Okay today we're going to introduce a  new concept that is going to help you  

understand the economy of today and the economy  of the future, it is called 'The Asset Economy'

all right so one of the biggest changes in the  economy in the last 20-30 years has been an  

enormous increase in asset prices that is most  visible in house prices but it's important to  

understand that it's actually happened in pretty  much all assets; there's been a massive increase  

in stock prices, there's been a massive increase  in land prices, there's been a massive increase  

in the gold price and while I'm filming this in  London there's been a lot of focus in the UK on  

London; it's important to realise that increase has  been pretty much International we've seen a big  

increase in house prices and stock prices all over Europe, the U.S, all over the Western World  

now this is what I call 'the Asset Economy' the reason I call it this is because asset prices have increased  

enormously in the last 30 years and wages have  only increased a bit we have moved into a new kind  

of economy where increasingly the work that you  do is not really that important for determining  

how rich you are, increasingly the only thing that  matters is how many assets your family has  

I think the best way to explain this is probably through giving an example so if you are living  

here in London and you make £70-80,000 so you know 2-3 times average income so you've got a   

really good job, a really good wage, increasingly it is  almost impossible to buy property without being  

able to get some significant help from your family  unless you can get a big cash gift from your  

parents or at the very least have a long period of  staying with your parents and not having to pay rent  

on the flip side if you are from a very wealthy  family what you will see is even if you have  

a pretty average paying job £20-30,000 a lot of people from those kinds of families can quite  

easily buy property because they can get big gifts;  half a million pounds, £600,000 from their family  

so what that means is increasingly we're in a situation where basically for determining how  

rich you are the kind of job you have the kind of  degree you have increasingly doesn't really matter  

all that really happens all that really matters  is how many assets your family has so we're  

moving away from an economy where your financial  outcomes for you as an individual for your family  

were primarily determined by your job and your  salary and we've moved towards an economy where  

the financial outcomes for individuals are  increasingly overwhelmingly determined by  

the amount of assets a family has now in other  videos I've referred to this concept as the end  

of capitalism what I mean when I say that was my  parents and my grandparents they lived in a world  

where really regardless of your background if you  are willing and able to work really hard you could  

save up some money buy a house if you're willing  to work really really hard you can even get rich  

increasingly for my generation and for future  generations, that will be impossible, so we've  

moved away from this kind of capitalistic idea  of meritocracy, work hard get rich, we're moving  

towards really an economy which is primarily about inherited wealth I've called this 'a New Feudalism'  

we're moving into an economy which is an asset economy you can only be rich if you are born rich 

if you are born poor you will definitely die poor, now in my opinion this is the biggest 

economic trend of the last 20-30 years it's going to continue so if you want to

understand the economy of today and the future you need to understand the asset economy

next step; how did we get here? how did we move into an asset economy?

now this is actually what I wrote my thesis on this when I was at Oxford this is actually

the thing I've looked at most of my time as an  economist so it's something I'm really interested in,

I'm really happy to be able to explain it the reason that we've moved into an asset

economy is because of the massive increase in wealth inequality in the last Thirty years

this has happened for a few different reasons the three main reasons I would point out is

number one: massive decreases in the effective tax rates of the very rich in the 80's 

under the Thatcher government here in the UK and the Reagan government in the 80's (*U.S.)

(No.2*) the increased integration between Western  economies like UK, Europe, US and much more  

unequal economies like India or particularly China  and thirdly the mismanagement of massive crises  

like the 2008 crisis and the covid crisis in such  a way that they led to massive increases in wealth  

for the very rich and that's something I've  talked about a lot on this channel so once you  

have a massive increase in the wealth of the very  rich what that means is you get a very rich class  

that has a huge amount of assets and they have  huge amounts of passive income so we always

use as our example Rishi Sunak; he's worth about £700million to £800 million, he will generate a 

passive income every year of something like £20-30 million, very rich people with big passive  

incomes they tend to use the vast majority of  those incomes to buy the rest of the assets  

what that means is all of this money trying  to buy assets, it pushes asset prices up  

those super rich buy the assets of the middle  class which makes them even richer which   

pushes asset prices up even more so because of the dynamics of this, once the rich get very 

rich they buy more assets which makes them  richer, which means they buy more assets still  

what you get is a spiralling nature so the rich will  get richer and over time the middle class will  

increasingly lose their assets which means asset  price will go up and up and up, wage will go down  

and down if you want to know more about this you  can watch our video how wealth inequality affects  

the economy but the primary thing you need  to understand is once the rich get very rich  

asset prices go up, ordinary families lose their  wealth and this gets worse and worse over time  

so understanding the asset economy will help you  predict the future because the asset economy is  

going to be more and more what the future looks  like part three what does the asset economy mean  

for you for your family so I think the number one  consequence of an asset economy is that upward  

social mobility becomes almost impossible and the  reason for that is quite obvious right because  

as asset prices go up and up and up and up and up much faster than your wages it simply becomes  

impossible to buy assets with your wages and  that means that unless you already have assets  

you can't get assets now when I say social  mobility is impossible what I mean is it's  

basically impossible to move upwards in class so  if you look at a very small scale if you consider  

two people from very poor families if one of them  gets a 30 grand a year job and one of them gets a  

60 grand a year job that person with a much higher  salary will be able to live a more comfortable life 

but it will not be enough to be able to buy assets and move up into a permanently higher  

asset owning position for them and their family in the long run so if we only look at  

ourselves and people in a very similar situation  to us it looks like a meritocracy but once you  

start looking at yourself and people born with  higher wealth you realise it becomes impossible  

to move up so upward social mobility basically  ceases to exist and you're already seeing this  

massively now when I look at the people around  me in my life almost everybody my age is pretty  

much the exact same position in the financial  hierarchy as their parents were and that is  

because the most important thing that matters is what assets you inherit from your parents  

the other side is okay if upwards social mobility is impossible what about downward social mobility  

well what happens when you have an asset  economy is that asset prices go up and up and  

up and up, we still do have a decently sized property owning middle class in this country 

country it's largely older people and these  older people find themselves in a situation  

where there is a massive financial incentive  for them to sell their assets because they're  

sitting on a house that might be worth 500 600  grand, living is becoming more difficult so if  

they sell that property they can have a much  more comfortable retirement they can they can  

it looks like they can support their family in  their living conditions now this reminds me of  

um a bible story that I was taught when I was  a young kid um about a guy called Esau who um  

he was a very strong guy who was a hunter he was  the eldest son of his family and he was about to  

get his inheritance; one day he came home very  very hungry really starving and his younger brother  

I'm not sure his name Jacob maybe said to him listen I'll give you this food if you let me  

take your inheritance and the guy was super  hungry so he gave it away and then you know in  

in trade for being able to enjoy the moment he  lost his basically families wealth from from his  

side of the family and this is the situation that  older people are finding themselves in now they  

are seeing prices go up but at the same time their  house prices going up and they're thinking well  

that's okay I'm making loads of money on the house  if I sell the house I can live a comfortable life  

they of course grew up not in the asset economy but in a workers economy and they think well  

it's okay because my kids will be able to  work hard and buy properties of their own  

in reality because we are in an asset economy  now when the older generation of the middle  

class sell their property their kids and their  grandkids will never be able to buy property  

again so what you see is as the richer get  richer and richer and richer more and more  

of the middle class start to drop away as they  sell their assets to the rich and ultimately  

inevitably if the rich are buying assets they must be getting them from somewhere and  

this is because people in the middle class are  dropping off so the way it affects you is that  

we are moving into a world where if your family  has no assets they will never have assets  

which means upper social mobility is becoming  impossible but increasingly as the rich get  

richer and richer they take the assets of the  middle class which means inevitably my grandkids  

and your grandkids (unless you are Rishi Sunak) I don't know if you watch my videos  

your grandkids will be poor so next we're going to  talk about how this looks from the perspective of  

the old and the perspective of the young because  I think it looks very very different from both of  

those perspectives now older people who in many  cases own property they often look at the asset  

economy and they see their house price going up  and up and up and they think happy days you know  

I'm really rich well done me for being so smart to  buy property I'm doing really really well um and  

I use that money to to pay for their retirement  and they sell the property and they they live a  

good life um and they think it's going to be okay  because they read stories in the newspaper saying  

listen don't worry as long as your kids pull their  socks up and stop buying avocado toast and stop  

going to Starbucks things will be fine um I think  it's really important for older people any older  

people watching these videos any other people  in your life that you explain to them listen  

if you sell that property which is the only way  you can actually enjoy the increase in house price  

your kids and grandkids will never own property  that is what the asset economy is if you take a  

long-term look at history you'll see for most of  history people born poor cannot ever buy assets  

or property if you sell your property now as  we move back into asset economy your family  

will be poor forever so older people who might  be happy at seeing house prices going up please  

consider the consequence of this is poverty for your for your family for the rest of time  

okay so how does it look from the perspective  of the young now this is something that I  

really want to talk about because I think  it's really important now we still live  

with this kind of age this idea in our  society that we live in a meritocracy  

you know we we believe that if you work hard if  you save up if you study hard you can get rich  

in reality as we move into the asset economy it  is increasingly difficult approaching impossible  

for anybody born in a poor family to ever  become truly rich in the sense of owning assets  

I think this creates a very very difficult  situation for the mental health of young people  

we're telling young people listen if you don't  make money it's because you're lazy or because  

you're dumb if you can't get rich it's because  you're lazy it's because you're dumb and we're  

giving them a situation where if they're born into  the wrong family it is impossible for them to get  

rich and why is it impossible for them to get rich  well the reason is like we've said before even if  

you're earning a good salary imagine you're  earning 80 grand you have to pay tax on all  

of your salary at the top end you're paying above  50% when you include National Insurance you save  

up as much as you can after tax and you're able  to save maybe 10-15 grand a year when you go to  

buy a property you are competing with young kids from richer families who are getting  

gifts from their parents of 400,500,600 grand cash  that is the equivalent of you saving your after  

tax income for 50 years even if you are on two or  three times the national average so we are telling  

young people if you fail it's your fault and we  are making it impossible for them to succeed and  

I think this is creating in many cases a mental  health crisis for young people so I want to send  

the message out here to young people especially on  people from poor or ordinary backgrounds okay if  

you are feeling like you are poor and other people  around you are rich that is not your fault you  

have been given a system where it is impossible  for people born into poor families to get rich  

so if you're not happy about that you need to come  and help us change the system you know that is  

what this channel is here for if the system as it  is continues people from poor families will never  

be able to escape poverty this is not your fault  this is a system that makes it impossible for you  

support us and help us change that system now  the very last point which is something I think  

that is super super interesting which is in the  asset economy for very sensible understandable  

reasons people and families become very very  protective of their assets and that is because  

if you are a family in an asset economy with no  assets your whole family your descendants forever  

are consigned to definite poverty so obviously  you want to protect your assets as much as you can  

because you know if you lose those assets then  your family is going to be devastated forever  

and what that leads to is actually people  doing things which are actually very counter  

their interests for example many people  because they are very protective of their  

own assets will for example oppose things like  a wealth tax which we support on this channel  

and once you understand the asset economy you can  totally understand why they're doing that they're  

sitting there thinking oh my god if I lose these  assets then my family is going to be devastated  

so I absolutely have to protect these assets  and in so doing they oppose increasing taxation  

on the richest and remember that the wealth of the  richest is growing and growing and growing and if  

you don't do anything about that it is inevitable  that they will out-compete the middle class for  

assets in the long term it's a little bit like  if we're sitting here in this room and there's  

a there's a massive balloon that is growing and  growing and growing at an accelerating rate and  

it's starting to squash us all we're taking up  all the oxygen in the room and we're sitting  

here with a little balloon in our pocket saying  we can't do anything that will hurt balloons  

you see if you don't do anything about this  massively spiraling growing wealth of the  

very rich remember just Rishi Sunak alone gets  a passive income of 40 million pounds they will  

inevitably take all the assets in the long term  that means we will lose our middle class and  

we will end up as a country which which is  filled with poverty the only way to protect  

the middle class is to keep the wealth of this  country flowing through the country generation  

after generation if you allow the rich to slowly  accumulate and grow and take all of the wealth  

it is inevitable that ordinary families will lose  theirs in the long term but at the same time I'm  

very understanding of why people want to protect  their wealth and that is why on this channel we  

always make it very clear look we're not trying  to tax ordinary working people even if you might  

be a doctor a lawyer or heaven forbid a banker  we are out here trying to tax very very wealthy  

families with wealth of 10 100 a billion pounds  super super wealthy families these are the guys  

who if you don't tax them their wealth will grow  and grow and over the long run they will end up  

taking the wealth of the middle class so if you  allow the super rich to grow their wealth forever  

unless you already are super rich you will lose  your wealth in the long run and your kids will be  

poor the only way to protect working people in  this country including asset owners is to keep  

wealth flowing around so listen I would encourage  you even if you do have wealth of your own you need  

to support greater taxation of the rich and the  super rich if you do not then they will take  

your wealth the only way to protect your wealth  is to stop the super wealthy from taking it and  

if you allow them to accumulate more and more  wealth without paying any tax it is inevitable  

that they will do that so I hope you enjoyed this  video the asset economy this is a theory which I  

have used to help me understand the economy  for a long time I've made a lot of money of it  

I think most economists don't understand  it if you understand it I think you have a  

really good understanding what's happening most  important thing to understand it will get worse  

asset prices will go up the rich will get richer  the middle class will become dispossessed and and  

that includes you you know so I would encourage  you whether you are from a poorer background or  

whether you are from a middle class background  support this channel get behind us support us  

follow us and everything we've got what have we  got now TikTok, Facebook, Instagram, YouTube  

of course, do you have anything else? yeah follow  it share this video because if we don't stop  

this the situation gets worse I don't want it to  happen hopefully you don't want it to happen  

if you are Rishi & you're watching these videos thank you for your support otherwise we need to  

stop it, because its the only way to support  our futures and our families, thank you

money currently is Flowing from the  government to the rich leaving the  

government with big powers of debt and the rich  with big parts of money there's one other thing  

they can do with that mass amount of  income they can buy your mom's house

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