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The history of middle-class ownership in America is a history of debt. Here’s why. 🧵 (1/8)

Time and again the U.S. used credit as a tool to expand ownership and stabilize belief in the system. Let’s turn back the clock and first look at land. The Federal Farm Loan Act of 1916 created 12 federal land banks to provide long-term, low-interest rate loans to farmers.

It made sense then. Land was the *it* asset to own, because we were an agrarian society. Credit turned land into wealth. Next came homes.

We were urbanizing, and in an urban society the picket-fence home became the *it* thing to own. The National Housing Act of 1934 created the FHA, which provided standardized, long-term, low-interest amortizing loans to unlock home ownership.

Again, credit made ownership possible. Today, 65% of Americans are homeowners, and homes make up 50–70% of middle-class wealth. Something similar happened with cars.

In the 1920s, automakers were producing vehicles most workers couldn’t afford upfront. So they created the financing, too: • GM launched GMAC (aka Ally Financial) to help workers buy cars • Credit moved inventory and fueled suburban expansion Credit helped Americans afford

The US turned to education next. In 1965, the Higher Education Act funded a nationwide push for college access. It was part of LBJ’s Great Society, but the Cold War provided a hawkish incentive: • The Soviets had launched Sputnik • Washington didn’t want to fall behind in

For many, student debt delayed *actual* ownership of a home, a retirement plan, a meaningful stake in their future. The pressure to make more people partake in the joys of capitalist consumerism pushed the rise of consumer credit. Credit once expanded access to the home

Today, the *it* thing to own is no longer land, a home, a Buick, a liberal arts degree, or appliances. We’re no longer agrarian, homes are a big burden, and AI is smarter than all of us. The *it* thing to own now is shares of Nvidia, stocks and bonds.

But most Americans can’t buy enough to make it count. Unlike mortgages or farm loans or even student debt, there’s been no system to help you own financial assets. We built credit markets for land, homes, cars, and college. Why not for ownership in the economy itself?

If not for credit, there would not be farmers, homeowners, automobile owners, or an educated populace.

For decades, there was an unspoken truce between employers and workers: You give the company your best years, and they ensure you can retire with security. Then the deal changed. 🧵

During the postwar boom, steady growth and union contracts brought wages and benefits to millions. Part of that agreement included pensions: a secure, company-funded retirement benefit that would last a lifetime. But by the 1970s, profit margins were tightening, driven by many

Corporations responded by: •Slashing costs •Pushing for flexible labor •Sending jobs overseas At the same time, life expectancies rose and the cost of guaranteed retirement surged.

The handshake between labor and capital began to unravel. By the 1990s, the pension was no longer a promise but a liability. That’s when the 401(k) took the spotlight. The tax-deferred savings plan had been originally designed for executives, but soon was the default retirement

Retirement became a solo project. Workers were now expected to: • Contribute from each paycheck • Navigate the investment universe • Time their withdrawals • Make the money last for decades An assembly line worker was in essence expected to become an actuary, a pension

Some managed to make it work. But for most, the results have been punishing. In 2020, the US Census Bureau found: • The median retirement account value around $30,000 • Median annual contributions hitting less than $3,600 • Just 37.5% contribute to a 401(k)

Retirement didn’t disappear. It was redesigned to shift the burden onto workers, and the support structure vanished. You can’t blame the employers. Pensions are a big, undefined liability (thanks to the miracles of modern medicine).

But there has to be a way for employers to show up for their workers without breaking the balance sheet. That’s what we’re building at Basic Capital.