okay today we are going to talk about what I  think is one of the most important economic  

changes of the last twenty-thirty years I'm very confident it's going to continue and  

dominate the economy for the next 20 years  if you want to understand what's going to  

happen in our economy you need to understand  this and it is the death of the middle class

okay so what do I mean when I say the death of  the middle class well the first thing is we need  

to define what we mean by the middle class this  is a term that different people mean differently  

for the purpose of this video when I talk about  the middle class what I mean is people who are  

not rich but have some ownership of wealth so  in this country it basically means anyone who  

owns their own property essentially so the UK has  a reputation for being a very unequal country but  

in reality if we compare it to all of the countries  across the world and also what the UK was like  

for most of its history, it is actually a relatively  equal country and what I mean when I say that is  

this country still has today a relatively broad  property owning middle class what that means is  

most people own the property that they live in  which means they do have some level of wealth  

even if they're not super rich so let's talk a little  bit about the wealth distribution first of all  

in this country property residential property  is still quite broadly owned a lot of people  

own their own property once we start looking  at commercial property, financial wealth, debt  

then we start seeing almost all of that world is  owned by richer people and they've increasingly  

the very rich but residential property has some level of broad ownership so what that means  

is we do have a broad property owning middle  class and that is true in the US and it's true  

in Australia, in Japan and most of Western Europe  there is a broad property owning middle class now  

what you need to understand is that is not really  normal either internationally or across history  

so if you go to look at most of Latin America  or most of Africa or many places in Asia  

what you have is very unequal countries where  most people do not own much wealth at all you  

have a very large poor group and a small  very rich group and you do not have this  

broad property owning middle class like we have  here that's also true if you look throughout  

history right so before the second world wars  in the early 20th century in the 19th century  

in the industrial revolution what you had in  this country was different to what you have now  

so at this point in time most people own or  their family owns the property they live in  

it's decreasing over time but still most do  whereas if you were to look in the *1800s* 

the vast majority of people here in London the vast  majority were renting very few people own their  

own home and there was not broad wealth ownership  so this broad property owned middle class  

you need to understand that even though it has  been normal for the last 50-60 years it is not normal  

either across the world or throughout the  history of capitalism and if anything the  

last 70 years have been very special historically  in the sense that we have had this broad property  

owning middle class here, in the US, in Australia  and in Europe & I think one big thing that has  

dominated the economy over the last 20 years and  will definitely dominate it going forward is that  

that middle class is slowly dying and what I mean  by that is the middle class is losing their assets  

and that is happening in two ways, one the direct  loss of the assets themselves so in this country  

asset ownership by non-rich people is almost  always in the form of property if you look at  

younger people their rate of property ownership is  collapsing so the number one way which the middle  

class dies loses their assets is direct loss of  property and the second way is increased debt  

which means ordinary people have to go deeper into  debt to fund their lifestyles but increasingly if  

you want to own a property the only way to do  that is to take out enormous amounts of debt  

now this in my opinion is has really dominated  the economy especially since 2008 and my big  

sort of penny drop moment when I realised what was  happening with the economy was when I was a trader  

and I was trying to deal with the question of 'why  is it that people can't spend much money?' this has  

been the dominant economic narrative since 2008  and when I looked into the situation of ordinary  

families and also of governments what I saw was  ordinary families were losing their wealth over time  

you can see this in the form of decreased property ownership rates and also governments were  

losing their wealth you could see this in the form  of governments falling deeper and deeper into debt  

so that has created a situation where we have  economic weakness because families and governments  

can't spend because they're losing their wealth over time now when we consider this loss of wealth  

of the middle class in many ways what we are  seeing is the mirror image of something which I  

have spoken about a lot already on this channel  which is the rapid growth and snowballing of  

wealth of the very rich now when you consider  the wealth distribution you need to understand  

we have this property owning middle class all the  know people that in many cases own their own homes  

but when it comes to the broader commercial  infrastructure of our economies the factories,  

the skyscrapers, the office buildings, food production, energy production  

all of this commercial infrastructure is largely  owned by the rich and that means that every single  

month every single year ordinary people have to  spend a lot of money which goes to the rich in  

order to get things like food, energy, transport,  the basic essentials of life or even housing  

if you don't own your own home and this creates  enormous flows of wealth to the rich every year  

the flows of wealth are so enormous that  rich people can't spend them, Rishi Sunak as  

I've said many times on the channel gets a  passive income of 20-30 million pounds a year  

they can't spend that money so  they use that money to buy assets  

and when you have a growing economy this isn't  necessarily a bad thing you're creating all of 

this new economic wealth, these new assets,  new factories, new office blocks and the rich  

will own those new assets when it becomes a  really big problem is when that growth slows down  

so when economies stop growing you are still  having to pay all of that money to the rich  

every year the rich are still receiving all that  money every year what do they do with that money  

if they can't buy new assets because there are  not good investment opportunities they will still  

receive that money and what they start to do is  they use that money to buy your assets and I think  

what's really interesting is the things that  the rich people do with those money with that  

money often appears good from the perspective  of the middle class so when the rich get that  

money and they're not investing they either  buy your assets or they lend you that money  

from the perspective of a middle class person what  you see is the rich want to buy my house, my house  

price is going up, the rich want to lend me money  I have increased availability of mortgages and  

both of those things seem good right you are an  ordinary family your house price is going up great  

you can get more access to mortgages great  these are good things but if we think about  

what it is actually doing in terms of flows  of wealth that is rich people buying houses  

from more middle class families and often this  happens generationally rich people take the  

money, they give it to their kids, their kids have  a large amount of money, they go out and they buy  

the houses that maybe your kids would have bought  and instead of your house going to your kids or  

another kid from an ordinary middle class family  ends up going to rich people when they lend money  

what that means is it might seem good for you  if you can get a mortgage but if the rich are  

lending more then that means everybody can get a  big mortgage and that means you are competing with  

people who can get big mortgages and what that  means is it becomes impossible for ordinary middle  

class people to buy property without taking a  massive mortgage essentially from the rich so you  

create a situation where on the one hand middle  class families are selling their properties to the  

rich and on the other hand if they are actually  able to keep property the only way to do it is by  

taking a massive debt from the rich so you have  two sides of the same coin here right massive  

wealth accumulation from the rich is mirrored by  loss of assets for the middle class and increase  

of debt for the middle class and exactly  the same thing is happening for governments  

governments are losing their assets governments  are going into debt and you can see how this is  

it's impossible for the rich to accumulate  assets in a low growth economy without these  

things happening because the assets have to come  from somewhere and what you see is loss of assets  

for middle class, loss of assets for government,  growth of debt for the middle class, growth of  

debt for the government it's important to realise  that when the rich lend poor people money to buy  

assets essentially what's happening is the rich  are buying the assets through the poor now if I  

lend you half a million pounds and use that half  million pounds to buy a house you still have to  

pay me interest every year and it's very similar  to paying rent so the lending really is just  

the flip side of the rich buying the asset it's  another way for the rich to buy the assets so in  

both cases the rich are gaining assets the middle  class are losing those assets and over time we  

lose that property owning middle class and we also  lose that property owning and stable government  

once this starts going it is essentially  inevitable it will continue right because  

once the middle class starts  to lose their assets then  

there are more people who don't own property and  have to rent once they start to fall heavily into  

debt then they have to pay large amounts of  interest every year this means bigger flows of  

money from the middle class to the rich which  the rich can then use to buy the rest of the  

assets which means it starts a spiral which  builds up momentum over time and this is why  

it is pretty much inevitable that the middle  class will significantly lose their assets over  

the next 20 30 40 years and of all my economic  predictions I think this is the one that I'm most  

confident about that we will lose that property  owning middle class over the next 30-40 years  

um so what does that mean what does that  mean well fortunately if we want to know what  

economies without property owning middle classes  look like it's really easy to see that because  

we the world is full of them you can go to Brazil  you can go to South Africa you can go to Russia  

you can go to India and you can see what economies  look like when you do not have a property owning  

middle class so for the last 70 years we have had  property owning middle class in Europe in the US  

and it has led to a situation where we have had  broadly high standard of living not for everyone  

there has always been poverty but it has been  unusual if we compare to most of history in the  

percentage of people who live decent quality lives  if you look at countries without those property  

middle classes what do they look like? they look like small super wealthy elites and very very large  

essentially very poor people that very often  they're forced to live in very squalid housing  

on the outskirts of cities they work for very  low wages and that is because when you lose your  

property owning middle class what you also  lose is your customer base the basis of the  

wealth of Western economies in the last 70 years  is you have a big middle class you have a lot of  

customers and what that means is even if you are  not middle class even if you are poor you have  

a lot of customers so so you can get a decent  wage because there's a lot of people competing  

for your labour basically but once you lose that  middle class then you move to a situation where  

workers are also significantly disadvantaged and  I think it's really interesting to go and sort  

of look at cities like Johannesburg or Sao Paulo  Mumbai and what you see is because there's so few  

customers the poor are then forced to cluster  into the big cities because it's the only way  

to get work because that's where the rich people  are essentially and that's the only place you can  

get your money from and I think it's interesting  that we're kind of seeing slowly slowly at first  

the same thing happening here in London which  is London is significantly increasing in size  

is seeing an influx of poor people from  within the country from without the country  

they're trying to get accommodation in the big  city because it's the only place where they can  

get a decent job and it's kind of leading to  a slumification of the outskirts of the city  

you know I grew up in ilford which is one of  the cheapest places to live in London you've  

seen a massive increase in density you've seen a  massive decrease in the average quality of housing  

and essentially it's becoming slum and this is  what what happens when you lose your middle class  

if you don't have a middle class society you  have a rich and poor society and if you don't  

have a middle class society you don't need middle  class housing what you need is rich housing and  

poor housing and increasingly that is what we will  see so it will lead to a situation of very small  

wealthy elite and basically really really broad  poverty and um I don't want that to happen that's  

why I made this channel um and it will happen, it  will happen for the simple reason that if you take  

two groups of people a large middle class and and  a small rich elite and you constantly pump wealth  

from the middle class to the super rich elite  and you don't pump anything back in the other  

direction it is inevitable that over time this  group will lose their wealth you know if I take  

if I take two buckets of water and I constantly  pour water from one to the other eventually it  

will run out of water and this will this will  inevitably happen and you can easily see that  

when you look at the flows of wealth between  the middle class and the rich, the middle class  

will eventually disappear and we can see what  that looks like you know it's go and look at  

what countries are like without middle class  go and look read up on the history of the UK  

or whatever country you're in what it looked like  in the early 20th century and 19th century before  

we had a broad property owning middle class  and you'll see is is a is a place of broad poverty  

and very low living conditions and we can see it  happening in front of our eyes we can see poverty  

growing we can see living standards falling and  that is inevitably what will happen if you have  

growing inequality slowly dying middle class  in a situation of no economic growth and the  

only way to fix that is the pump wealth back in  the other direction and um we've called to it  

many times on this channel we need high tax  on rich people it's the only way to support the  

middle class if your wealth is being pumped out of  your communities out of your families towards the  

very rich nothing is pumped back eventually we'll have  nothing left so please support us in campaigning  

for higher tax on the rich, because if we don't  do it, it will mean poverty for the rest of us and  

um yeah it's important so uh yeah tax the rich more & support the channel thanks for your time

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

government with big piles of debt and the  rich with big piles of money, there's 1 other  

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