Spain's middle class is fading: no home, no retirement on a salary
A calculation circulating in forums puts the traditional middle-class lifestyle in Spain at €120,000 a year. Money printing, offshoring and a frozen income tax are to blame.
English · Original discussion in Spanish · Published
A year's salary no longer buys seven kilos of gold
Spain's middle class has spent decades as the victim of a silent transfer of wealth. An analysis circulating on investment forums argues that the phenomenon is not measured in euros, but in a single concept: getting up to go to work and still being unable to buy a home or save for retirement. The central bank's printing press, the offshoring of industry and credit expansion have done the rest. The result, according to this diagnosis, is a generation that lives worse than its parents and celebrates it.
The diagnosis is harsh: the true middle class — the one that could pay for a house, change cars every four or six years, dine at a fancy restaurant once a week, go abroad every summer and save a third of its salary — would today need around €120,000 a year, according to a calculation doing the rounds in the debate. Almost nobody has that. What is left, in this view, is a lower class with aspirations that mistakes a few beers and a camping alucinación for prosperity.
The mirage of debt and inflation
The parents' generation worked hard, yes, but was able to build a modest nest egg and support the family with some leisure time included. Modernity was sold as an improvement in living standards when in reality it was a mirage of debt and inflation, as argued in the thread. Wage increases stopped being tied to productivity in the seventies; since then, the middle class has been worn away by inflation, debt and taxes.
Some argue the big mistake was failing to update the income tax brackets of Spain's IRPF (personal income tax). With the pogre brackets frozen and prices rising, a gross salary of €3,000 or €4,000 barely covers a single home anymore, according to one participant. Taxation does the rest: every purchase carries a hefty tax hit, which pushes people to stay put, and that kills retail and the self-employed.
The gold that no longer circulates
The dollar's gold standard was abandoned in 1971. Since then, money has stopped flowing like waves: plenty came in and plenty went out. Now almost all the gold sits in vaults, and fiat money, more abundant than ever, is concentrated in few hands that invest it to generate more money, the debate argues. The middle class earns four times less, spends less and, when it spends, pays taxes. The train is grinding to a halt through inertia.
The warning is clear: when inflation puts everyone in their place, those who hold only fiat will have a hard time. Though some doubt gold is the solution: by the time a retiree needs to use it for everyday life, it will already have been stolen. In a collapse, it might pay the guide who helps you cross the Pyrenees — or the bandit who pushes you into a ravine after robbing you.
How long until the middle class becomes a statistical memory? The answer, as always, depends on who you ask.
Spain's middle class has spent decades as the victim of a silent transfer of wealth. An analysis circulating on investment forums argues that the phenomenon is not measured in euros, but in a single concept: getting up to go to work and still being unable to buy a home or save for retirement. The central bank's printing press, the offshoring of industry and credit expansion have done the rest. The result, according to this diagnosis, is a generation that lives worse than its parents and celebrates it.
The diagnosis is harsh: the true middle class — the one that could pay for a house, change cars every four or six years, dine at a fancy restaurant once a week, go abroad every summer and save a third of its salary — would today need around €120,000 a year, according to a calculation doing the rounds in the debate. Almost nobody has that. What is left, in this view, is a lower class with aspirations that mistakes a few beers and a camping alucinación for prosperity.
The mirage of debt and inflation
The parents' generation worked hard, yes, but was able to build a modest nest egg and support the family with some leisure time included. Modernity was sold as an improvement in living standards when in reality it was a mirage of debt and inflation, as argued in the thread. Wage increases stopped being tied to productivity in the seventies; since then, the middle class has been worn away by inflation, debt and taxes.
Some argue the big mistake was failing to update the income tax brackets of Spain's IRPF (personal income tax). With the pogre brackets frozen and prices rising, a gross salary of €3,000 or €4,000 barely covers a single home anymore, according to one participant. Taxation does the rest: every purchase carries a hefty tax hit, which pushes people to stay put, and that kills retail and the self-employed.
The gold that no longer circulates
The dollar's gold standard was abandoned in 1971. Since then, money has stopped flowing like waves: plenty came in and plenty went out. Now almost all the gold sits in vaults, and fiat money, more abundant than ever, is concentrated in few hands that invest it to generate more money, the debate argues. The middle class earns four times less, spends less and, when it spends, pays taxes. The train is grinding to a halt through inertia.
The warning is clear: when inflation puts everyone in their place, those who hold only fiat will have a hard time. Though some doubt gold is the solution: by the time a retiree needs to use it for everyday life, it will already have been stolen. In a collapse, it might pay the guide who helps you cross the Pyrenees — or the bandit who pushes you into a ravine after robbing you.
How long until the middle class becomes a statistical memory? The answer, as always, depends on who you ask.
Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (44 replies).
More summaries
-
Inflation dissolves public debt: the tax no one votes for
Public debt shrinks via inflation, lowering the debt-to-GDP ratio without a surplus. Here is what ordinary workers can do to avoid paying for the economic adjustment.
-
Audax Renovables: 1.96% margins and €660M debt
Audax Renovables reports €2.76B in revenue but only €48M pre-tax profit, with a 1.96% margin and €660M in debt. These figures challenge its narrative.
-
Global Debt Hits $100 Trillion: Why Gold is Returning to Safe Haven Status
Global debt reaches $100 trillion, 93% of GDP, according to the IMF. Central banks have been accumulating gold since 2010, while the dollar weakens below 100. The debate is shifting towards...
-
Invertir desde Cero course reviews: useful but basic
Students call the stock market course introductory, not advanced: one month of classes and a year of monthly sessions.
-
Spanish bond soars 200 basis points even as the ECB keeps buying
Spain's ten-year bond yield has jumped 200 basis points while the ECB is still buying. Germany has gone from -0.5% to 1% and the US is above 3%. It looks ugly.
-
Andorrano jeweller: silver ounces wrapped in cling film
999 fine silver ounces sent wrapped in transparent film when an order doesn't fill a full tube: the clash between competitive prices and packaging that tarnishes the coins.