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Wealth inequality—perhaps the most talked-about yet poorly understood phenomenon of modern economics. With every passing year, the divide between the ultra-wealthy and everyone else seems to grow deeper, like a canyon widening with each market fluctuation. A recent video dives into the severity of wealth inequality in America, shedding light on just how far the gap has stretched and how deeply entrenched this imbalance has become.
But what does this mean for the average person? And more importantly, is there a way to bridge this ever-widening divide? As traditional finance faces scrutiny, the rise of cryptocurrencies and decentralized finance (DeFi) opens the door to new conversations about wealth redistribution, financial inclusion, and the power dynamics of modern economies. Could blockchain and crypto be the disruptors that change the narrative?
This lesson on “Wealth Inequality in America Has Never Been Worse” reveals the profound disconnect between what people think wealth distribution looks like in the U.S. versus the harsh reality. Through surveys and visual analogies, viewers are shown just how skewed the nation’s wealth distribution is, with the top 1% holding more wealth than the bottom 50% combined.
The middle class, often seen as the backbone of the American economy, is rapidly shrinking, leaving a vast economic void. The video points to a troubling trend: not only is the wealth gap widening, but public misconceptions about the severity of the problem persist. The video culminates in a sobering analysis of how much wealth is controlled by billionaires and the top 1%, casting doubt on the sustainability of this financial imbalance.
Striking claims such as the fact that the wealthiest 1% owns over 31% of the nation’s total wealth—and that this concentration has only intensified over the last decade—make the argument impossible to ignore. It is a clear call to rethink how wealth is generated and distributed in modern economies.
One of the video’s strongest points is its effective use of visual analogies and relatable metaphors to illustrate complex economic concepts. By using a pie chart or even stacking Toblerones to symbolize wealth distribution, the video simplifies an otherwise daunting subject for viewers. This tactic is not just visually effective, it’s emotionally resonant. You can’t help but feel a certain level of discomfort seeing how small the “middle class” slice of pie is.
Moreover, the video shines in revealing the disparity between the public’s perception of wealth inequality and the actual figures. Surveys showing that most Americans believe the wealth gap is less severe than it truly is strike at the core of the issue: there’s a fundamental misunderstanding of the financial landscape. This misperception highlights the dangers of financial illiteracy, which is arguably one of the reasons why the divide continues to grow unchecked.
Another compelling strength is the use of historical data to show how wealth inequality has evolved over time. The video compares wealth distribution from 1989, 2012, and 2023, painting a clear picture of how the top 1% has gained an increasing share of the nation’s wealth, while the middle and lower classes have seen stagnant or even decreasing wealth shares. The fact that the bottom 50% once held less than 1% of the nation’s wealth in 2012 is a jaw-dropping statistic that provides necessary context for understanding just how dire the situation is.
However, the video isn’t without its limitations. While it effectively outlines the problem of wealth inequality, it doesn’t offer concrete solutions or suggestions on how to address this imbalance. Highlighting the issue is crucial, but without offering pathways to change, the video risks leaving viewers feeling helpless.
Additionally, there’s an argument to be made that the video could have gone deeper into the structural causes of wealth inequality. While it touches on the role of billionaires and corporate power, it doesn’t fully explore how tax policies, corporate lobbying, and government regulations contribute to the widening gap. Furthermore, though the video references data from the Federal Reserve, it largely ignores how globalization and automation have also exacerbated wealth inequality by displacing workers and concentrating wealth in the hands of capital owners.
Lastly, while the video correctly identifies the top 1% as a key driver of wealth inequality, it oversimplifies the narrative by focusing solely on U.S. data. Wealth inequality is a global issue, and examining trends in other countries or comparing the U.S. to nations with different wealth distribution models could have enriched the analysis. For instance, looking at Nordic countries where wealth is distributed more equitably might have provided insight into alternative economic systems.
The wealth disparity in traditional finance mirrors the power dynamics we observe in the world of cryptocurrencies. Much like in traditional finance, the top 1% of crypto wallet holders—commonly referred to as “whales”—hold a disproportionate share of wealth in major cryptocurrencies like Bitcoin and Ethereum. According to blockchain data, roughly 2% of Bitcoin wallets control over 90% of the available Bitcoin. This raises a key question: are cryptocurrencies truly the democratizing force they claim to be?
While cryptocurrencies offer decentralized access to financial tools, the distribution of wealth within these networks still favors early adopters and large-scale investors. Just as in traditional finance, those with the resources to invest early or in large amounts have a distinct advantage. For example, early investors in Bitcoin or Ethereum have seen astronomical returns, placing them in a new class of crypto billionaires.
That said, the crypto ecosystem does offer solutions that could mitigate wealth inequality in the future. Decentralized finance (DeFi) platforms aim to create more equitable financial systems by allowing users to lend, borrow, and trade assets without relying on centralized institutions. Protocols like Aave and Compound democratize access to lending and borrowing by using blockchain technology, which theoretically levels the playing field for those without access to traditional banking services.
However, DeFi is not without its risks. Market manipulation by whales can still occur, and DeFi remains largely inaccessible to those without a certain level of technological literacy. For crypto to truly tackle wealth inequality, these platforms will need to focus on reducing the barriers to entry and ensuring that they are user-friendly for the broader public.
The growing wealth gap highlighted in the video has significant implications for both traditional and crypto markets. In traditional finance, this disparity could lead to increased social unrest, political instability, and calls for regulatory reforms. We’re already seeing this in movements advocating for wealth taxes and increased financial transparency. If nothing changes, the middle class may continue to shrink, with wealth becoming even more concentrated in the hands of a few.
In the crypto world, wealth inequality raises questions about the decentralization ethos. Blockchain technology promises to democratize finance, but without efforts to address the concentration of wealth in the hands of a few whales, the system risks replicating the same power structures it seeks to disrupt. However, with innovations in DeFi and the increasing accessibility of blockchain technology, there’s hope that cryptocurrencies can offer new pathways to financial inclusion.
As blockchain technology matures, we may see new systems emerge that actively distribute wealth more equitably. Projects focusing on universal basic income (UBI) through crypto, such as GoodDollar, are already exploring ways to use decentralized technology to reduce financial inequality. Additionally, as governments and financial institutions continue to explore central bank digital currencies (CBDCs), the lines between traditional finance and the crypto world may blur, offering both challenges and opportunities for wealth distribution.
From my perspective, the conversation about wealth inequality needs to move beyond just the numbers. It’s not just about how much the top 1% holds; it’s about the systems and structures that allow such disparity to thrive. In both traditional finance and crypto, wealth tends to accumulate at the top, often because of early access, insider knowledge, or sheer financial muscle.
But here’s where crypto could genuinely offer something different. The rise of decentralized finance, if executed correctly, could allow for a more inclusive financial system. That said, education is key. Without proper understanding, the very people who stand to benefit the most from crypto’s potential—those without access to traditional financial systems—could be left behind.
If blockchain technology can continue to innovate, reduce barriers to entry, and increase transparency, it may yet become a tool for reducing wealth inequality rather than perpetuating it. But we must remain vigilant, ensuring that these systems stay true to their decentralized, democratizing potential.
The wealth gap in America—and globally—continues to widen, driven by systemic issues in traditional finance. As cryptocurrencies and blockchain technology rise in prominence, they offer new opportunities for addressing these disparities. However, much like the traditional systems they aim to replace, crypto is not immune to centralization and inequality. To truly transform the financial landscape, both sectors must prioritize accessibility, education, and equitable wealth distribution.
At its core, the video reminds us of a fundamental truth: the way wealth is distributed shapes societies. Whether through traditional finance or the world of crypto, understanding this dynamic is crucial for building a more inclusive future. The promise of decentralized finance may yet offer solutions to bridge the divide—but only if we remain committed to its ideals.
Wealth inequality has been a defining issue in traditional finance, shaping economic policies and societal norms for decades. This lesson explores the distribution of wealth in America, its growing disparity, and the factors driving this trend. As the crypto world emerges as an alternative financial ecosystem, the principles of wealth distribution take on new dimensions. We’ll examine how wealth inequality works in traditional systems and draw connections to cryptocurrency markets, highlighting opportunities and challenges in both worlds.
Detailed Explanation:
Many studies, like those referenced in the video, show a gap between perceived and actual wealth distribution in America. The general public believes wealth is distributed more fairly than it is, creating a significant misconception. This section emphasizes the stark contrast between what people want and the reality they live in.
- **Crypto Connection**:
Similar misconceptions exist in crypto. Many assume decentralized finance (DeFi) or blockchain projects distribute wealth equitably, but in practice, a few large investors (whales) often hold most tokens. Understanding this parallel helps newcomers navigate crypto markets with a clear-eyed view of who controls wealth.
Example:
Just as the top 20% of Americans own more than 80% of the nation’s wealth, a few wallets control a significant share of Bitcoin’s total supply, mirroring centralized wealth distribution patterns.
Detailed Explanation:
In traditional finance, the middle class has seen a decline in its economic influence, with rising costs and stagnant wages contributing to its shrinkage. The wealth gap continues to widen as financial assets become concentrated in fewer hands.
Example:
Imagine a middle-class family investing in Bitcoin in 2015. By 2021, their investment could have multiplied significantly, creating a new pathway to financial security. However, without proper timing, the same investment in 2022 may have led to steep losses, highlighting the risks involved.
Detailed Explanation:
The top 1% of individuals hold more wealth than the bottom 90%, controlling financial markets, influencing policy, and shaping economies. This trend also exists in crypto, where “whales” have the power to move markets by buying or selling large amounts of assets.
Example:
In 2021, Bitcoin’s price surged after Tesla, led by Elon Musk (a member of the traditional top 1%), announced a major investment. This event highlights the overlap between traditional and crypto wealth influencers.
Detailed Explanation:
The poverty line in traditional finance is a harsh reminder of how many people live with insufficient resources. Crypto’s promise is to democratize finance, but access to technology, education, and capital can still limit participation.
Example:
Decentralized finance (DeFi) platforms like Aave or Compound allow anyone to lend and borrow crypto assets without a traditional bank account, offering a potential lifeline for the unbanked.
Bar Charts in Wealth Distribution:
The bar charts showing wealth distribution in America can easily be adapted to show the distribution of Bitcoin or Ethereum ownership. For instance, in both traditional and crypto markets, the top 1% hold most of the wealth.
Pie Chart Analogy:
Just as participants divided wealth into “slices” of a pie, a pie chart could illustrate the percentage of total coins held by various classes of investors in any major crypto network, such as Bitcoin or Ethereum.
Traditional Finance:
The growing wealth gap affects policies, investment opportunities, and economic growth. Tax policies, social programs, and economic reforms often target this imbalance, with varying degrees of success.
Crypto:
Cryptocurrencies, with their decentralized nature, offer a potential solution to wealth inequality by democratizing access to financial tools. However, early adopters and large holders still control significant portions of the wealth, replicating traditional systems.
Traditional Finance:
Rising wealth inequality is driven by factors like financial deregulation, tax cuts for the wealthy, and wage stagnation.
Crypto Markets:
In crypto, wealth inequality is caused by early adoption, large-scale accumulation of tokens, and market manipulation by whales.
Explore decentralized finance (DeFi) protocols to see how they compare to traditional banks. Study the role of “whales” in crypto to understand market influence.
Most people have no clue about how severe wealth inequality has become in America and how much worse it’s getting. There’s a YouTube video by user Paulit Zane where he references a study done by a Harvard economist and professor. The study asked 5,000 Americans how they believed wealth was distributed in the United States. The group was first asked what they thought the wealth distribution in America looked like, dividing up American wealth into five segments. The participants came up with the following: a bar chart that looks like this, with the top 20% owning a little bit more than half of the nation’s wealth and the bottom 20% owning just a sliver of wealth, no more than five percent.
Participants were then asked what they thought the ideal distribution should be. Over 9 out of 10 participants said it should look something like this: slightly more equally distributed, but the top 20% of course still owning quite a bit of the nation’s wealth. Before I show you what the actual distribution looks like, many of you might actually point out that this YouTube video was done a decade or 12 years ago, so surely the answers could have changed since then. But the reality is that human behavior and thought process seldom changes that quickly; answers have stayed pretty consistent even though time has passed.
In fact, in 2020 CBS did a morning show where they asked random mall shoppers what they thought wealth distribution in America looked like, using pumpkin pie. The pie was to represent total American household wealth and was cut into 10 slices. The subjects were then asked to distribute those 10 slices into the same five segments. The usual distribution they chose looked like something in this picture. This person allocated most of the pie to the middle class. In fact, all the subjects during that segment displayed similar results to that of the original study done by the original video. That goes to show you that there’s still a huge misconception about how wealth is actually distributed within the United States among its own citizens.
Okay, so the actual distribution looks like this: the top 20% of Americans own over 80% of the nation’s total wealth. The bottom 20% and the next 20%, so the 21st to 40th percentile, barely even register on this bar chart, and the middle class makes up less than five to six percent of the overall bar. This should be startling to you. And what’s even more crazy is how much the top 1% actually has in terms of wealth. The top 1% has more wealth than what most Americans think the top 20% should have. But still, that doesn’t really put the top 1% into its full context, which the original video from 2012 did really well.
In that video, the original creator took all 340 million Americans and reduced them down to a representative 100 people. He then ordered them from left to right, poorest on the left, richest on the right, and put them on a scale with each 10% representing a different percentile of wealth. Taking total household wealth in America and reducing it down to a pile of symbolic cash, he then spread it out among the 100 representative Americans. This is what Americans want the wealth distribution to look like. This looks pretty healthy. The poverty line is way over here on the left, and even though people are poor, they aren’t in “quote” poverty. The middle class has the bulk of the wealth here, and the wealthy own just slightly more than the middle class. There’s a smooth transition of wealth across the board here.
But we all know that it’s a lot worse than this. This is the distribution of how Americans think wealth is spread out in the United States. About five percent of the poor are now living in poverty. The wealthy definitely have a lot more than the middle class here, making about 10 times more than them and up to 100 times more than the poorest Americans. If you were to ask most people if this is acceptable, they’d probably say no. However, this still isn’t the reality of how it’s actually distributed.
So here’s what reality looks like on that same scale: the poverty line is now moved up to 11.6%, with 37.9 million people living in poverty. The census defines that as making less than $12,760 per year or about $35 per day for a single person under the age of 65. The middle class here is very hard to differentiate from the poor, and the richest people have so much wealth that it’s hard to even comprehend; they don’t even fit on the screen. But what’s even harder to comprehend is just how much more money the top 1% holds in wealth compared to the rest of the nation.
What I want to accomplish in this video is to show you how big that disparity is and how much it’s actually changed since 11 years ago. According to recent Federal Reserve data, the top 1% of all Americans own a whopping 31% of the nation’s wealth. That’s $43.94 trillion of the nation’s $140 trillion of wealth. The top 1% is defined as those having a net worth of over $11.1 million. And because they are so wealthy, the scale of them might be pretty hard to comprehend. In fact, we had to make a separate column just for them.
If we expand our parameter slightly, the top 10% owns 69% of the wealth of the entire nation, while the remaining 90% of people own just 31%, or a third of the nation’s wealth. What that means is that the majority of wealth, close to 70%, is concentrated in the hands of a few. What’s even crazier is that the bottom 50% owns just $3.44 trillion of wealth. That means the entire bottom half of the population in the United States owns just a mere 2.45% of the entire nation’s wealth.
The crazier part, though, is that even though you think that’s bad, that’s actually an improvement. Since 2012, the bottom 50% owned just 0.87% of the nation’s wealth. That means the bottom half of the population has nearly doubled their total household wealth since 2012, but that doesn’t really matter because the top 1% also grew their wealth considerably. It’s important to understand how wealth inequality has changed because that gap has certainly widened over the years.
According to the Organization for Economic Cooperation and Development, they conducted a 2018 study on wealth inequality across 28 industrialized countries, and one of their primary findings was the following: out of the five countries for which several observations are available, wealth inequality increased in the U.S. and the U.K. since the Great Recession in 2008. These changes are associated with falling home prices, lower rates of home ownership, but higher prices of financial assets and the recovery benefiting the top of the distribution.
With that being said, let’s take a look at wealth distribution within the United States from 1989 to 2012 all the way to 2023. In 1989, the distribution in the United States looked closer to this: the top 1% owned 22% of the nation’s wealth—still quite a lot but nowhere near what they own today. The top 10% in its entirety owned 60% of the nation’s wealth, and the remaining 90% owned 40%. The bottom 50%, they only owned 3.79% of the wealth.
In 2012, when that video was published, the distribution looked like the following: the top 10% owned 67.96%, or 68%, of the nation’s wealth, rounding up, and the remaining 90% now owned 32% of the wealth. So in about a quarter of a century, the wealthiest 10% started to own eight percent more wealth while the bottom 90% owned eight percent less wealth. We can see that the gap clearly started to widen around that time. But now, here’s what that looks like in 2023: the top 10% now owns 69% of the nation’s total wealth, with the remaining owning 31%. That means in just a decade, the gap has widened even more, with one percent more wealth going towards the top 10% and one percent less for the remainder.
Let’s look at the top 1% wealth and just look at how it’s changed from 1989 to 2012 to 2023. 22.67% of the wealth in 1989 went to the top 1%. That number changed to 29.13% in 2012, and now 31.26% of the nation’s wealth is concentrated among the top 1%. Now, I’m no statistician here, but this trend is clearly disheartening.
One thing I was wondering was, how do other countries fare? Are they seeing the same trends that we are seeing, or are they seeing their wealth gap decreasing? Well, that same study from 2018 looked at 28 other countries, countries like Denmark, Germany, Canada, Japan, and Italy, and it found that the wealth disparity in the United States is unrivaled by any other industrialized country. On average, across all of these global countries, the top 10% would own 52% of their respective nation’s wealth. This is considerably different from what we experience here in the United States, so much so that the United States is a crazy outlier among other countries.
Looking at this graph, the most offending countries in terms of wealth inequality would be the Netherlands and Denmark after the United States. But you can still see that the United States here is a clear outlier. One of the biggest reasons I think the United States has such a wealth disparity between the top 1% and the rest of the population is due to the fact that in the U.S., we have the sheer most amount of billionaires that live here. According to Forbes, the United States has the highest number of billionaires, with 735 publicly listed billionaires,
followed by China with 698 billionaires, and India with 237. Germany and Russia complete the top five countries, with 136 and 117 billionaires respectively.
According to the fact-checking website Snopes, 735 billionaires in the United States collectively held over $4.5 trillion of wealth at the end of 2022. That’s more than the entire bottom 50% of all American households. Let that sink in. This type of wealth is incomprehensible to the human mind. In fact, if we just took the average net worth of all of these billionaires—so you just took the sum of their total wealth divided by 735—each billionaire on average would own about $6.1 billion in net worth. That’s 110,000 times the amount of a family in the bottom 50% net worth and 555 times that of someone who just broke into the top 1% with a net worth of $11.1 million. That’s right—your average billionaire is 555 times richer than someone who just hit the top 1%. And those top 1% were already 200 times richer than those in the bottom 50%.
Billionaire wealth has always been a controversial topic. In fact, I made a video back in 2020 about Jeff Bezos’s wealth in rice, and usually, the tension does go towards these individuals like Jeff Bezos or even Elon Musk. Let’s actually take a look at Elon Musk’s total net worth of $248 billion, and let’s try to put it into perspective. The New York Times did a fascinating article about a year ago on Jeff Bezos’s wealth. They did a bunch of cool visualizations, but this was back when Jeff Bezos was the number one richest guy in the world. But since Elon now holds that title, let’s actually do the same visualizations just in Elon terms, shall we?
This right here is a Toblerone chocolate. The height of one of these is about 1.05 inches tall. Let’s pretend for a moment that the height of this Toblerone chocolate represents the median wealth of a household in the United States, or about $121,700. We can then start stacking Toblerones one on top of each other just like so. So that means this stack of three would represent about $365,000 of total wealth. And if we kept stacking these Toblerones all the way up and up and up and up, how tall do you think we would have to stack these Toblerones to get to Elon Musk’s wealth?
Well, let me tell you: Elon Musk’s net worth would stretch upwards all the way to the height of Mount Everest. Yeah, that’s right—Mount Everest, 29,000 feet. But not just one Mount Everest—maybe two Mount Everests, you might say. Nope, not even two Mount Everests. The answer is seven Mount Everests tall. You’d have to climb Everest seven times to get the equivalent net worth of Elon Musk, where the median net worth was the height of this piece of chocolate. Fascinating.
This is an Oreo. It measures about 1.7 inches in diameter. It also represents the median net worth of someone in America at $121,700. You probably know where I’m going with this, but three of these cookies across would be 5.25 inches, which is a pretty good size, but it’s also worth about $165,000 in net worth in our example. So if each of these cookies represents the median wealth of an American at 1.75 inches or $121,700 in median net worth for the American household, how many of these would need to be laid side by side to get to Elon Musk’s net worth?
Well, you’d need about 2,333,607 of these cookies laid side by side. To put that into perspective, we would need to go super wide—in fact, as wide as the Grand Canyon. Not just once, not just twice, but three separate times. Three separate times—that is very fascinating.
Lastly, here’s my favorite depiction of Elon Musk’s wealth. Let’s visualize it with this cube of $1 billion. It has a height of 45 feet, a width of 48 feet, and a length of 40 feet. This cube is already huge, but let’s see how far Elon Musk’s wealth literally stacks up. To find out how much he has—because this level of wealth is still difficult to comprehend for any human brain to do so—we’ll lay the cubes horizontally across and then compare them to global landmarks. If they were laid down on their side, as we go through famous landmarks, we can see that we’re passing the Eiffel Tower, which is about $21 billion worth of cash stacked high.
In making this video, I unfortunately don’t have a good solution on how to reduce wealth inequality. Hopefully, shedding some light on the problem helps bring some awareness, and that you appreciate this video. Our country’s wealth is a double-edged sword. For those that can generate wealth, it’s one of the greatest things imaginable. However, it does seem that the majority of people, if you’re not born within that category of wealth, such as the top 1%, it is extremely hard to ascend to those ranks. At the end of the day, the American dream is still alive, but it does come with the cost of wealth inequality.
If you found this video insightful, please make sure to subscribe. It’s free, and I come out with personal finance videos quite regularly. Thank you for watching, and I’ll see you guys in the next video. Peace.