Why is it that "We The People" are slowly going broke while the so-called one percent continues to grow and gain wealth every day?
Everything is so expensive due to a combination of factors that have driven up inflation, which is the steady rise in the price of goods and services.
Why do ordinary people feel “going broke” while the top 1 percent gain
Here are the major structural dynamics:
Stagnant wage growth & weak bargaining power
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Over the past several decades, productivity (the output per worker) has increased substantially. But in many sectors, wages for middle‑ and lower‑income workers haven’t kept pace.
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The power of labor (unions, collective bargaining) has weakened. That means workers have less leverage to demand their fair share of productivity gains.
Because wages rise slowly (or even stagnate), people’s incomes don’t keep up with rising costs.
Inflation hits the poor and middle harder
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Inflation (a general rise in prices) erodes purchasing power, especially for those who can’t hedge against it.
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Wealthier people typically hold assets (stocks, real estate, equity in businesses) whose value can rise with inflation, offsetting some losses.
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Lower-income households mostly hold cash or fixed-dollar incomes. When prices rise, every dollar buys less.
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Put another way: inflation acts like a “regressive tax”—it takes a larger share from those with fewer resources. The Heritage Foundation
Debt as a coping mechanism
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When incomes don’t rise enough to cover costs, people often resort to borrowing (credit cards, personal loans, home equity, etc.).
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Over time, this debt burden erodes future income, making it more difficult to save or invest.
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In effect, increased inequality, combined with stagnant wages, pushes the lower and middle classes into more debt, while the wealthy can lend or invest.
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Some economic models suggest that rising inequality and stagnant incomes lead to rising debt-to-income ratios among the middle and lower classes. IMF+1
Asset concentration & capital gains
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Much of modern wealth accumulation comes from owning capital—stocks, bonds, real estate, private equity—not just from wages.
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The wealthy are disproportionately owners of these assets. When capital markets, real estate, and corporate profits do well, they gain much more.
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Those gains are often taxed preferentially (capital gains, dividends) compared to ordinary income.
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Thus, asset appreciation compounds wealth for the rich, widening the gap.
Policy choices & institutional design
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Tax policy: Over time, many countries (including the U.S.) have slashed top marginal tax rates, reduced estate taxes, or given favorable treatment to capital income, benefiting the wealthy.
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Deregulation and financial liberalization: Easier flows of capital, looser restrictions on financial markets, and more opportunities for speculation and leveraging favor those with capital.
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Political influence: Wealthier individuals and corporations have a greater ability to lobby, influence regulation, subsidies, bailouts, or favorable legislation.
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Weak social safety nets and underinvestment in public services: When public goods like education, healthcare, and transport are underfunded, ordinary people bear higher costs, further squeezing budgets.
Financial cycles, bubbles, and “suction pump” dynamics
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Some theorists describe a kind of “wealth suction pump”: as capital accrues, the wealthy lend or invest more, and their gains allow them to capture more of total economic growth, leaving less for others unless debt or credit expands.
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In boom times, easy credit floods into assets, pushing their values up — benefiting asset owners. In downturns, those with debt and few assets are more vulnerable.
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In effect, the system can magnify gains for capital owners while burdening those without capital.
Debt at the national level & macro pressures
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National governments often run deficits, borrowing to finance spending. When interest rates are low, this is easier, but debt servicing becomes a large burden.
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Some of the money pumped into the system (monetary expansion, quantitative easing, stimulus) often boosts asset prices more than wages.
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This can exacerbate inequality: capital owners get the “upside” of liquidity and asset appreciation.
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Meanwhile, for ordinary folks, high inflation, high housing costs, or higher borrowing costs reduce their standard of living.
Psychological & perception gaps
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People may feel “broke” even in periods when aggregate indicators (GDP, median household wealth) show growth. That’s because those gains are not distributed evenly.
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The “average” or “median” hides the skew from the top. Many feel left behind, even if the headline numbers look okay.
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Also, expectations have shifted: living standards used to rise more reliably for broad groups; now, even maintaining your standard feels harder.
Why is this combination dangerous over time
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It undermines social mobility and trust. If people believe the system is rigged, it erodes legitimacy.
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It increases financial instability. When people and states rely more on debt, crises become more likely.
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It may slow long-term growth. If most wealth is concentrated at the top, consumption demand is weaker (since the wealthy save more), leading to under‑investment in broad sectors.
Americans are going broke
https://fortune.com/2025/10/14/america-going-broke-jpmorgan-david-kelly-debt-tariffs/
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