The Rich Are Getting Richer While the Middle Class is Shrinking

The world is already at that point and the reality is starting to dawn on many people. It is way more obvious in America than in most other places at the moment. The idea is that the Keynesian economy is splitting the population into two kinds of people - the millionaires and the homeless. No middle ground. If you are not a millionaire, homelessness is the next tier.

This would have severe repercussions for society and the economy too. But for now, no one seems to care that much about this result. I have been saying for some time now that it is the worst-case scenario. That's because cities become unlivable when there is no middle class.

The middle class is the engine of prosperity for an economy. And while I encourage people to be as rich as possible, most people will pause and stay in the middle class. Why? No ambition.

If you feel fulfilled in your life at the middle-class level of wealth, that is okay. Most people are. But there are special and privileged people who are poised to move forward. When such people don't, enough wealth isn't created for the growth we expect.

When this division of "millionaire vs homeless" appears, economists are going to explain it away as a good thing. They will say that the economy is growing because the middle class are now millionaires. Yes, some will move up from middle class to millionaire. But many will fall into homelessness.

Let's explore why and what can be done to change it.

The Unintentionally Rich

A lot of rich people like to explain the factors for their success like it is their hard work. But too many things are dictated by economic cycles. In my first book, I explained this clearly - you position yourself to be rich.

I saw a documentary where an older gentleman (likely in his 70s) said that when he was young, he knew someone who was a bond trader as a second job. His other job was at his train station. He needed to do both to make ends meet for his family.

In a few years, this man with two jobs is now fully a bond trader making a fortune every month. Of course, he now lives in luxury. Not that he got promoted as a bond trader or anything like that. Money just flushed in his direction. Lots of money suddenly went into this financial trading industry and it boomed big in a matter of a few years.

This is the case of the unintentional rich. If you ask such a person, they'll tell you they worked hard to make the money they make. But in the real sense of it, they became rich because they were operating in an industry that suddenly got flush with cash.

Not all industries experience that. But for those who do, it can be overwhelming. This brings me to the first moral point here - when a deluge of money comes in your direction, never make yourself feel like you don't deserve it.

It is important to own and fully embrace the wealth that comes your way, even if you know that it was just plain luck. Accept your luck. Don't push it away. Never say that it is too much money. Being lucky is part of success. Don't feel like you need to give away a large portion of it to feel good.

All successful people got lucky. Yes, many of them added hard work and other things into the mix. However, other people worked just as hard and got nothing.

If you are rightly positioned, you will get lucky. It may take a while, but luck will find you. When that luck comes, don't disqualify yourself. Don't self-sabotage. Everybody else got lucky too. Always remember that.

I believe in working hard after getting lucky. I don't believe in working hard to get lucky. To get lucky, you work smart.

Closing the Gap

The gap is growing every day and is more obvious in big first world cities. The choice is to become a millionaire or become homeless. You can't empathize too much with homeless people otherwise you might join them.

The only way to help is first to be in a position where you don't need help. In other words, help yourself first. The middle class is shrinking. Make up your mind to shift and jump into the rich class. When you have secured your place there, then you can help people.

There are those who like to protest and try to twist the hands of the government to make policies for the poor. But every attempt has always backfired. It will always end up making the rich richer. A "1.5 times" help to the poor is often coupled with a "15 times" boost for the rich. Always remember that the rich are those with means. The government cannot help the poor without making the rich richer. If they attempt to, it will fail. Historically, it always has.

Just as they say in an airplane, put on the oxygen mask for yourself before helping someone else. That is wisdom. When you have a big dream and your time is yet to come, wait for your time. Don't rush. Don't do things prematurely. There is a time to move in good faith and there is a time to wait.

There is a right position to do everything. If your positioning is wrong, you can hardly make a dent. You can only help after you have been helped.

When you help, focus on helping those who can create wealth - not those who just want to consume.

Conclusion

Over the next couple of years, people in the middle class will have to choose between becoming a millionaire or becoming homeless. It has already started. Don't sleep on this.

Before you can help anyone, you have to move up first. Give yourself no option but to move up. Have friends that are up or on the way up already.

The next couple of years are going to be interesting. Choose to be rich.

P.S. Read the 7 factors to consider when building a solid investment portfolio