A Once in a Lifetime Economic Reset is Coming.

SUMMARY

Peter from Bravos Research analyzes a historic divergence in consumer confidence and personal economic outlook, signaling a looming economic reset driven by income stagnation, asset inflation, and rising wealth inequality.

STATEMENTS

For the first time in over 30 years, consumer confidence in the stock market has diverged sharply from personal economic outlook, with stock market optimism at euphoric levels rivaling 2000 while personal sentiment mirrors the Great Financial Crisis.
Real personal income growth in the US followed a steady 2.8% annual trend from the 1960s until 2008, enabling predictable financial planning based on Milton Friedman's permanent income hypothesis.
Since 2008, real personal income has consistently fallen below historical trends, widening the gap post-pandemic and disappointing pre-crisis expectations for future earnings.
From 2010 to 2020, the S&P 500 has risen nearly 300% inflation-adjusted, vastly outpacing real personal income growth of about 50%, creating a unsustainable divide between the financial economy and real economy.
US personal savings rates have declined from 13% in the 1980s to 4% today, while corporate profit margins have steadily increased, directing wealth toward shareholders and asset reinvestment rather than broad consumption.
Home prices now average seven times yearly household income, up from four times historically, making housing less affordable and consuming a larger budget share, which stifles savings and investment for most households.
Optimism about improving standard of living has plummeted from 75% in 2000 to 25% today, contributing to wealth inequality at levels not seen since the 1920s, with the top 0.1% holding unprecedented shares.
Historical peaks in wealth inequality in 1929 aligned with stock market tops and preceded reversals triggered by rising corporate tax rates, which squeezed profits and asset prices but fostered middle-class prosperity through the mid-20th century.
Corporate tax rates fell from high levels in the 1980s to post-1930s lows today, boosting profit margins and asset growth but exacerbating inequality as consumer pressures mounted.
An impending economic reset may involve rising corporate taxes, potentially causing asset price drops like in the 1930s, with stock markets possibly peaking before policy changes materialize.

IDEAS

The divergence between stock market euphoria and personal economic despair reflects a fractured financial system where asset owners thrive while wage earners stagnate, hinting at systemic instability.
Milton Friedman's permanent income concept underscores how broken expectations of steady growth erode financial planning and long-term security for average Americans.
Post-2008 income trends have created a "lost decade" for personal finances, amplified by pandemic disruptions, leaving 2015 expectations unmet by 2025 realities.
Corporate profits fueling asset bubbles in stocks, gold, Bitcoin, and real estate sideline the middle class, as reinvested gains exclude those without initial capital.
Housing's shift from 4x to 7x annual income exemplifies how essential costs crowd out wealth-building, trapping households in a cycle of rising expenses without proportional gains.
Declining belief in upward mobility—from 75% to 25% over 25 years—mirrors rising inequality, evoking 1920s extremes and suggesting a need for structural reversal.
The 1929 stock peak preceded tax hikes that catalyzed the Great Depression but ultimately reduced inequality, illustrating how painful policies can reset equitable growth.
Low corporate taxes since the 1980s revived the economy short-term but sowed seeds for modern inequality by prioritizing profits over consumer resilience.
Stock markets discount future resets, potentially topping before tax rises, as in 1929, urging vigilance on policy signals amid current asset inflows.
A "great reset" could manifest quietly via income catch-up or violently through asset repricing, but historical patterns point to tax-driven corrections as the trigger.

INSIGHTS

Systemic divergences like stock optimism versus personal pessimism reveal a bifurcated economy where financial assets amplify inequality, demanding policies that realign growth with broad prosperity.
Broken income trajectories erode trust in economic institutions, fostering despair that could precipitate social and market instability unless addressed through inclusive reforms.
Corporate profit hoarding via low taxes perpetuates a wealth loop for elites, underscoring how fiscal policy shapes not just GDP but societal cohesion and human flourishing.
Housing unaffordability as CPI's largest component acts as a hidden tax on potential, highlighting technology's role in inflating assets while sidelining human capital development.
Historical resets via higher taxes show that short-term pain can yield long-term equity, suggesting modern AI-driven economies might need similar interventions to prevent 1920s-style repeats.
Anticipating market peaks before policy shifts emphasizes adaptive strategies, blending economic foresight with personal resilience for navigating technology-fueled disruptions.

QUOTES

"This is the first time that we've seen such a divergence between these two surveys. This is a symptom of a problem that has extremely deep roots."
"The reality is for the last decade, the financial expectations that people may have had pre-financial crisis have never been met."
"Corporate profits ultimately get distributed to shareholders. And unlike wage earners, shareholders don't spend most of the income that they receive."
"If a larger and larger share of someone's income goes through to shelter, that naturally leaves less room for saving. And so pretty much nothing left to invest in assets."
"This is the quote unquote reset that many people are looking for. That somehow we see wealth inequalities come back to where they were in the 1960s."

HABITS

Maintain transparency in tracking both winning and losing trades to build trust and inform ongoing strategies in volatile markets.
Regularly review macroeconomic indicators like savings rates and tax policies to anticipate shifts in personal and asset-based wealth.
Diversify investments across stocks, gold, and crypto during inflow periods to capitalize on current trends before reversals.
Adjust portfolios defensively when inequality signals suggest impending resets, prioritizing capital preservation over growth.
Engage in continuous education on trading platforms and market outlooks to adapt to evolving economic environments.

FACTS

Consumer confidence in the stock market is at one of the highest levels in 30 years, surpassing 2000's euphoric bubble.
Real personal income growth averaged 2.8% annually from the 1960s to 2008, but has lagged significantly since.
US personal savings rates dropped from 13% in the 1980s to 4% today amid rising corporate profit margins.
Home prices now equate to seven times average yearly household income, up from four times over the past 60 years.
Wealth optimism fell from 75% in 2000 to 25% today, with top 0.1% holding shares rivaling 1920s highs.

REFERENCES

Milton Friedman's 1957 permanent income hypothesis.
University of Michigan economic outlook survey.
S&P 500 historical performance data.
US corporate income tax rate trends from 1910s onward.

HOW TO APPLY

Monitor consumer confidence surveys weekly to detect divergences between stock market sentiment and personal economic views, adjusting expectations for potential resets.
Calculate your personal income trajectory against historical 2.8% growth benchmarks annually to assess if expectations align with reality and revise financial plans.
Track housing costs relative to income quarterly, aiming to keep shelter under 30% of budget to free resources for savings and investments.
Review corporate tax policy changes in news sources monthly, preparing for asset repricing by diversifying into defensive holdings like bonds.
Evaluate wealth inequality metrics yearly via sources like Federal Reserve data, using them to gauge middle-class mobility and inform voting or advocacy on fiscal reforms.

ONE-SENTENCE TAKEAWAY

An economic reset looms as income stagnation and asset inflation widen inequality, urging preparation for policy-driven market corrections.

RECOMMENDATIONS

Stay invested in high-inflow assets like stocks, gold, and crypto until inequality reversal signals emerge, then shift defensively.
Advocate for balanced tax policies that curb corporate profit excesses without stifling innovation, drawing from 1930s lessons.
Prioritize affordable housing reforms to restore savings capacity, enabling broader participation in wealth-compounding assets.
Build financial literacy through transparent trade tracking to navigate divergences between real and financial economies.
Foster personal resilience by aligning expectations with post-2008 income realities, avoiding over-reliance on historical growth assumptions.

MEMO

In an era of unprecedented market highs, a stark anomaly has emerged: Americans are more bullish on stocks than at any point since the dot-com bubble of 2000, yet their personal economic outlook rivals the despair of the 2008 financial crisis. This divergence, charted by Bravos Research analyst Peter Massaut, signals deep fissures in the financial system. Consumer confidence in equities soars, buoyed by a S&P 500 that has tripled in real terms since 2010, while real personal income has crawled just 50% in the same period. Such a split, unseen in over three decades, underscores a troubling reality— the wealth generated by corporations and funneled into assets like Bitcoin and real estate bypasses the average household, leaving wage earners adrift.

The roots trace back to shattered expectations. For generations until 2008, incomes grew steadily at 2.8% annually, embodying economist Milton Friedman's notion of "permanent income"—a reliable forecast for future earnings that underpinned home buys, retirements, and dreams of upward mobility. But the financial crisis upended this, and the pandemic widened the chasm further. A worker in 1999 anticipated a comfortable 2019; instead, they faced stagnation. Savings rates, once robust at 13% in the 1980s, now hover at a meager 4%, as corporate profits climb and redistribute to shareholders who reinvest rather than spend. Homeownership, once four times annual income, now demands sevenfold, devouring budgets and locking families out of the asset boom.

This imbalance has bred profound pessimism. In 2000, 75% of Americans believed they could better their lot; today, just 25% do, amid inequality echoing the Roaring Twenties. The top 0.1% controls wealth shares unseen since then, fueled by tax cuts that slashed corporate rates to Depression-era lows. History offers a cautionary parallel: The 1929 market peak preceded tax hikes that, though triggering the Great Depression, reversed inequality and birthed mid-century prosperity. Massaut warns of a similar "great reset" ahead—possibly via rising taxes that could crash assets, with markets likely topping beforehand. For now, he advises riding the inflow wave into stocks and gold, but vigilance is key as policy winds shift.

Yet amid the gloom, opportunity glimmers in adaptation. Bravos Research, marking five years of transparent trade insights, urges investors to arm themselves with education on platforms like Interactive Brokers and TradingView. The reset may bring pain, but as past eras show, it could also pave equitable growth, reminding us that technology and markets serve humanity best when tethered to inclusive progress. In this bifurcated landscape, the truly wise prepare not just portfolios, but a vision for shared flourishing.