The Bermuda Triangle of Wealth

He misses what I consider a major issue. The price of college education is going up much faster than the cost of providing it. If you look at tuition vs what a professor is paid, one goes up much faster than the other. If you look at housing costs things don&#x27;t add up either - renting an apartment seems to be a source of revenue for the schools. These are the obvious places the schools are making a ton of money - where does it go?<p>And then there are the absurdities. Where I went to school they now have all sorts of fancy places to eat on campus. I can&#x27;t imagine students paying $4 a couple times a day for a Starbucks coffee when they&#x27;re paying with borrowed money. This is just grossly irresponsible. I imagine the justification is &quot;but everybody does it&quot;. The problem is nobody is teaching the general public anything about managing their money or evaluating costs of anything.<p>Sure, if you get a good job you can pay off your loan in X years, but that has nothing to do with the fact that you drastically overpaid for what you got (services provided).

I very interesting article. This kind of numbers should be on the news all the time (like global warming) so people focus more on them instead of what is the last Twitt from the president.<p>&gt; &quot;Get rich or die trying&quot;<p>I have always seen this as USA&#x27;s major flaws. You are not supposed to have a good life but to risk everything for riches. This was working when the rest of the world was under-developed. USA citizens had so much more than the rest. As the world catches up and surpases USA its problems are getting bigger and bigger. If ever the dollar stops being the defacto world currency I can&#x27;t even imagine what will happen.<p>How many TV shows I have seen that people laugh at the janitor looking down to him? There is no pride in a job well done, there is no self-fulfilment on doing what is correct. Money and fame are the only thing that matter. You even have religious groups that see economic wealth as a sign of God blessing!<p>Other countries have different and even bigger problems, but meanwhile the american dream is about economic aboundance and not about having a good life you are doom to a rat race.<p>&gt; The taxman. I’d like 30% please. 40% if you got a bonus this year. Good job. &gt; Medical conditions! Your income means you have to pay out of pocket<p>The fact that your taxes are disconnected from a public health care system is scary. I am very proud of paying taxes that helps people to survive cancer, to get an education or to live with a disability. Your problem is not that you have to pay taxes but that the taxes are not used to give you back services as it was designed to be done (and that rich people does not pay their fair share, and that is something that it is also true in Europe).

&gt; Google tells me that the most common reason for hospitalization in the US is childbirth. Thankfully, here in San Francisco, that would only set me back $15,000<p>Surely this is not true?<p>Does having kids just bankrupt ordinary people in the US or what?<p>I&#x27;m not asking about exceptional cases, like what is the normal way of dealing with having to pay $15,000 just to have a baby climb out of your body, when I&#x27;m assuming most people don&#x27;t have that much money?

&gt; The sticker price of college pre-loan or pre-financial-aid is about the same as the median net worth of married couples in America. Just enough to hit the reset button on those savings.<p>I know someone who works in a warehouse. She&#x27;s done that for a while, she&#x27;s good at her job, and management wants to promote her but can&#x27;t -- because she doesn&#x27;t have a degree. They told her as much: if she gets a degree, they&#x27;ll promote her, but without one they can&#x27;t, because HR says managers need degrees.<p>I have a degree, but it isn&#x27;t a degree <i>from a good college in a useful field</i>, which it seems you need nowadays to get a job better than warehouse manager. I didn&#x27;t know this, and neither did my parents; they just figured that you need the piece of paper, and that&#x27;s it. But people with a higher-class background did know that.<p>And for those people... well, class mobility isn&#x27;t in their interests, now is it?<p>(It&#x27;s worth remembering that colleges themselves switched from academic performance to &quot;holistic admissions&quot;... to ensure that they remained a preserve for the hereditary upper class.)

Here’s a controversial perspective. Maybe most people’s expectations are too lofty, and their abilities much lower than the think they are.<p>In 2000, less than 25% of the working popultion had a bachelors degree. Today, every young person I talk to expects to finish a Phd, JD, and MBA. And, now everyone wants to live in the trendiest (highest-cost areas). There are plenty of places in the US where a house can be purcahsed for under $100k.<p>Unless you came from wealth, or you’re definitely in the top 1% of your peers, maybe set your expectations a bit lower. Or, at least be patient as you work your way up. Build wealth the old fashion way (like we did 25 years ago) - get a menial job (i.e. “in the mail room”), genuinely try to help your bosses (not compete with them), slowly build your reputation and circle of influence, take night classes at the community college, live below your means, save, etc.

The biggest trick that the FED has pulled is that it convinced the world that inflation is at 2% yoy. What a disgraceful joke!<p>Had they been real about the inflation, the interest rates on savings would&#x27;ve been higher. Sure, it would crash the stock market but the stock market only benefits the rich disproportionately. Not teachers, admins, nurses etc.<p>Oh btw, has anyone noticed that 20% of the 20 trillion dollar US GDP is healthcare? That&#x27;s 4 trillions spent on healthcare every year!!

&gt; But unlike the prophecies of talking cartoon bears, all this money didn’t drive inflation through the roof and crash the stock market. It doesn’t seem to have really gone…anywhere.<p>It sure did drive inflation. It went into asset prices, which have been massively inflated by low interest rates.<p>Absurdly, the article is ranting about the rate at which real estate and rent are increasing, then pretending the inflation from printing all that money didn&#x27;t go anywhere. From one paragraph to the next, somehow the author managed that disconnect. The Fed&#x27;s zero interest rate policy, spurred the big recovery in housing prices (intentionally), and has enabled people to spend more on housing via artificially cheap mortgages than they otherwise could have, pushing prices up rapidly.

&gt; But unlike the prophecies of talking cartoon bears, all this money didn’t drive inflation through the roof and crash the stock market. It doesn’t seem to have really gone…anywhere.<p>This essay is obviously backed by a lot of thought, but this specific conclusion is a bit glib. Talking of things which are exponential, 2 trillion dollars is a few magnitudes bigger than 2 million dollars. That is more than the annual GDP of most countries.<p>The banks havn&#x27;t lost that money under the couch cushions, they will be using it to their advantage. If it is to their best advantage to have it in excess reserves, that probably means something complicated is happening that is letting them make out like bandits.<p>If they aren&#x27;t using it to influence the wider economy, we really need to ask what exactly they are doing with it. It is an extraordinary claim that it &quot;doesn&#x27;t seem to have gone anywhere&quot;, implying that somehow it isn&#x27;t doing something.

In the UK people&#x27;s savings have been shrinking for the last 10 years.<p>Its scary how many people are living hand to mouth, and with banks offering crappy interest rates it is no wonder people are spending rather than saving.<p>cue : rampant consumerism, payday loans, wage stagnation etc.

I&#x27;ve been wondering recently if the economy has shaped to optimally exploit the most readily available and easily renewable resource available: people.<p>There&#x27;s been an explosion in computing power over the last two decades, and computing power roughly equals the ability to optimise. Has this allowed the economy, through sheer market forces, to reach an equilibrium where people are maximally exploited while still being able to grow, and increase their &quot;value output&quot; over time?<p>Has the economy managed to dodge the malthusian trap with humanity, that it has otherwise fallen into with fossil fuels and rare metals&#x2F;minerals?

&gt; $180,000 on a 4-year degree in 2018 would’ve been a $160,000 downpayment on a house for my parents generation, plus the $20,000 four year degree.<p>$160k would buy the whole house! (If not, most of it!)<p>&gt; Success only begins when you build enough wealth to pay for:<p>&gt; Your own continuing education: $0 — $125,000<p>&gt; A home for your family: $750,000 — $1,500,000 (depending on how far you are willing to move from a major urban center — but don’t move too far because the wages go down too)<p>&gt; Education for your children: $180,000 — $325,000 (start at the bottom of the range if your kids are 18 today, move up accordingly)<p>&gt; Medical expenses: $50,000 guaranteed between childbirth and insurance, more with pre-existing conditions or any large event<p>&gt; Your own medical care as you age: $0 — $LOTS<p>I get the feeling that the author purposefully picked one of the worst places to build wealth with &quot;average&quot; incomes (which so happens to be where he lives). While these are bad, these prices aren&#x27;t average.<p>I live in the rust belt and might be making some very large (read: expensive!) life changes in the next year or two. There is no way it&#x27;s going to this expensive.

I like where his heart is. The article is a bit hard to follow. He mixes broad stats with his own situation and I&#x27;m often not sure if he is referring to USA or bay area. I think with another edit, and to tighten prose up a bit, it could be a great post.

I read a passage related to this, in a book called 5000 years of trade. Countries can be categorized as rich&#x2F;scarce in capital, land or labour. Those countries that are rich in say capital, tend to enforce protections on capital while relaxing the policies for land and labour. So coming back to this article, I would say that US being rich in capital has strictly enforced and nurtured conditions on its society by which capital has decent return through investment into student, house debt etc., while meaningly deteriorating the conditions for labour (wages). This is the reason why it is incredibly difficult to become rich nowadays in US through wages alone..

Cost of my childrens’ education will much more than $180k. Daycare is 70-80k then private school is 300k+. Public schools are in a very sad state.<p>Children are a true luxury in this day and age.

This happens when you give a lot of data to entities that helps others to empty your pocket...

I really liked this article as it was thought provoking and motivational, with interesting data to back it up!<p>That said, I don&#x27;t understand why 750K-1.5M for housing was considered in the one-time expenditure equation. Your home is an asset as well as a monthly liability, and you don&#x27;t need to have it paid off in order to build wealth, either in prices or in savings while you pay off your mortgage.

Whenever people mention real wages, I get the feeling they&#x27;re not really &quot;real&quot;. What I mean is that I don&#x27;t think they&#x27;re calculating inflation correctly. Inflation doesn&#x27;t seem to take into account Housing costs, which often cost significantly more than their constituent building blocks upon which inflation is based. Furthermore, I believe real wages should be calculated based on your ability to afford the necessities of life: shelter, food, water, transportation, medical rather than everything under the sun (most of which won&#x27;t raise your living standard much). I&#x27;d like to see a chart that calculates real &quot;real&quot; wages for the last 50 years,.

One clearly hits a salary ceiling and starting from a certain timepoint one becomes only more vulnerable by switching the jobs. One has no means to push back rising prices other than picking something else but sooner or later the prices simply unify upwards.

Does anyone know why wages aren’t increasing? Unemployment is almost at a 50-year low.

Medical care has arguably gotten better and continues to improve. Housing is vague and controversial, because land is fixed, and people can live in formats that have significant impact on other people, and they continue to prefer modes that cost more for sundry reasons (not all of them good, but there is choice). Food has gone up, but there are savings to be had if you adjust your habits and expectations. No one need starve.<p>But education is the big one: no real net improvement from many decades ago (arguably worse), and in greater supply than ever. Why has cost continued to go up?

Focusing on the parts of the inflation index that have gone up the most and implying that&#x27;s the &quot;real&quot; rate of inflation is misleading.<p>I could write an article pointing out that wages have stayed the same but the cost of a computer has gone down by orders of magnitude - that doesn&#x27;t imply that we&#x27;re richer by an order of magnitude just as this article doesn&#x27;t mean we&#x27;re poorer

What happened around 2000 that caused the accelerated growth in tuition?

Modern societies are supposed to be organised for the benefit of all in society (broadly speaking; obviously there are cases when different people have desires that cannot be reconciled). This is why the government usually sponsors education, for example. All of society benefits from an educated population and hence all of society contributes to the cost of that education. This seems to have been lost in the US (and, increasingly, the UK) and is, I think, the root cause of the problems. I believe the start of the problem was the rise of neo-liberalism, holding the market and competition above all else.

Is this again millenials fault ? &#x2F;s

The writing of this article seems a bit &#x27;choppy&#x27;.