Gerald Hörhan is widely known and recognized after his quite rough. But also passionate and furious arguing about underlying issues of the current economic system, its settings, and repercussions. Particularly onto the middle class and average working men. His lecturing proving the mechanism and financial interaction pushing middle class towards consumer debt crisis shook the people worldwide, including governments, banks, and global leaders significantly. There are whole deeply analyzed theories about reasons behind middle class losing this global financial game, but here are just some of the main issues he holds as responsible.
Higher costs and gap between wage and costs
If you took a look at a timeline several decades ago, you’d see that the average wages of middle-class workers have grown significantly if the nominal basis is considered. However, if you adjust the nominal basis according to the inflation, you’ll figure that average wages have grown minimally. Somewhat less than 10%. At the same time, two major expenses including costs for medical insurance and costs for college have grown impressively and outgrown average wages a big time. This stagnant wage growth and a gap between wages and essential costs are one of the major sources of middle class’ debts. Along with the accusation that middle-class people lack saving money habits and financial discipline. There goes the argument about levels of debt that are too high. This issue refers to people getting irresponsible and free with their credits.
Debt-driven hole tends to expand if you hit significant debt and it might swallow a big share of your savings or even monthly paycheck. Furthermore, comes the issue of low lending rates. Although interest-rate policy promoted by the government almost a decade ago has brought some welcomed changes. Such as low mortgage rates, the final effect onto working middle class has been negative. Closely attached to the abovementioned is the issue with the inadequate and unequal growth of the incomes. There’s a significant gap between upper and middle class, creating an issue for the second one.
Lower income – weaker connection to the upper class
With lower overall income you lack money to afford some stuff to link you with the upper class. Thus the system works against any climbing on the social and financial ladders of middle-class workers. It particularly refers to debts emerging from medical and healthcare. As well as from university taxes and all other life aspects providing you with the potential of becoming upper class.