We as people are simply not
wired to care about the poor. We're
wired to want to punish the rich. This
is why we struggle to actually solve
this problem. People don't actually want
the solution to inequality. As
frontiersin.org
noted, resentment is more than simple
anger. Political scientists describe it
as a hostile emotion triggered not just
from seeing others do well, but from
believing that their success comes at
your expense. Unlike anger, resentment
carries a desire for retaliation.
Imagine watching executives cash massive
stock bonuses while your factory closes
or seeing tech billionaires wealth
skyrocket during a pandemic that put you
out of work. or bankers getting huge
bonuses after being bailed out of a
self-inflicted bank failure. Even if you
know intellectually that some of those
fortunes came from innovation and hard
work, resentment tells you that the
playing field is rigged. It is not
enough to level it. You want to flip it
over. Resentment says they got rich at
my expense, so it's only fair that we
take some back. It is powerful fuel for
a punitive tax system because that would
achieve not just wealth redistribution
but it would also serve to punish and
for most people punishment is the
desired outcome even if it hurts them
and others in need financially.
Resentment actually overrides
self-interest. When wages stagnate and
living costs sore, it's psychologically
easier and more satisfying to blame the
rich than to confront complex structural
forces like debt, money printing,
inflation, trade policy, and regulatory
choices. Righteous anger at genuine
unfairness rapidly becomes toxic
resentment aimed at destroying the
successful, and the problem accelerates.
Welcome to part three. What actually
drives inequality? Since the start of
the pandemic, the US government has
stolen 27% of its own people's money
through the hidden tax known as
inflation. Haters are going to say they
didn't steal the money, and technically
they're correct. They stole your
purchasing power. But I think people
often hide the truth of what's happening
behind technicalities and complexity. If
you act as if inflation is theft of your
money, you'll start making the right
moves. Also, to make matters worse,
since 2000, inflationadjusted housing
prices have risen about 65%
while median household income has barely
budged. But why? The answer is not what
people expect. It's that printing money
drives inflation and inflation drives
asset prices up. Because smart money
knows you have to get out of cash and
hide in inflation resistant assets like
houses, stocks, art, watches, etc. more
people pour in and the prices go up.
It's all gambling, but you have to do
something to stop the government from
stealing your purchasing power through
inflation. So, who ends up owning the
assets that ride up on this inflationary
policy? The top 10% of US households,
they hold about 93%
of all asset wealth, while the bottom
half own roughly 1% of the market. If
you're looking for a smoking gun, here
it is. When the government borrows and
prints money, inflation eats away at
cash and wages. But assets, stocks, real
estate, private businesses, etc. can
surge in relative value. If you already
own assets, you're somewhat shielded
from inflation. In fact, inflation can
work for you. But if you don't own
assets, you fall behind massively and
rapidly. That is what kills the middle
class. Now you throw in globalization
and the middle class is being squeezed
from two sides. Global competition and
automation on one side and monetary
policy and asset inflation on the other.
During the first 22 months of the
pandemic alone, 70% of shareholder
wealth gains went to the richest 5% of
Americans. Not because they're evil, but
because they're the ones that owned the
assets that inflation drove up in value.
These trends feed the sense that the
system is rigged. And quite honestly, it
is. Globalization made good cheaper, but
it also hollowed out the middle class
and funneled wealth to those who already
owned assets. Debt and regulation also
add to the mix. When governments finance
deficits, they do so by taking on more
debt via money printing. Debt at the
government level dilutes the value of
wages and savings. During the pandemic
caused recession, the US printed a
tsunami of dollars to help avert a
depression. But it also fueled the worst
inflation in four decades. Prices for
essentials like food, fuel, and housing
shot up while nominal wages failed to
keep pace. Excessive regulations also
play a role in aviscerating the middle
class. Layer upon layer of rules can
stifle investment in productivity and
innovation and innovation and increases
in productivity are huge drivers of wage
increases. Without those, wages don't
increase. These drivers, excessive money
printing, heavy regulation, runaway debt
interact with globalization to
absolutely destroy the middle class. And
how do the politicians and the voting
public respond? Do they call for policy
that addresses the underlying causes of
this catastrophe? No. They respond with
populism, emotionally charged
decision-making, where everyone joins a
team and fights to destroy the other
side who they view as an existential
threat. They call for tax hikes on the
rich, say billionaires shouldn't exist,
or promise tax cuts with no plan other
than more money printing to address the
growing debt and freakish levels of
wealth inequality. It doesn't matter
what political side you're on. They're
all part of the problem. And here's why
these strategies are guaranteed to
backfire.
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And now, let's get back to the show.
Welcome to part four, the danger of
populist tax hikes and capital flight.
In 2025, a record 142,000
millionaires are expected to relocate
internationally. The UK alone is
projected to lose about 16,500
high- netw worth individuals, the
largest net outflow of wealthy residents
from any country ever recorded. That's
not a trivial migration. And it forces
all of us to confront a simple reality.
Barring tyrannical force, wealthy people
will flee any place that they view has a
punitive tax policy. People seem to lose
sight of the fact that nations are
competing with each other for citizens.
And favorable tax policies are one of
the shest ways to draw the people that
pay the most taxes, drive the most
innovation, and create the most jobs.
And let's not forget, the wealthy pay
the vast majority of taxes. So, whatever
country attracts the most wealthy people
has the most tax dollars to spend. But
none of that stops people from pushing
for policies that do the exact opposite.
Let's step back and ask, why exactly are
wealthy people fleeing the UK? The UK
used to roll out the red carpet for
global elites, but now they're letting
them in only to pick their pockets. A
Financial Express report notes that the
abolition of Britain's non-domicile tax
regime, which previously allowed foreign
residents to shelter overseas income,
has made the country one of the most
expensive places to live. After April 6,
2025, long-term residents must now pay
UK taxes on worldwide income and gains
with top income tax rates of 45%
capital gains taxes up to 24% and a 40%
inheritance tax on global assets.
London's Labor government budget also
raised taxes on wealthy foreigners and
eliminated provisions protecting
overseas earnings and estates. These
changes come at top already existing
steep burdens from council taxes, road
levies, and emission freeze zones to a
whole slew of other things that make the
UK uniquely hostile to high earners. Add
in a sluggish stock market that has
underperformed the US and Asia for
years, as well as a complex regulatory
environment, and it's easy to see why
the country is absolutely bleeding
wealth. Henley and Partners puts it
bluntly. For the first time since it
began tracking millionaire migration, a
European nation leads the world in
millionaire outflows. All of this is
insane if you have any context
whatsoever. And history tells us it will
lead to the UK actually collecting less
tax revenue. But remember, this isn't
about collecting more taxes. It's about
being punitive. It's not about helping
the poor. We're already seeing this play
out. Britain, once the crown jewel of
global finance, is now losing its most
productive citizens. It's the only major
wealth hub with shrinking numbers of
high- netw worth residents, even as the
US, Switzerland, and the UAE attract
record inflows. This contrast
underscores a simple but powerful point.
Capital and talent go where they are
treated well. Countries that combine
opportunity with reasonable tax and
regulatory burdens attract entrepreneurs
and investors. Those that punish
success, whether out of fiscal
desperation or populist resentment, risk
driving away the very people who create
jobs and fund public services. The US is
currently benefiting from that calculus.
But with increased calls to tax the rich
even more, the question is whether it
will continue to do so. America should
take heat of what's going on in the UK.
Today, the US is poised to gain 7,500
millionaires, according to Henley
Global. But if we succumb to the same
politics of envy, if we raise capital
gains rates to European levels, impose
wealth taxes, or scrap long-standing
incentives for investment, we could flip
from magnet to repellent almost
overnight. In fact, we've already tried
punishing levels of tax before, and it
didn't work. In the 1950s, as a result
of World War II, America had a marginal
tax rate of over 90%. You would think
that would bring in so much more
revenue, but the fact is we took in less
tax revenue per taxpayer than we take in
right now. That's correct. We had a 90
plus% progressive tax policy, the kind
like people are calling for right now.
And we took in less money per taxpayer
than we take in currently with a much
lower rate. Now, this is something known
as the Laugher curve. The LER curve is
an economic concept that illustrates the
relationship between tax rates and
actual tax revenue. It shows there is an
optimal tax rate that maximizes
government revenue. And if you go beyond
that, you're doing it out of spite
because increasing the tax rates above
that number serves only to reduce
revenue by discouraging economic
activity such as work, investment, or
even consumption. It also makes the
wealthy flee the country or state. As
previously discussed, history shows over
and over again that attempting to
eliminate inequality through punishing
taxation of the rich erodess the very
foundations of prosperity. So if tax
alone doesn't work, what is the
solution? Because the level of
inequality that we have right now must
be fixed for everyone's sake. Welcome to
part five. How do we fix the problem?
America's national debt is now bigger
than the entire economy. If we allocated
every cent of GDP we generate in an
entire year to the debt, we'd still owe
almost $10 trillion.
Our debt is on track to exceed its World
War II era record within just a few
years with interest payments totaling
more than the annual budget for national
defense. Those numbers aren't abstract.
They mean less money for schools, less
money for roads, less money for
research, less money for everything. But
before we can fix the problem, we have
to agree on what the problem is. The
symptom is obvious. Intolerable
inequality, that is what we have to
change. If we don't fix inequality,
we are guaranteed to have a future that
includes revolution or civil war. Our
future is only bloodshed if we don't
solve the inequality problem. But while
the symptom is obvious, the problem is
far more elusive. What's actually
causing it? I routinely get in debates
with people about wealth inequality. And
I am shocked how often people come back
to the solution being to tax the rich.
That's what made me want to write this
video essay in the first place. I'd be
all for it if it were going to actually
solve the problem. I'd much rather be
taxed more than I am now than have my
body separated from my head. But the
reality is that increasing the tax
policy alone will tank the economy,
making everything worse. We have to face
the hard truth. Wealth inequality is a
runaway train due to globalism and the
realities of how economies work. The
following oversimplifies the problem,
but not by much. When the government
racks up debt, it has to print money to
make its payments. Printing money causes
inflation. Inflation destroys anyone who
gets paid in cash or saves in cash and
it rewards anyone who owns a smart
basket of assets. The research suggests
there are a few large forces at work and
while none alone account for everything,
a small number of factors accounts for
the overwhelming majority of the
problem. If you've ignored everything
I've said up till now, please pay
attention to this because here is a
breakdown. Number one, globalization and
offshoring. Economists who studied the
China shock, letting China into the WTO,
found that increased import competition
from China caused nearly 60% of all US
manufacturing job losses between 2001
and 2019. From 2000 to 2007 alone, the
shock wiped out a staggering 1.5 to 2
million manufacturing jobs. Those losses
didn't simply shift workers into equally
good jobs. The vast majority of those
workers remained permanently unemployed
and the ones that did find work largely
found lower paying service jobs. While
people often point to a growing chasm
between executive compensation and labor
wages, the Brookings Institute points
out this is actually a problem of
globalism. The offshoring of the more
labor intensive parts of the US supply
chains explains the majority of the drop
in the labor share of income. The report
went on to highlight that the evidence
for other neocclassical explanations for
the drop, such as a softening of union
negotiating power is weak at best. Two,
the changing labor capital split and
worker power. According to the Brookings
Institute, researchers found limited
support for neocclassical capital
deepening explanations and noted that
labor share of national income has only
fallen by about 6 percentage points
since the mid 1980s from roughly 64% to
about 58%. Their study also notes that
about a third of that decline is due to
statistical quirks in how
self-employment income is computed and
that most of the rest stems from within
industry declines in manufacturing and
trade rather than a simple shift of
profits from labor to executives.
Additionally, when you factor benefits
into total compensation, wages actually
held steady with productivity increases
until the 2000s when the problems of
globalization and runaway inflation
began a serious downward trend. That's
not to say that unions and minimum wage
policy doesn't matter. It does, but
their aggregate impact is modest at
best. A study summarized by the US
Bureau of Labor Statistics found that
unions reduce economywide wage
inequality by less than 10%. And in the
private sector, it effectively doesn't
matter, accounting for only about 1.5
percentage points for men and 6 points
for women. Declining union membership
and the eroded real minimum wage do
contribute to the problem, but they
don't explain the vast majority of the
gap. For that, we have to talk about the
elephant in the room. Three, how debt
financed money printing creates asset
inflation. To fund our chronic deficits
and stimulate our economy even more
since 2008, the Federal Reserve has
increased the money supply wildly. From
2020 to 2021 alone, the Fed increased
the money supply by an unforgivable 27%.
That's much more than the money supply
was increased for the Great Depression
in World War II. This surge helped avert
immediate economic collapse, but fueled
the highest inflation in 40 years,
absolutely obliterating the middle
class. Nominal wages failed to keep up
for the reasons previously mentioned,
eroding the purchasing power of anyone
who didn't own assets. There's no way
around that. I wish there was. I wish it
wasn't this complicated, but that is the
reality. If we're going to claw our way
out from under the terrifying spectre of
debt and inflation, we must realize that
inflation helps those who own
appreciating assets while hurting anyone
who doesn't. That is the problem.
According to the US Treasury, since
2000, inflation adjusted housing prices
have climbed about 65% while median
household income has barely moved. Stock
market gains have been even more
lopsided. The top 10% of Americans now
hold 93% of all US equities, while the
bottom 50%, as we talked about, hold
just 1%. The top 1% alone own over 16
trillion in stocks, whereas the bottom
half hold.3
trillion. As a result, asset price
inflation has widened the wealth gap to
terrifying levels. Even if wage growth
had kept keeping pace with productivity,
those without assets such as stocks,
crypto, gold, or a house would get left
behind no matter what. That's the
problem with resentment. It makes people
emotional and stops them from focusing
on the actual cause and effect that's
gotten us here. So, what should people
focus on? Well, according to statistical
evidence presented by the Heritage
Foundation, reducing regulations can
actually unleash economic growth. The
data shows that even simply not allowing
any new regulation, forget reducing
them, just not allowing any new
regulations, would increase GDP by
nearly 2% over 10 years, guys, that
would roughly double our GDP and would
put us squarely in the middle of an
extraordinary economic boom. Their data
also suggests that this would allow us
to trim inflation by6 percentage points
annually, which would free up billions
of dollars that currently go to interest
payments on the debt. And that would be
small potatoes compared to a balanced
budget, ending deficit spending and
never allowing the government to take on
debt in excess of 3% of GDP. Also,
according to the National Institute of
Standards and Technology, each dollar
invested in US manufacturing generates
$269
in total economic activity. We have to
accept that by allowing China into the
WTO, teaching them all of our high-skll
manufacturing techniques and all of our
VC capital allocation techniques, we've
created a pure competitor that can now
rival us militarily and economically. We
have to be realistic about the threat
they pose and onshore essential and
high-skll future-facing manufacturing.
We also have to ensure a pro wealth tax
code so that we can be competitive on
the world stage for top tier talent.
Even if you hate migrants, you have to
remember that just because someone was
born here doesn't mean they're going to
stay here if we create a confiscatory
tax policy. And one last thing, and this
is a big one. We have to stop money
printing. This is the assassin's bullet
for the middle class. All right, you put
it all together and you see the tools to
grow the economy and reduce inequality
exist, but they require discipline and a
willingness to rethink our approach.
They also require us to get out from
under the massive debt that we've
accumulated, which is currently
enslaving all future generations. And to
do that, we'll need to execute a
beautiful deleveraging. Now, I've done a
full video that you can watch here about
that exact thing. Remember, fewer than
1.5 million Americans, roughly the
population of Phoenix, pay almost twice
as much in federal income tax as the
other 137 million taxpayers combined.
Now, imagine those same people looking
at headlines that call them freeloaders
that say that they're not paying their
share. Imagine them watching London
chase out its wealthiest residents with
punitive taxes. Then they themselves
packing up and leaving. It always seems
impossible until it happens, as it has
many times throughout history, as it is
happening right now in Europe in
unparalleled fashion. That doesn't mean
that inequality isn't grotesque and
unacceptably high. It is, and I hope
I've made that clear here today. But our
goal should be to fix the broken system,
not get caught up in the emotions of
punitive populist rhetoric that's based
on resentment rather than an actual
desire to change that will help those
that are struggling. Helping those that
are struggling should be the goal. The
yawning gap between the rich and the
poor isn't because the rich dodge taxes.
It's because globalization sent factory
jobs overseas. The government took on an
insane amount of debt and printed an
absurd amount of money. And that in turn
inflated asset prices like mad. That
sent asset owners into the upper class
and non-asset owners down into the lower
class. Failed economic policies have
gotten us into this mess. And no matter
how hard they are to fix, if we don't
fix the real problems, then economic
stagnation or catastrophe are the only
options left on the table. History
screams its warning. Actions taken out
of envy lead to guillotines, civil wars,
and genocides. They are a cure that is
far worse than the disease. It's how
France elected a dictator, Spain elected
a dictator, Italy elected a dictator,
and most memorable of all, how Germany
elected a dictator. If we let resentment
for the rich strangle another
generation's ambition in the crib, we
will lose to China, see our millionaires
flee as they are from the UK, and we'll
spend a hundred years as a former
economic superpower, just as Argentina
did for the exact same reason. We need
to channel our anger towards solutions,
not scapegoats. We need to cut the red
tape that holds back entrepreneurs. We
need to bring back critical
manufacturing. And we need to balance
the budget and stop electing people who
promise things for free. Nothing but
failure comes for free. As is true the
world over, America's prosperity has
always come from growing the pie rather
than slicing it thinner. So, let's
remind ourselves of how we became the
most dominant economy the world has ever
seen and get back to solutions that
survive contact with the real world. All
right, guys. If you want to join me as I
explore these ideas in real time and
have your own voice heard or simply
listen to the debate, make sure you join
me during my live streams here on
YouTube Wednesday and Friday at 6:00
a.m. Pacific. Until then, my friends, be
legendary. Take care. Peace. If you like
this conversation, check out this
episode to learn more. The average rent
for a one-bedroom apartment in Manhattan
now exceeds $4,200
per month. That's more than twice the
average monthly income for a recent
college graduate. In San Francisco, a
person earning