The Real Meaning of Downward Class Migration — 30 Comments

  1. @Jack,

    Really good video, and a lot to think about.
    Big picture, what it says to me is that our nation (as a whole) has been on the decline for a long time. It is a horrible thing to realize, that the United States is moving backwards. I’m not sure the rest of the world is any better off, and if so, that means our WORLD is declining.

    It makes your message of removing oneself from that system as the ONLY means of (really) prospering all the more relevant.

    • @KAM your conclusion is of course spot on, as it often is. I think the key here though and damn I hate to put it this way. We are hitting a critical mass of decline! It has been long, slow and largely unfelt because we used the band-aid of debt to cover the wounds. Now they are infected and festering. People just keep putting more bandages on but the smell of what is underneath can now be perceived by all.

      I still think there may be one more big strike up the band upswing before the final bill comes due. If so everyone needs to use it to solidify their personal freedom. If I am wrong even more people are going to really get hurt in this mess.

      • @Jack,

        You’re right. I think more people than ever have some sense of things not being right, but I don’t think people understand what is wrong or why. That’s why I appreciate this sort of Video.

        Unfortunately, I think that even if people know something’s wrong, they are being led down false paths, (like OWS). I also think that the “upswing” (false recovery you’ve talked about for so long) is going to be embraced by many. I think it will be hard to resist the desire to say “Whew, things are now good again.”

        I’ve got my eyes open, but a lot of work ahead of me. Thanks for your motivation.

    • i found this article on decline very enlightening:

      The Seneca Effect: Why Decline is Faster than Growth

      Where it gets really interesting is when you’re combining the decline curve with population overshoot.

      Something I’ve been contemplating is where would the western world be without the ‘windfall’ of resources provided by the north american continent? (tens of feet of topsoil, old growth forests, untold mineral wealth, abundant to the pt of insanity game, oil, etc.) Or, in other words, how much of our ‘success’ to date is DUE TO that windfall of wealth, and how much is to our forefathers actions.

      We’re of course taught that we (the american people, and of course our beloved leaders) are solely responsible for our prosperity. But lately I’ve really been wondering.

      I mention this because of the ‘all they need is democracy and free markets and they’ll be rich too’ mantra that we’ve been pitching since WWII. I don’t think a Sudanese bedouin’s life changes at all if he’s suddenly allowed to vote. Its largely a function of his (man made) environment.

      in other words, i could care less abt being ‘rich’ and ‘democratic’.. i’d much rather be ‘free’.. that includes freedom of choice, which does require surplus (‘rich’) but not in the way a consumer sees it

  2. Have you seen the 2002 Speech by Ben Bernanke ? Will the fed devalue the currency by 30-40% at one time this year. I am reading more recently about that being a possibility. This is the only thing left to do that he mentioned in that speech. What do you see as the results if that were to happen? Have read that it will happen in Feb.

    God Bless
    Dan H

  3. Jack well said. I live in Yakima, Washington State. Yakima County exports over a billion dollars of agriculture a year. Yakima county also has the highest poverty level in the state. The rich stay rich and the poor get poorer. The education system is broken. It does not help that both parents work out of the home and their childeren dont get the meaning of life and how to stay out of debt from thier parents untill its to late. Thank you for sharing.

    • What I meant to say when I said “1 billion dollars in exports a year”. It’s also the highest in exports in agriculture for the State.

  4. Great video! Most people I have seen in my area that make 120k or more are still in the “country club” mentality of “ohh well we just have some bumbs in the road”.

    Episode 766 with Jacob Lund Fisker really changed my concept of how to build a life that is satisfying without the consumer mentality that seems promise happiness. Happiness to me is living a life well lived in real realtionships and community with others, not with gadets, debt, and fancy crap.

  5. Most-excellent presentation … very-very complete and informative.
    You and your skills & ability at effective communication are appreciated.
    The message you shared — really puts into perspective the issues of life style ‘down-ward migration’ and the real mess we are in and that such a mess is only going to get worse and deeper.
    Keep up the good work – these ‘in-person’ presentation segments are needed to be heard by many-many more folk.

  6. As I walk through the Malls (rarely). I have a sense that I don’t belong, or I hold some information that these people don’t have. This cannot go on forever; Ten year old kids with iPhones, cell phones stuck to their head. People filling their grocery carts with lettuce cleaned and wrapped in plastic. Service stations full of Diesel and gasoline, large trucks, cruises, 2nd homes. Like a high altitude balloon, I keep wincing but it has not popped yet. It is going to be ugly when people consider dropping the cable package as ‘cutting back’

    • I was thinking of getting rid of my cable TV LOL. Great Point on the cutting back. I dont shop at Malls Anymore except when I need to go to a radio shack for electonics parts when I need it right away. My kids hopefully will not have earbuds implanted. At least not in my house.

      • Andy, get rid of cable TV. It will change your life. A bit more money in your pocket, more time in your schedule, more things magically get done, etc.

        The only thing I really miss is sports, but hey, now I listen to games on the radio and it is (in a way) even more entertaining than watching them on TV.

      • Get rid of your TV all together. My family has not owned a TV for 12 years. My kids have been raised from birth without one.

        On a related note I always get a kick when people rant about “unplugging from the matrix” and “opting out” of the consumer lifestyle, yet have to be home by 8 to watch the prime time show.

        Lastly, great presentation on the topic Jack.

    • Brent, I know exactly how you feel. Going to the mall for me now is like going to a wax museum, or Disneyland, or something. It is this totally drugged out experience that does not seem to make any sense anymore.

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  8. Jack I just started to watch the video and the wall behind you caught my eye and I had to comment, thats has to be the office space your renting because that cant be your house because that wall looks to have wallpaper on it LOL LOL..

    • @Brent, you bet and I just can’t bring myself to get rid of it at my expense in a rented space.

  9. Nice. How did I not notice this the day it came out???

    Awesome, Jack. A long overdue video on the money / lifestyle / financial stuff that I really love about your show (one of the last videos you did on a related subject, a ‘real truth about money’ video is one of my all-time favorites).

    Anyway, when I go back and listen to any of the first 100 or 200 episodes, you talk about ‘class warfare’ a lot, so I felt like I had a good context for the beginning of these concepts from some of those early shows.

    Flash forward a bit; from about episode 500 on, you’ve been talking more about this ‘downward class migration’ concept and I *thought* I really understood it, but this video brought it much more into focus. Very helpful.

    Thanks again.

  10. Jack,

    you can find the same story in other parts of the world, where people are living on credit (like Romania, where I live) . Credit is the common denominator.
    So your presentation is relevant for a lot more people than americans 😉

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  12. One answer is for people to reject outright and completely the “access to credit paradigm”. Its the emperor’s new clothes. To have the ridiculous FEAR of bad credit ratings is to be a self-made slave. People have to work outside of the system, off the books, barter, and pay with cash. THEN the banksters will be crawling back trying to get into our lives. Then credit will loosen. They NEED us. It’s become so unbalanced, that it’s like the parasite is killing the host. Credit/debt is a parasite which NO ONE NEEDS.

    I am and have been a 100% supporter of OWS. I’m not a kid, I’m not misguided, I am informed. I know they (big money, corps) are bloodsuckers, pulling the lifeblood out of this country. Don’t fall for that divisive crap that if you are making 200k you are part of the problem, not even close.

    • Access to credit is a mysterious joke.

      We sought to refinance our mortgage. We were looking at a 15 year 3.125% rate. All looks good, except for the fact I, like about 20% of America, went through a period of unemployment.

      The result, I am automatically ineligible to re-finance. Excuse me….what did we do the bailouts for if not to quote “ensure credit cont. to flow”.

      Was I seeking some crazy elaborate mortgage? No, $100,000 on a $150,000 home. Credit scores of both my wife and I were over 800. We had 10 grand in the bank. We were seeking a mortgage that could be paid by a minimum wage job.

      But because I was out of work, we’re ineligible. Tried other bank options too. (My wife is a nurse part time so they won’t count her as employed either.)

      Why were we seeking to refinance? Well, at the rate for a 15 year mortgage we’d pay off our house in 15 instead of 28 years. Save $85,000. And only have to pay $90 more a month than we do now.

      But even with 800 credit scores, cash in the bank, not a single missed payment EVER. I can’t get a lone, because I was unemployed.

      It’s frustrating. We bailed out banks which defrauded America. And did so in the name of credit availability, but it’s still not there for us avg. decent folks.

      Yes, I want to see the banks burn. Literally or figuratively, I don’t care. I lost $20K-$30K due to banks. None of which received even a handslap.

      But I am working on fixing the problem. Wells-Fargo is in the process of losing my business. Got tired of their fee increases. And my understanding is that a LOT more people besides myself have relocated to credit unions this year.

      • @Jason the Saj,

        Perfect example of what I was talking about. In your case though there is a partial solution. Assuming your current interest rate isn’t something insane like say 7% you can probably pay about 15% more then you would with the refi and get a very similar result. In other words if you just start adding something around 100-120 dollars to each payment and MAKE damn sure you check the “apply to principal” box you will still pay the thing off in 15-18 years and save about the same amount of money.

        Doesn’t make the douchebags right for saying no but it is what you can do.

        This is also what drives me crazy! If I had Jack’s bank you are EXACTLY who I would lend to in a heart beat. Why?

        1. You are a good credit risk on score alone
        2. You lost a job and didn’t skate out you paid your bills even when you lost a job
        3. You found a job after you lost one, even when unemployment is in double digits this tells me if you loose this job you are more likely to find another one then most I would lend to.

        The TARP bail out DID NOT ONE DAMN thing to help any of us that play but the rules! In fact they can tell you no because they got bailed out.

  13. Jack.
    Its funny, my co-host and I talked about this same thing on our podcast on Wednesday and I come here and you’re talking about it as well. I think your use of the whiteboard was perfect and your terminology makes it easy to grasp. Also great advice at the end.
    Thanks Buddy! Keep up the great work.

  14. Interesting to look at times in the history when there was downward class migration. Most notable is the “Dark Ages” in Europe. This was a time when France and England which were part of the Roman Empire at the time saw that money to support the LQ drop quickly as the Empire had to stop spending in the West and the economy contracted. LQ went back to pre-Roman levels and was shocking when you compare that to Roman standard of living at the time.

    I envision something similar happening in the US as we move back to “sustainable” levels of LQ that are more in line with the world average. You can check out a mini-book podcast by Dan Carlin’s Hardcore History named Thor’s Angels or the long series of audio podcasts called Death Throes of the Republic to see what happens when the leading world economic and military power fails. Interesting stuff and lots of correlation’s between the US and Roman Empire also explains some of the reasons the US is way it is today.

    Then keep in mind the “Dark Ages” was what happened in a small region of the world. Other regions at the same time flourished. Think China. Hmmm….more similarities. Also, the “Dark Ages’ happened quickly and took generations for the people to return to the previous LQ levels when the slide started. What we are seeing today in the US is the start of a similar change that will occur over the next several generations. At least that is what I see….as the US returns to a middle tier world power like it was in the late 1800’s.

  15. Dr Spirko,

    I used to take a vacation every winter and fly to someplace like FL, CA, Mexico, etc. I did alot of trips to NC, and Canada. I no longer plan to go anywhere except stay on my BOL in Maine and maybe visit my sister occasionally in Idaho, but I try to avoid most travel. It’s not that I can’t afford it, I just figure I have to save money nowadays as I feel uneasy on the economic outlook ..

  16. Jack,

    Great job explaining class migration and where we, as a country, are going.

    A fair amount of someone’s LQ is based on their dollar wealth/income. The key to avoiding downward class migration is to take every opportunity to convert surplus “dollar based” wealth into permanent, LQ producing wealth and remove the use of currency as a means of acquiring al a carte LQ. Shelter-Pay off debt and establish renewable “utility” sources.
    Food-Grow your own.
    Entertainment-Hike, fish, hunt, play cards and board games with your family.
    Education-Challenge tax assessments and try homeschooling.
    Credit Access-Have a cash reserve so you don’t need it.

    Your point about the younger generation not having the access to wealth underscores how vital it is that we educate our children to look for real wealth and not currency based wealth.

    PS. Like the Steelers hat.