The Top 1% Increasing Their Share

Understanding inflation, SP500 and Crude Toppy

OK MTR readers, we are going to start today by analyzing the increasing wealth disparity in the United States. We understand that this is an inevitability given the architecture of the Federal Reserve and our monetary system, but our job is to convey to you that over time, the evidence is clear that INFLATION ultimately leads to an extreme concentration of wealth.

When we look at inflation, we view it from the lens of the Federal Reserves asset base increase YoY (year over year). We know over the last 30 years this has been running at an annualized clip of 9.82%. This correlates to an annualized inflation rate for domestic consumers as measured by the CPI of 3.0%. Which is actually 50% higher than the Federal Reserves mandate of 2%, go figure!

Anyway what we are going to look at is the comparison of the total wealth measured via actual US GDP in 1989 to present day or year ending 2024. Here is a table of our data:

As you can see since 1989 the average net worth of the 99% went from $17.7k to $59.8k while the top 1% went from $508k to $2.63m. In 1989 the wealth differential of these two camps went from 28x to 44x, meaning in 1989 the top 1% held over 28x more wealth but by 2024 this jumped to 44x, a massive 16x increase as shown in the right hand column.

Next we use the cost of an average home in their respective years. Here is where we should see an improvement in the 99% group over time and we have, an 18% improvement in regards to the cost of an average home vs their average net worth. We want to see this ratio improve and it did.

However when we analyze the top 1% via this same metric, and this is really where the problem of expanding the money supply is embedded. The top 1% improved their ratio by a massive 87% and this data is highlighted in the very last row on our chart.

What we call “Relative Housing Affordability Gain” the top 1% improved at a factor of 5x! Magnelibra why is this a problem, well, think of the game Monopoly.

Eventually the game starts out fairly, then all of a sudden life happens and you start to move around the board. Various situations occur, players evolve, some advance, some stagnate and some fall behind. Ultimately however, the game evolves through various transactions, scenarios and via probability, the game eventually funnels all of the capital to just one player. Now transfer this result to the real world and you can view our Monopoly game winner as our “real world 1%.”

Now we are certain, nobody has explained inflation to you this way, because honestly, people can’t comprehend it as they should. It is so vital, so important to keeping our monetary system intact that the goal is almost to keep this kind of explanation hidden by those that deploy its forces.

Well now you know how to actually view inflation and to simplify all of this, the only real factor you need to ever know is by how much is the top 1% gaining in real value vs everyone else.

In total GDP terms and in regards to acquiring the single largest component that is vital for a stable and cohesive society (access to affordable housing) well, they are gaining at a rate that is 5 times over the rest.

This all reminds me of the scene in the movie Wall Street where the high powered Wall Street investor, Gordon Gekko is trying to explain to his young protege, Bud Fox, “the game.” This is one of my favorite movies of all time and if you haven’t scene this movie, you better rent it, buy it do whatever you have to do, because it explains a lot.

Bud Fox a young protege asks the question,

So tell me Gordon, when does it all end, huh, how many yachts can you water ski behind. How much is enough?

Gordon Gekko responds,

It’s not a question of enough, pal, its a zero sum game, somebody wins, somebody loses, money isn’t lost or gained, its simply uh transferred from one perception to another, LIKE MAGIC!

Wall Street 1987

We have the clip of this part, (profanity warning) but for those that want to see this part of the movie, here is the link, Wall Street Scene This movie is a must see for any aspiring trader and investor, a lot of truth bombs and reality checks in this one, back in the day when stocks were trading in fractions, can you imagine the HFT algos with that today!

Anyway we also saw this graphic from the VisualCapitalist which is what prompted us to clarify the wealth data for our readers:

Capitalism is designed to reward those that are willing to work hard, take risk and innovate. To reward prudence and resiliency, to embrace ingenuity and factor it up for success that drives a thriving and health economy.

However what we see is that in our 20 years plus in actively understanding how our actual systems work, it seems we have strayed away from these core principles. That we now have a system that is rewarding a very few who operate covertly and are often overlooked but command a disproportionate control of many facets of our society, designed to keep things a certain way.

That financial alchemy, which is a product of both too much money creation and far too low of real rates has created this synthetic ecosystem by which a very few continue to hijack organic fundamental principles of supply and demand economics.

Quite often debt is used to supplant actual revenue, a kick the can down the road mentality much like our Government and this leads to a whole host of bad economic signaling up and down the supply and distribution chains. The waste, the fraud the lack of oversight and change is becoming more and more obvious and inflating the monetary base, which the Federal Reserve has done, leads to a greater wealth disparity but an even more nefarious debasement of the average persons ability to afford a basic standard of living. ← This is the real output of inflationary monetarist regimes.

We believe the revolt from the post Gen X generations will lead to a massive overhaul of how business and life is conducted in the future and we believe this change will be at the very fabric of how the United States operates and ultimately how it advances forward. Understanding this subject of monetary inflation is paramount to being part of the solution instead of condoning being part of the problem. Our message may not sit well with many, but that doesn’t change the reality of what we are going through, life changes whether we want it to or not. This is why Darwin often said the single biggest attribute to avoiding extinction is, ADAPTABILITY!

Ok that is our story for the day, we will now move to the markets, our subscriber based data trackers and a look back at what transpired yesterday, by the way CrowdStrike really getting pounded today -9%! Anyway hit that subscribe button, share our work and we hope you join the ranks of the informed here at Magnelibra Research and Trading!