This is a mindblowing article. It really is. Well, the anger isn't about the goods. It's about the breach of contract. The American deal was that effort is proportional to security. So, the real poverty line is 140,000, but effort no longer yields security or progress. It brings risk, exhaustion, and debt. When you are drowning and you see the lifeguard throw a life vest to the person treading water next to you, a person who isn't swimming as hard as you are, you don't feel happiness for them.


You feel a homicidal rage at the lifeguard. We have created a system where the only way to survive is to be destitute enough to qualify for aid or rich enough to ignore the cost. Everyone in the middle is being cannibalized. The rich know this and they are increasingly opting out of the shared spaces. Hi everyone, it's Mike and Allan once again with the Gold Silver Show and we have a really important presentation for you, especially if you've been feeling the pinch in the economy. If if you find


that you're sort of trying that you're struggling to try and save up enough to be able to buy some silver, uh if you find that shopping, going out to dinner, everything else is just getting more and more expensive and you want to know why, this is the video for you. Uh uh this is a very important video, but it's going to be a long one because we're going to review some excellent investigative reporting when it comes to the economy and the CP lie. So Allan, do you agree with this that this is a really


important video? Absolutely it is. Um you know, if anyone out there is feeling the pinch, especially this time of year, uh you're not alone. You're not imagining it. You're not crazy. There's some basic math behind it and millions of people feel this way. And in this video, we're going to show you why the poverty line is not what the government says. It actually should be multiples higher. It probably should be six figures, over $100,000 per year. Um, and there's some fantastic math and


rationale that goes into it. So, this is a very exciting video. It helps clarify things and then hopefully gives you a path out of it. >> Yeah, if you've got children, especially, I mean, $80,000 a year, $100,000 a year sounds like something until you try to support a family today. It's It's practically impossible. So, uh, take it away. Show us your presentation here. Let's get rolling. >> Yeah. So, first of all, pretty much everything we're going to talk about comes from this article right here. And


it's part one of a multi-part series called My Life Is Lie: How a Broken Benchmark Quietly Broke America. And that benchmark is the poverty line. And this is by Michael W. Green. All credit goes to him. He wrote this around Thanksgiving. And this is fantastic. Absolutely wonderful investigative reporting. Very excited to share this. >> Yes. When somebody uh really takes things apart, I mean, you and I uh dove into a lot of stuff for the book uh and and took things apart. So, we've done


investigating report investigative reporting. I know how hard this is. He spent a lot of time figuring this out so that he could tell everybody about it. He's And my hat is off to him. >> Yeah. Mine, too. [laughter] Yeah, he did a great job. So, I'm going to read a lot a lot of his article here. Um, but it's much much larger. So, if you guys find this interesting, you could read the entirety of it uh on Substack. So, when you run the net income numbers, a family earning $100,000 is effectively in a worse


monthly financial position than a family earning only $40,000. This is one of his conclusions. At $40,000, you are drowning, but the state gives you a life vest. At $100,000, you're drowning. But the state says you are a high earnner and ties an anchor to your ankle called market price. >> Yes. And taxation. I've got to add that. So that $40,000 uh earning family uh is is actually when you talk about net taxation u both uh incomes are getting more than they're paying into the system with


roads and all of the things that they get out of society. Uh, but the family earning $40,000 is getting a whole lot more than the family earning $100,000 and paying taxes and not getting benefits. So, take us on to the next frame here. This is great. Yeah. So, this is a pretty bold claim, but we're going to walk through his logic and his math and his incentive structure. So, how a how a broken benchmark quietly broke America. This week, while trying to understand why the American middle class feels poorer each year despite


healthy GDP growth and low unemployment, I came across a sentence buried in a research paper. The US poverty line is calculated as three times the cost of a minimum food diet in 1963 adjusted for inflation. I read it again. Three times the minimum food budget. I felt sick. And there's a reason he feels sick. It's because the world today is not like the world in 1963. So just going back real quickly, like where did this number come from? The formula was developed by Molly Orchansky, an economist at the Social


Security Administration. And back then in 1963, she observed that families spent roughly one-third of their income on groceries. Roughly one-third. But it was really hard to find pricing data for other items like housing. And so she deduced that you can calculate a minimum adequate food bud budget at the grocery store and then just multiply it by three and you get a poverty line. So that's how she came up with it originally and we really haven't changed it since. However, as we know the world is


completely different. So back in 1963 housing was relatively cheap. Health care was provided by employers and was cost very little like $10 a month in the case of Blue Cross. Child care didn't really exist because mothers stayed home. Cars were affordable and if they broke down, people could fix them themselves. Usually, college tuition could be covered with a summer job. Retirement meant a pension income. So again, the world was very different. And nowadays, the composition of household spending has transformed completely. So


in 2024, food at home is no longer 33% of household spending. For most families, it's only 5 to 7%. So, if you're going to triple food, that's not going to be enough to capture the entire budget of what you're spending. >> Well, yeah. If if you're considering that 5 to 7% of your actual income is how triple that is how they're calculating the poverty line instead of triple 33%. And so, the poverty line is way way off. Okay. >> Yeah. So, it should be probably five or


six times higher based on that that simple factor. Yeah. >> So, housing for example now consumes 35 to 45%. Health care 15 to 25%. Child care can eat 20 to 40%. So, lot a lot bigger budget items than what was uh in the 1960s. >> Wow. If you go back to those percentages, they actually add up to more than 100%. [laughter] >> At the high end. Yeah. At the high end. >> At the high end. Yeah. >> Yeah. >> So, okay. >> There's a range. So, anyways, um one chart I put together on monthly housing


payment, this was using um the 30-year average um fixed rate mortgage combined with the median sales price of a US home and assuming a 20% down payment and then you you finance the rest. And this is what your your housing payment would be over time. That's the red line. It's not adjusted for inflation. And you could see it rose a lot in the 70s when interest rates were rising rapidly and then it has risen has actually doubled in the last few years um since since co um you know because of all the currency


creation and so forth >> right comparing that to CPI >> and and going out to dinner and stuff like that. Yes. >> Okay. So from $142 to $2,229. And I just want to say debt-based national fiat currencies. This is what the what they have given us. This is what Keynesian economics has given us. Something that used to cost $142 now costs $2,229. But go ahead with the point of this chart. >> Yeah. Um and I was just going to say that this this gray line here is the CPI. And you can see that housing has


has increased much faster than CPI. No doubt about it. >> Right. And I have to um insert here that the CP this is the CP lie and that's a term I coined in my first book the CP lie because it isn't accurate. The only accurate measure is uh you know how many dollars there are because uh dollar every dollar has to go somewhere and it's going to inflate some sector. They just don't count the stock market and they don't count this and that. They pick certain things to measure and then


they do all of this uh adjustments and stuff and they end up with this figure. But still 142 to 1124 [laughter] that's a pretty bad track record. >> Yeah. Exactly. >> Is doing a bangup job. [laughter] >> Yeah. Exactly. And of course if you measure this in gold, I don't have it on the chart here, but I've calculated. If you measure housing payment in gold, it goes down over time. Of course. Right. So >> yeah, >> so that's why we uh that's why we hold


gold. So if you keep Orchansk's logic, if you maintain her principle that poverty could be defined by the inverse of food's budget share, but if you update the food share to reflect today's reality, the multiplier is no longer three. It becomes 16. 16. Okay. So yeah, about five, it should be about five times higher. So that means if you measure income inadequacy today the way Orchansky measured it in the 60s, the threshold for a family of four wouldn't be $31,000. It would be somewhere between 130 and


$150,000. >> Wow. So that's a lot. So So yeah. So if you're a family of four making somewhere in this range, you're basically at the poverty line. You could think of it that way. So if you feel yourself struggling, this is why. And we're going to go through some of the math and some of the incentives. Yeah, there's some other big uh bombs in here that you're going to enjoy. >> Yeah, exactly. But but real quick, an announcement. I want to thank everyone who came to the live Q&A with me called


Ask Allen. That was so successful. It was amazing. We planned on doing it for an hour. It actually went an hour and 45 minutes because there were so many questions. It was wonderful. We're going to be doing another one in January on Tuesday, January 13th from 12:00 to 1:00 p.m. Eastern. So you can go to golds.com/askalen and you can sign up for that now. So hope to see you guys there. Bring your bring your questions about golds, hidden secrets of value, anything like that. All right, the real math of survival.


So the official poverty line for a family of four in 2024 is $31,000. The median household income is roughly $80,000. We've been told implicitly that a family earning $80,000 is doing fine, safely above poverty, solidly middle class, perhaps comfortable. But if Orchansky's crisis threshold were calculated today using her own methodology, that $80,000 family would be living in deep poverty. So the author here, he wanted to see what would happen if he ignored the official stats and simply calculated the cost of existing.


He says, "I built it basic." >> I want to point out cost of existing, not cost of living, but the cost of existing. So anyway, yeah, that's great. Okay. >> Yeah. So he he built a basic needs budget for a family of four, two earners and two kids, no vacations, no Netflix, no luxury, just the participation tickets. I love this phrase. Required to hold a job and raise kids. And so using conservative national average data, here's what that looks like. Child care, housing, food, transportation, health


care, other essentials, the required net income there is about $118,000. If you count taxes, you arrive at a gross income of about $136,000. So that's >> the property the the poverty line, right? >> Yeah. That's the updated poverty line. 136,000. >> Uhhuh. So that's that's the floor. So some people say, well, what about hedonic adjustment? Because all those things are better, right? Uh cell phones are better or they didn't exist back then, but you know, things have


improved. The quality of goods has improved. And so he addressed this in the article. I just want to talk about it a little bit. Basically, what he says is it's unfair to compare, you know, back then to right now because we're not calculating the price of luxury. We're calculating the price of participation. This is >> right. So if you've got a job that's more than a mile away, you have to have a car. Doesn't matter how nice that car is now that it's got air, you know, if


if you buy uh a Prius, you know, or or some little economy car. Uh it's got airbags and it's got air conditioning and it's got all these things that the cars didn't have back in 1960. So, yes, it's a better product, but you know, and the the Volkswagen Beetle that you bought back then compared to the least expensive economy car today, the the cost difference is enormous. I remember, oh, when Hond's first came out, the first Hondas were like 800. They were under $1,000. I remember the Honda


dealer. It was only like a a block from my house with uh you know numbers on the windshield and it was like $899 for a car that you know it was only a little twocylinder 650cc. It was a motorcycle engine in a car but still you could get to work in a car that cost less than $1,000. >> Yeah. And you can't buy a brand new car today uh for I mean you know it's somewhere around 20 grand uh so 20 times higher to participate doesn't matter that it has airbags and it's the participation you either have


it or you go without which means you can't have a job that's more than a few miles away. >> Yeah. Exactly. Exactly. And inflation only roughly 10 times more. So if a car is 20 times more, inflation is only 10 times more, then the the real price went up basically. So >> yeah. So um so ju just to give a sense of of the comparison here to function in 1955 society to have a job, call a doctor, and be a citizen, you needed a telephone line. That participation ticket cost $5 a month. Adjusted for


standard inflation, that $5 should be $58 today. But 58 is not accurate because you can't run a household in 2024 on a $58 landline to function today to to do two-factor authentication with your bank account to answer work emails to check your child's school portal which is now digital only. You need a smartphone plan and home broadband. Like you just have to have it. So the cost of that participation ticket for a family of four is not $58. It's $200 a month. So >> $200 a month is the floor of that cost


though. So this is the participation ticket, not what the average person is actually spending. You're talking about broadband and the cell phone. And so most people are spending uh 250, 300, 350 if you combine the two. Uh I know that my phone costs me a few hundred bucks a month and I'm spending um uh 125 a month on broadband. So >> yeah, exactly. And and so the applesto apples comparison here is is again not luxury. It's just the price of participation. If you want to be a part


of society, you just got to have it. >> Exactly. >> Yeah. So um he ran this participation audit across the entire budget. I didn't ask is the car better. I asked what does it cost to get to work? Right? That's that's the key question. Healthcare in 1955 was 10 bucks a month. Now it's $1,600 a month, right? Which is 14 times the the increase in inflation. >> It's 14 times the inflation adjusted. So the $10 a month would be 115 today because of the loss of purchasing power


of our national debt-based fiat currency. [laughter] But uh that is 14 times is huge. Go. Yeah. Go on. >> Yeah. Uh taxes, for example, social security tax was 2% on the first $4,200 of income. So the maximum annual contribution was $84. That's so small. Adjusted for inflation, that's about $960 a year. Today, a family earning the median $80,000 pays over $6,100. That's six times the inflation adjusted amount. >> Wow. Child care 1955. This cost was zero because the economy supported a single


earner model. Today it's 32,000. That's an infinite percent increase in the cost of participation. 32,000. I'm just blown away by it. >> Yeah, me too. >> Uh so that is what they can how much it costs to be a single parent and and have your child cared for while you're at work is the poverty line. $32,000. That's so Oh man. Okay, go ahead. >> Yeah, exactly. It's It's really unbelievable. >> It is. >> The only thing that actually tracked official CPI was food, which


>> is all based off of. Yeah. Sure. >> Exactly. Exactly. So, so I don't know if it's by coincidence or what, but basically the amount by which the official poverty line is suppressed is about as much as it possibly could have been. like they picked the one category that increased the smallest amount in price. >> Um well that category actually increases small be a lot because of replacement. Uh back in the 50s and 60s they were tracking uh a pound of um top sirloin uh choice top sirloin beef. And during the


Greenspan administration, it was replaced with chicken breast because beef was getting so expensive, they figured, well, people will eat chicken instead. [laughter] >> Yeah. So, you know, that's part of the CP lie. They He's He's going by what the CPI says. uh he didn't dig I mean uh he did an incredible job here and he dug really deep into this thing but he didn't dig into uh exactly how the the food that uh worked out correct but if they were actually tracking food would have been


uh even higher. So because they've lied about the food through substitution, um the poverty line is actually lower than it would be if they had been telling the truth because the CPI on food would be higher. >> Exactly. >> Okay. Go ahead. >> Yeah. So everything else, everything besides food, the inescapable fees required to hold a job, stay healthy, and raise children inflated at multiples of the official rate when considered on a participation basis. So yeah, absolutely. >> Um, so one thing I wanted to include


here, this is not from the article, but it's something I saw recently and thought it would fit here. This is a chart of families with children in official poverty over roughly that time time frame. Um, and you can see, so the red line is single parent families with children and the blue line is married families with children. And they both have a kink just around 1971. So they they both uh tend to kink higher and we basically get more of them. So instead of dropping, this one goes flat and this one goes from flat to rising.


So yeah, >> in the late60s is when we passed the war, Johnson's war on poverty. The war on poverty got exactly the opposite results of what it was intended for. The blue line stops falling and goes sideways. I mean, imagine if it had continued falling. uh the red line stops going sideways and starts rising. Both they got exactly the opposite results of what they were hoping for. So the war on poverty uh started things like the SNAP pro food stamps uh and all of the government housing and everything else.


Uh and so you know like all organisms humans take the path of least resistance and uh so and it it set a trap for all of these people. Um and then you said something recently these lines would be uptilted if we were you this is families with children in official poverty. If we use the new poverty line, you can take both of these and and uh uh tilt them up even more than Yeah. Right. The blue line would be rising. The red line would be twice as steep. >> Yeah. >> Right. >> Yeah. Exactly. So the war on poverty was


really a poverty creation act. >> Yes. >> Just like just like the inflation reduction act is an inflation creation act. Just spending spending spending. >> Yeah. >> Uh classic government. the big bad boondoggle. The one big bad boondoggle. >> It's all enabled by fiat, right? >> So, one other important thing to understand here is the valley of death. It's what it's what the author calls the valley of death. And it's why $100,000 is the new poor. So, he says once I


established that $136,000 is the real break even point. I ran the numbers on what happens to a family climbing the ladder toward that number. So, can you can you get out of poverty easily or not? What I found explains the vibes of the economy better than any CPI print. Our entire safety net is designed to catch people at the very bottom, but it sets a trap for anyone trying to climb out. As income rises from 40,000 up to a 100,000, benefits disappear [snorts] faster than wages increase. I call this the valley


of death. Very powerful. >> I did a a video on this. I did a real deep analysis on it and it it was many years ago now. It was probably even before the pandemic uh that I showed how um they've created this trap that once a family starts taking food stamps and living in government housing, they can really never get out of it unless they somehow go uh and unless they somehow take this giant leap and they land a job that like triples their income. instead of just uh going up 10% 20% 30% as they


go up 10% they lose 15% worth of benefits. You go up another 10% you lose 20% worth of benefits. It's just it's it's totally insane. Uh this valley of death trap that the government has set for for people. It's really atrocious. >> Yeah. >> Okay. It's it's just a horrible horrible incentive structure. So, let's just walk through it here. The view from $35,000. The official poor. Okay. At this income, the family is struggling, but the state provides a floor. They qualify for


Medicaid, free healthcare. They receive SNAP, food stamps. They receive heavy child care subsidies. Their deficits are real, but they're capped. Okay. So, they have health. >> Yeah. And they don't have to pay any taxes. >> Exactly. Exactly. So, what happens uh if you get a little bit of a raise? The family earns a $10,000 raise. Good news, right? No. At this level, the parents lose Medicaid eligibility. Suddenly, they must pay premiums and deductibles. So, even though they gain $10,000 in


income, their expenses go up more than $10,000, $10,500, let's say. So, the net result is they're poorer than before. So, this is a tax on mobility, and that tax is over 100%. >> Wow. So if you keep going past 45,000, if you suffer through it and endure it, you get to 65,000. This is the breaker. The family works harder. They get promoted to $65,000. They are now solidly working class. But at roughly this level, child care subsidies vanish. They must now pay the full market rate for daycare. So even though they gained


$20,000 from that $45,000 level, their expenses went up 28,000. So they're in the hole another 8,000. And to your point, they have to pay more in taxes. >> Yeah. >> So yeah, it it it hurts to grow out of it. You're actually incentivized not to get a raise because you can keep more benefits by by having a lower income. If you chart this, and I I did a chart in that video that is years old. Um but uh if if you take the income minus these expenses that valley it looks like a valley in the chart uh and you know


you're earning more and more and more except your cost of uh your you as you lose these benefits your actual income uh after you deduct the expenses is going down and down and down. Yeah. Okay. How could you expect anyone to climb out of poverty when you incentivize them to stay there? >> Exactly. >> So, we see some charts like this. This is from from the article here where it sort of looks on the surface like families are climbing out of poverty because of the broken official measure.


And economists would look at this and they cheer. They say, "Oh, in 1967 only 5% of families made over $150,000 adjusted for inflation. Now, 34% of those families do. We are a nation of rising aristocrats. And where he's getting that from is the gray section in this chart here. These are the um percentage of US households with an income of over 150,000 or more. And you can see >> inflation adjusted. >> Inflation adjusted. Y >> and so you can see it was, you know, about 5% um back then and now it's about


34% now. And it it does look like incomes are rising because this is inflation adjusted. However, if we look at that chart through the lens of the real poverty line, it looks like something like this red line, which is something I added to the chart. We started over here like in in the mid1 1960s roughly around 30 or 40,000, something like that, somewhere in this blue area. and we end the line just shy of 150,000, maybe 140,000, something like that. And so this red line would represent basically an increase because it's going


up to the right, an increase in the number of US households in poverty. So this tells a completely different story than the official government statistics. >> So you're going from under 25% to over 50%. Uh you're G 60% is where that line ends up at. Right. >> Just about. Yeah, I eyeballed this. It should it should be somewhere down in the blue section to >> double is is my point. >> And uh it's Yeah. Okay. This is a mindblowing article. It really is. >> Yeah, I agree. I agree. And poverty is a


lot more widespread than than we want to admit. So, um, the family earning $65,000, the family that just lost their subsidies and is now paying 32,000 for daycare and 12,000 for healthare is hyper aware of the family that's only earning 30,000 and getting subsidized food, rent, healthare, childare. They see the neighbor at the grocery store using an EBT card while they put items back on the shelf. They see the immigrant family receiving emergency housing support while they face eviction. They are not


seeing poverty. They are seeing people get for free. The exact things that they are working 60 hours a week to barely afford. So this this type of this setup breeds so much resentment, animosity, racism, xenophobia, hostility, hatred, anger, you know, depression, all that stuff. all these just awful awful things in society and we can trace it all back to the monetary system. It's horrible. >> Well, this isn't necessarily the monetary system. These this is politicians coming up with great ideas.


This is not allowing the free market to work. This is uh somebody saying, "Oh, we've got to help this group of people. We got to help that group of people." Puerto Rico has more of this than any any place in the United States that I've seen. and um and therefore it's the poorest section of the United States. So, >> okay. Yeah. Absolutely. Well, the anger isn't about the goods. It's about the breach of contract. The American deal was that effort is proportional to


security. So, the real poverty line is 140,000. But effort no longer yields security or progress. It brings risk, exhaustion, and debt. When you are drowning and you see the lifeguard throw a life vest to the person treading water next to you, a person who isn't swimming as hard as you are, you don't feel happiness for them. You feel a homicidal rage at the lifeguard. We have created a system where the only way to survive is to be destitute enough to qualify for aid or rich enough to ignore the cost.


Everyone in the middle is being cannibalized. The rich know this and they are increasingly opting out of the shared spaces. Yeah, you know, I would um uh change that last sentence. It's actually that middle class that is suffering that knows it the most. The rich uh don't really know that valley of death that that he pointed out. Um it's it's really the people that he's talking about when you're drowning. It's it's the people in the middle class, the people between uh


80,000 and 140,000 that have kids. They're trying to raise a family on that and they're feeling the pinch right now. Uh and um and they are being cannibalized. They're the ones that know it. The rich don't actually know it because it does they it doesn't affect them. They're wondering why it's happening. Uh as we all are, but they don't think about it all the time. um where the middle class family between 80 to 140 they are thinking about this all the time and that resentment I believe


is real. >> So >> I think so too. Well, we can also we can sum it all up with a meme here. Um this this is me when someone asks how much I love America and this is me when someone asks me how much I love our government. Okay, I want to say to anybody watching this, if you haven't seen V for Vendetta yet, please watch it. It is a phenomenal film. So, I want to thank everybody for watching. Allan, thank you for this phenomenal presentation. >> Hey, thanks Mike. Thanks everyone.