How the Government Makes Billionaires

Politicians are making billionaires and the top 1% wealthier while the average American family is struggling. Now, yes, they get tax breaks, and that is very, very big. We're going to show you. But that's actually not the main method that they're using to make billionaires in the top 1% wealthy. And today, I'm going to show you how.

This is a big topic which encompasses a lot that we can't hit on in the time frame that we have. But I'm going to show you exactly how the government is making the wealthy wealthier. This actually came up because our listeners and viewers are amazing. And as you can see in all of these comments, they hit on a very important topic. But it also showed me that a lot of people are missing the main way the government makes the wealthy richer. And I wanted to explore that today.

But let's start off with tax cuts. First, the top 1% have gotten a lot of tax cuts. Now, some of these things, as you can see, are just the actual marginal tax rate has been reduced from 39 to 37%. But also we had 20% deductions pass through income plus things like the increase of the estate tax. Now the wealthy do not get taxed and they don't even earn money in the same way we do. And while those individual tax deductions and actual cuts are large and they equate to billions which I'm going to show you, that is not actually the large driver.

Now, even corporate tax in America and our tax system, although it doesn't really seem, is actually quite progressive. If you look at the rest of the world, the United States actually stacks up higher than a lot of countries throughout Europe. This is a reason why American corporations stash cash in places like Ireland, Switzerland, Sweden, even the United Kingdom is also other places that US corporations love to stash cash so they don't bring it back and get taxed on it. But the top 1%'s tax benefits are so disproportionate, especially at first glance. Take a look at this chart for example. The projected 2025 average federal tax cut by income group so vastly overbenefits the 1%. It seems wild. Now there's a reason for this as in a lot of the lower categories end up not paying any federal tax. So the tax breaks don't give them a lot. So there's two sides to it. First of all, yes, the amount that they receive is disproportionately bigger, but that's also because the amount that they pay is, but it's still a bigger tax break than a lot of other categories, and they were benefited much more than other categories like upper middle class, which tends to get hit actually the worst.

Now the driving reason for this is billionaires make their money in assets not income. As you can see here the top five billionaires some of them got paid basically nothing or a very small amount. Warren Buffett famously only gets paid $100,000 and other CEOs have famously only worked for a dollar. It's not how they make their money and that's definitely not where their wealth comes from. Now taxation is hit on a few things and that is cash or income. So if you sell an asset, you get hit with a certain type of tax. That's called capital gains tax. There's two different levels for it. Now mainly increasing the billionaire's taxing is through these methods. It's getting rid of deductions and increasing taxes on things like capital gains because that's where they make all their money. The top 1% is assetri and heavy for the lower cortiles of society. They are not the ownership society. So they do not have the benefits of assets. Asset protection, asset growth. They have income. So different types of taxation affects different groups very, very differently. This is actually the main driver and function of how the government makes the wealthy even richer, which we'll show you.

But first, let's take a look. We have a massive debt crisis in the United States. And the government has been printing trillions upon trillions of dollars. And a lot of people, especially in our comments, talked about one of the main reasons is because of the billionaires and they don't pay taxes, which you're not wrong. That actually does contribute to obviously less money that can pay bills and go to paying our debt. So the question then is how much? That is a very different story. In fact, that amount tends to be very small. And we're going to look at a few scenarios here. Without the tax cuts that have been enacted in the last 10 years, the difference on the overall federal debt is almost inconsequential. Now, of course, because they don't pay very much taxes. So, what if we increased that tax to like 80%? Now, that's better, but that still doesn't make up for all of these billions and billions of dollars that the 1% and billionaires have created for themselves over the last 10 years. All this money that is so disproportionate to the rest of us. In fact, lots of billionaires are pro raising the taxes. Famously on billionaires and top percent earners. This made me interested because I'm like, why would you be in favor of that? Now, two, why would you be in favor of, let's say, a party like the Democrats that are openly going after you? In fact, Democrats rose 5:1 in funding from billionaires than Republicans did who were supposed to be giving them tax breaks and helping them out. The vast majority of billionaires supported Democrats who talked about increasing taxes. That didn't make sense. That's happened not only in the last election, but the previous elections. Warren Buffett has famously been aggressive about saying we need to raise the tax on billionaires. But yet, Warren Buffett makes all of his wealth, his wealth creation and growth is principally through Berkshire Hathaway, which buys companies. It's a holdings company of sort. But Warren Buffett uses something called a float that insurance companies have. And he uses this at a tax-free rate that it doesn't matter how much you increase taxes on Warren Buffett, he doesn't pay it or it won't affect his wealth creation. The machine won't stop.

You see, we get into this problem. If you want to tax their wealth or their unearned income, that means they have to sell off those assets in order to pay the tax. But when you sell off assets, that has another effect. That means prices go down. So if every year billionaires have to sell off mass amounts of shares, sell assets, the economy just tanks. And not just billionaires, but the top 1% because the market is flooded with them selling shares or other assets, therefore tanking the value within those markets. It's a balancing act that the government has to play. You see, the wealthy make their money by owning parts of the economy, and the government doesn't want the economy to stop or fail. The United States is not only the biggest economy, it is pretty much the engine for the rest of the world. So, why would billionaires support increased taxes and also maybe candidates that are actively going after billionaires claiming that they're evil and wanting to tax them more? Why would they get behind this? Why would they support that? Well, at the heart of it, billionaires don't care about their income. They care about their wealth or their ownership, the companies, the assets that they own. They want them to grow. Now, assets can grow for lots of reasons. You can be more productive. There can be more buyers and sellers. They can make more money or just simply have more demand in general. That could be due to more buyers or limited supply. But there's an economic function that has been at the works for a long time that has made it so the owner class is so far from the regular American that it's to a point that we can't ignore.

So, let's take a look at it. Even if you taxed billionaires, not only what they're being taxed, got rid of the tax cuts, but increased their taxes up to 80%. That doesn't annually even equal the amount of improper payments by the government. Now, let's get one thing straight. Billionaires don't need support. They've got all that they need. They've got everything. They own everything. The key of this is not understanding whether you tax billionaires more or less. They need to not only pay their fair share, but one that is equivalent to the benefit they're getting from society. And that has been skewed. But it's still not the driving reason of wealth inequality in the United States. This is how government and politicians make the rich and the wealthy wealthier.

In orange, we have the real income growth rate for normal Americans, our average income. As you can see, it's negative. Due to inflation, which is also shown on the chart, we can't buy as much. Our dollars don't go as far. So, even though Americans were getting payraises, it wasn't enough to keep up. Now, they're struggling to buy everyday items. Another side effect of inflation is interest rates went up. Now, they can't buy homes or finance for cars, even credit card payments. Everything has gotten harder for the average American.

In blue you can see government spending. Government spending has skyrocketed. And over at the right up to 2025 in those green we have a few metrics that are important like the S&P 500, Bitcoin, gold all hitting highs ever recorded. Assets homes within the last 10 years hitting the highest points ever. Commercial real estate and others hitting high value marks. All why Americans have less savings, their dollars aren't going as far, so they can't spend more. That seems totally counterintuitive. If the engine that actually feeds the businesses being consumers and all of the American citizens, they can't buy as much, they can't spend as much, they can't purchase things, and now they don't have debt because it costs too much for them to get debt. How in the world are assets hitting higher and higher marks? Obviously, there's a lot that goes into it, but the principal reason is due to government spending. Government spending creates inflation. When you have too much dollars, dollars have to go somewhere. And in order to preserve money and in order to preserve the value of your dollars, especially when there's inflation and the devaluing of the dollar, they go to assets. As the government prints more, assets rise in value.

So over the last 10 years, really since after 2008, the United States has become very involved in private markets and supporting the economy. In fact, it has become a bigger and bigger and bigger portion of the economy, higher than it's ever become. All why the real economy hasn't grown much. This is what's happening. The government is borrowing money and it is putting borrowed money that came from nowhere into the economy which goes to assets which makes the wealthy wealthier. Where do they get the borrowed money? They get the borrowed money from promising yours, mine, and our children's futures to pay it off. Yet, when government spends money, it only flows up. And it doesn't flow up by meaning just we go in and we pay for it. It's an actual systematic devaluing and increasing value of assets. Government printing and support props up the wealthy. The less money government spends, the less there is in circulation. Take this chart for example. Now, if the government spends its tax revenue, that's like swap and spit. They take a dollar, they put it back in to roads, everything else. The money supply isn't created. You're just changing dollars. But when the government creates debt out of thin air and puts it into the economy, that's new. That's new money. And what we saw is especially after 2020, but in 2022 and onward, even when we had no crisis and we had no major military expense or anything else, the government was borrowing and spending in the economy money that didn't exist. This created inflation and it propped up asset prices.

Here's a very simple example how the function works. Government spending increases. Budget deficit expands. Central banks buy bonds. They lower interest rates. That money supply increases more dollars and more liquidity. More capital is chasing returns and trying to preserve because the dollar is getting weaker or we have inflation. That means investment into assets increase. Asset prices rise regardless if Main Street or the real economy is actually doing better. This is why, especially amongst billionaires, things like bailouts and government spending is so important. They want liquidity and they want lots of it and they want asset prices to rise. But when that gets too far away from actual productivity, we could have crashes or corrections, they want them to balance and keep spending cuz after all, it's not them that has to pay it. It's all the mainstream taxpayers because they can take out debt on their assets and they can spend that tax-free. The larger the government is and the more it spends, the higher the concentration becomes for dollars in the hands of very, very few. It is not created by the real economy. It is going to a smaller and smaller group of people. That is very, very dangerous. And even worse, nothing was done to create that value except tax the future of the citizens. So the citizens really get nothing for it at all.

This is something that's been going on for a while. But after 2008, there became a thought process within the government and politicians. The government spending essentially didn't matter because we're the reserve currency and always intervene and prop up the economy. Good intentions. You don't want recessions, depressions, right? You want to prop up and save the economy. But taking that to another level, use it to grow the economy. That is very different. And that is what the United States has been doing for a long, long time. This effect of making the wealthy richer actually makes Main Street poor. It devalues dollars. It increases the price of goods and services. The more the government plays a role in society by supporting the economy, the less Main Street benefits and the further away the economy gets from real productivity and results and the smaller the group of winners there is. Taxes pale in comparison to this. You can tax billionaires more, but it'll do nothing as long as this is continuing. They will only increase in wealth and taxes do trickle down.

Now what you can learn from this is twofold. Understanding why it's happening but also a very important lesson that the asset holders and owners get rich and the cash holders get poor. This will never go away. It will always be true. Even starting small, $100 a month, and focusing on finance, on equity, ownership, assets, and participation in the economy, the government will always default to saving the economy. Obviously, if we're all unemployed, we have no money, and we have a depression. That's not good. But the other side is the government gets carried away. Why? Cuz politicians don't like anything bad, and they want everyone to like them. And they want to get voted in. And the easiest way to do that is by printing and handing people checks, which just hurt Main Street America and makes the rich richer. Play the game as best you can. Focus on opportunities that allow you to be educated or participate in ownership. Save. Invest small amounts so while the economy and the stock market and everything is benefited, you are not left behind. At the end of the day, the shareholders of Tesla or Microsoft or anyone else, their wealth rises and falls the exact same as the billionaires that own all the shares. Participation is the only way to fight against it.

Early in my life, I followed my dad's footsteps into sales. That actually got him out of poverty and we sold insurance. There was a big problem with that and it was a cash problem. It's not that I was complaining. Obviously, we did good and had money. We had excess money to invest. We were very, very fortunate, but I didn't feel that I could get ahead. So, we shifted and focused on asset driven returns. A lot of people that seems really scary and we started small and most people do start small. The key of earning more income, saving and investing, it is a process. Time is a very important function. You not only need to save and invest, you also have to learn how the game works. So that's what I did. I studied and I studied. I learned more of these things and I invested more. Then I started investing with other people. And then I built a firm all about investing, protecting capital, and increasing your overall wealth. And you can too. There is so much on this channel. This is what I do. I teach people for free about what's going on and what the rich are doing. How to get assets, create income, and how to put yourself in a place where you are financially independent. So, make sure you're watching the other videos, subscribe, and also everybody comment all the other things that are going on that exaggerate this and make this effect happen within our economy. I love to read your comments. [Music]