The "Seven-Piece Suit of Middle-Class Bankruptcy" goes viral, revealing the truth behind balance sheet recession. From frustration and learned helplessness to the collapse of trust, this is not laziness, but a rational market clearing by the common people. Facing an extractive system and aging before getting rich, how can young people break the deadlock? Teaching you how to regain vitality through strategic contraction and exit options

This video explores the truth behind the balance sheet recession hidden behind the trending internet phrase "seven-piece suit of middle-class bankruptcy," analyzes the three psychological stages of contemporary youth ranging from frustration and learned helplessness to the collapse of trust, compares the similarities and differences between the US Great Depression and Japan's Heisei era, points out China's dilemma of clearing out under an extractive system and getting old before getting rich, and proposes coping strategies for young people to break through through strategic contraction, cash flow management, capacity building, and acquiring exit options.

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Observe things as they are and reject fragmented understanding. Over the past few days, a term has surged to the top of hot searches, called the "seven-piece suit of middle-class bankruptcy." Entrepreneurial loans, trendy toy dolls (Jiwa), leveraged investments—set after set, these are all the most standard hardworking actions of the past decade. Hasn't the Chinese Communist Party recently been frantically pushing against lying flat? Well, now Chinese netizens no longer talk about lying flat, but these seven items, though not mentioning lying flat in any single sentence, are inseparable from it in every sentence, directly concretizing the act of lying flat. The seven-piece suit and lying flat may seem like two different terms, but what are they actually? They are simply the concrete manifestation of lying flat. So what is the nature of this seven-piece suit? It is a spontaneous risk disclosure by the public, meaning that these actions are now all financial landmines, and everyone must avoid stepping on them. Lying flat is a rational response after receiving this disclosure. Since everything is a minefield, people simply stop moving. Furthermore, lying flat and the seven-piece suit are slightly different.

Lying flat is stepping down and not moving, while the seven-piece suit is about truly staying motionless, so it has now escalated from an idea to a standardized action across the entire internet. Hidden within this is a most core concept today, called the fallacy of composition, meaning that every individual makes the optimal choice for themselves, but when added together, it results in the worst collective outcome. This worst outcome is fed back by the interaction between people and the environment, not determined by anyone's words. Everyone stops consuming, investing, marrying, and having children. From a micro perspective, everyone is right, but when aggregated together, what is it? It is the collapse of demand, the deflationary spiral; this is the expression of the deflationary spiral in social mindset. If we look at this process, and how Chinese society will further evolve once this process is understood, everyone will gain great clarity, because this process plays a highly trend-setting role. The first stage is actually none other than a sense of frustration. Note that the key to frustration is not failure itself.

is the decoupling of effort and results. Look at the gaokao prep and the civil service exam competition—they are standard annotations for this phase. Look at how thousands of people previously competed for a single position, or tens of thousands took the civil service exams, while those who managed to get into big tech companies actually face the pressure of layoffs. If they fall back to studying for civil service exams, well, that path has also been competed to death. People have followed this script and tried hard at every single step, yet the rewards for each step have not materialized. When this sense of frustration accumulates to a certain extent, well, it enters the second phase—the stage of learned helplessness. This is a classic concept by the psychologist Martin Seligman. He once conducted a behavioral experiment, which went like this: he used dogs in an experiment, and what did he do? He made the dogs repeatedly experience unavoidable electric shocks. Later on, even when the cage doors were opened, the dogs just lay there motionless. It wasn't that they didn't want to run, but rather that their brains had already formed a judgment: 'Whatever I do is useless.' Mapping this to humans.

What is the electric baton for humans? It is young people repeatedly experiencing that effort does not equal reward. Once effort and reward are decoupled, well, the brain simultaneously shuts down what? The switch for action. Even if one day this opportunity, well, might actually appear, people still won't reach out for it. Therefore, lying flat itself is not laziness; on the contrary, it is a complete decoupling of effort and reward. Laziness is a deficiency in ability and willingness, whereas lying flat is a strategic retreat following a rational judgment of the odds. So one is passive and the other is active; this distinction is very clear. Therefore, the Chinese Communist Party (CCP), save your breath! Stop everyday shouting your fucking bullshit about foreign hostile forces instigating people to lie flat. Well, if you CCP are really awesome, then raise the odds of effort versus reward. But what is the actual outcome? The reality is that these fucking odds are getting worse and worse. Even for jobs like ride-hailing and food delivery, the unit prices are dropping, working hours are getting longer and longer, but you just can't make any money. So why are the odds...

Why would it rot? This brings us to the third stage, which is also the deepest layer: the collapse of trust. Japanese economist Kenichi Ohmae made a very, very detailed analysis. When analyzing Japan's low-desire society, he mentioned a very, very profound root cause: the way governments and corporations handled crises made people completely lose trust. For instance, back then the Japanese government was so weak, a large number of zombie companies were kept afloat, and bad debts were infinitely dragged out. Mapping this to the present, what is the CCP doing now? The people are not blind; what do they all see? The main theme is fucking bailing out local governments with infinite debt mitigation, rather than spending money on the ordinary residents. Can hard work bring a fair reward? This social contract has already been torn up, hasn't it? Furthermore, what it fucking hollows out is the wallet of the common people. What is the greatest asset? Trust can be said to be the biggest implicit GDP for consumption and investment. Once GDP is gone, desires are locked down—it's just that simple. Rather than

this fucking brother, babbling every day about a great nation's leader, it would be better to understand a very, very simple truth proven even by song lyrics, which is that if you want the Chinese people to be citizens of a great nation, all they need is money in their pockets. Luo Tayu already provided the answer decades ago. Otherwise, every fucking day it's 'great nation this' and 'great nation that,' all of it is fucking bullshit. What kind of great power diplomacy? In the end, it's fucking just a pack of rabid dogs. If you look at these three stages consecutively, they are actually very continuous. That is, those who still want to work hard are still struggling in the arena, manifesting as anxiety and involution (rat race). Meanwhile, those with learned helplessness are still in the arena, but they no longer invest effort, manifesting as lying flat and low desires. And those whose trust has collapsed have directly left the arena, visibly manifested as running (emigrating), or choosing not to marry or reproduce. And Qi Jiantao happens to be stuck right in the transition zone between involution (rat race) and lying flat; everything he lists is what? It's all about actions where people are still trying hard, but that effort is dragging themselves down. So it's not that young people want to.

Lying flat is fucking... this entire Chinese society is mass-producing lying flat, so the CCP, since you have your fucking ass covered in shit, don't fucking blame others for shooing shit into your pants pockets, and you're still fucking incited by others. And actually, this collective psychology is not surprising; it has already appeared twice in history. Let's take out these two mirrors and reflect on them, and everyone can see the similarities and differences. The first mirror is the Great Depression in the United States in the 1930s. Everyone can first get a feel for the intensity: GDP shrank by about a third, the unemployment rate peaked at 25%, and the Dow Jones Industrial Average dropped directly by 90% from top to bottom. And how did Americans endure it back then? Well, a rather black-humorous quote is: at least we are all equally poor, which resonates self-deprecatingly with today's Chinese society's seven-piece suit, and it is the same psychological mechanism—that is, restructuring my failure into the idea that this game itself is toxic. Later, what turned the situation around was not just the engineering feats of Roosevelt's New Deal.

There was also that famous quote by Roosevelt in his 1933 inaugural address: the only thing we have to fear is fear itself. Pay attention, this quote doesn't fix the economy; rather, it treats the psychology of the masses. And compared to Roosevelt's quote, the CCP's rhetoric and discourse are worlds apart. What the fuck is the CCP's rhetoric? It's fucking blaming what others say as the root cause of young people lying flat, blaming foreign media, blaming overseas hostile forces, and blaming a small group of people who are dissatisfied with the CCP. If you, the CCP, really have the courage, stop fucking gagging others, and find trash like Gao Zixiang or Zhang Weiwei, and have a live debate on the spot with the overseas forces you keep talking about—including me—and broadcast it openly to the whole country, so that everyone can judge for themselves! Talking bullshit is useless, and blaming others cannot change any reality. On the contrary, judging by the CCP's action of shifting blame, the CCP never intended to solve this problem at all.

Or they don't even treat it as a problem, which is the scariest part. The second mirror is Japan during the Heisei era, where the Nikkei index touched 38,915 points at the end of 1989, and then plummeted all the way to 7,054 points in 2009. Land prices in the six major cities dropped by about 70%, and an entire generation entered an era of low desires, not buying houses, not buying cars, not getting married, and having no interest in promotion. Kenichi Ohmae called this group the generation without great ambitions. Doesn't that sound very familiar? If you change the wording of these terms, isn't it just Buddhism-style or lying flat? It's the same script, just with a changed title. What is the similarity? These three countries share the core of a recession psychology, and this core is the learned helplessness caused by the decoupling of effort and reward, while the damage to trust locks down all desires, and the behavior of the private sector shifts from profit maximization to debt minimization. So once it reaches this stage, monetary policy becomes ineffective.

This is the meaning of Richard Koo's famous quote: even if you lower interest rates to zero, people who don't want to borrow money still won't borrow. But what determines the divergence of fate are three differences. First is the bubble structure. Back then, the US mainly suffered from monetary and banking crises, Japan had a dual bubble of the stock market and real estate, and China has a massive weight centered solely on real estate. How heavy is this weight? China's real estate industry and its related industries account for about 26% of the entire GDP, so this time the load-bearing wall has collapsed. Second, and most crucially, is the system's self-correction capability. The US system can self-correct and give the desperate hope once again. Japan's system could correct itself, but it was too slow; zombie banks took a decade to finally resolve. China's situation is something I will discuss separately later. Third, and most severely, is the population and time window. The population of the US during the Great Depression was still very young, and they were later backed by the baby boom. Japan was aging before...

They have already grown rich, with a large amount of financial assets in the hands of their citizens, and they have a financial cushion. As for China, the number of births plummeted from 17.86 million in 2016 to just over 7 million in a decade, a slash of nearly 70%. Marriage registrations dropped from a peak of 13.46 million pairs in 2013 to only 6.7 million pairs in 2025. Among these, a considerable number are remarriages, along with all kinds of bizarre data falsification and so on. But even if I use the official data of the Chinese Communist Party (CCP), the number has dropped by more than half in a decade. To sum it up in four words: growing old before getting rich. What about Japan? Japan is wealthy with low desires, while Chinese society is impoverished with low desires, so there is no point in comparing with Japan. Let's talk about different choices of paths, which is the liquidation. The United States undergoes rapid liquidation, while Japan does what? If we compare the economic crisis to a broken car, Japan's approach is slow repairs, but the car owner has money, so repairing it slowly won't lead to starvation. And what has China been turned into by the CCP? It's fucking...

This driver is quite reluctant to admit that the car is already broken, and furthermore, the car owner is growing old before getting rich. In fact, many people think of this liquidation as something very mystical, but it can actually be summarized in a single sentence: the misallocated resources, debts, and expectations of the bubble period must be repriced; this is the liquidation, and the losses generated by liquidation pricing must be absorbed by someone. So who absorbs them? Searching through the entire economic history, there are only three candidates. The first is the debtor, which refers to defaulting residents and bankrupt enterprises; the seven-piece suite is essentially a record of debtors being liquidated. The second is the creditor, such as banks, platforms, and depositors, whose manifestation is bad debt write-offs and financial restructuring. The third candidate is the most covert: all currency holders, meaning everyone shares the burden by diluting purchasing power. But which of these three paths will the CCP take? Well, if we list them out, it becomes clear. Let's first look at the asset pricing dislocation caused by the bubble—who is the biggest beneficiary?

Helping the government, who is the biggest creditor? Commercial banks, and behind them is still the CCP. Is it okay to let enterprises and residents go bankrupt? Still no, because that would still impact commercial banks, returning to the previous step. Therefore, the CCP will ultimately end up doing what the late Qing Dynasty did: mixing lead into silver in its currency. Well, that was the practice of the late Qing Dynasty at the time, and furthermore, stepping up plunder in fiscal policy, and then the odds of success for the entire society will continue to accelerate downward into ruin. This is why the CCP itself is the biggest problem in China's economy. Everyone sees that there are only three ways for liquidation. The first way is ripping off the band-aid—short-term liquidation, letting prices drop to the bottom quickly, writing off bad debts rapidly, and letting zombie enterprises go bankrupt quickly. The late Great Depression in the United States and the 2008 crisis both used this approach: painful quickly, painful deeply, with strong pain perception, but bottoming out and rebounding in about three to five years. However, this trick has a prerequisite—and a political prerequisite at that—which is that the regime dares to admit losses and has the ability to underwrite people's livelihoods. Does the CCP meet this condition?

[Blank]. The second type is boiling the frog slowly, which is Japan's long-term liquidation. Through rolling over debt and negative interest rates, the losses are spread out over 10 to 20 years to be slowly digested. Japan in the Heisei era dragged it out for 30 years, and the price paid was the zombification of the economy, with the entire society entering a three-low stagnation of low desires, low growth, and low inflation. It essentially trades a generation of time for the stability of the financial system and the regime. But this path is not something anyone can take just because they want to; you need a solid financial foundation to endure it. When the Japanese bubble burst back then, the average debt ratio of Japanese households was only a little over 20%, less than 30%. Today, the debt ratio of Chinese households has soared to around 65%, which is more than double what Japan's was back then. This is a path the CCP wants to take but cannot afford to walk. The third is silent bankruptcy—silent bankruptcy, implicit liquidation, where nominal prices do not collapse, but currency dilution and negative real rates might make your desire to actually go bankrupt turn into something else.

An extravagant hope. But everyone's savings are quietly disappearing; hey, this is absolute. So the Chinese Communist Party (CCP) is not following Japan's path; the CCP is following a path where the entire population pays the price for this fucking regime. Let's look at the trend chart of the CCP's policies, and it becomes very clear. What is the CCP doing? Debt resolution comes first, the " guaranteed delivery of pre-sold homes" order is executed first, and then government debt skyrockets, while M2, for fuck's sake, has flown up to the heavens. The CCP's direction can be said to be very clear: a combination of long-term liquidation and implicit liquidation. Here, I want to make a point—hey, this is an inference, and falsifiable conditions are also provided. The moment you see large-scale direct distribution of money to the people—hey, and bad debts are also rapidly written off—this judgment will be overturned. But I guarantee you, the CCP will fucking never do that. However, before the CCP does that, what is the limit? Or what is the ideal scenario the CCP wants? It wants a Japanese-style duration plus a combination of implicit liquidation. But China's social base is not that thick; this base is much weaker than Japan's. Whether it is people's livelihood, social security, or healthcare—speaking of this.

The question naturally is what? Since ripping off the bandage can be faster and more thorough, why not rip it off? This requires bringing in today's hardest theoretical tool, which is Acemoglu and Robinson's extractive institutions framework, namely the book *Why Nations Fail*. Acemoglu won the Nobel Prize in Economics in 2024, right? And he himself categorized China under what type? Growth under extractive institutions. What does that mean? It refers to political and economic arrangements where power and resources are concentrated in the hands of a few, often at the expense of the general public. This set of institutions has a self-reinforcing vicious circle: power is highly concentrated and virtually unrestrained. Thus, controlling power allows for the extraction of huge fortunes; therefore, the vested interest groups will desperately maintain this status quo and resist any reforms that would weaken their extractive capacity. Now, if we put this prototype into this cycle, this locking phenomenon will become very, very obvious. What is the prerequisite of the short-term prototype? It is acknowledgment.

Errors cannot be covered by the people's livelihood, and furthermore, some interests must be conceded. But what is admitting mistakes plus conceding interests? It equals shaking the foundations of extraction, doesn't it? So it's not that they don't know they should reform; structurally, they simply cannot reform, nor can they afford to reform. This completely crosses out all prerequisites for rapid liquidation, leaving only the path of delay plus dilution plus stability maintenance (weiwen). The CCP's method of liquidation has four observable characteristics, which everyone can compare against reality. First of all, the transfer of losses downwards: it does not write off bad debts of banks or state-owned enterprises, but instead imposes wage cuts, layoffs, and deposit depreciation on the household sector. Here, there is also a core priority order for saving lives first: meaning the financial system and local government platforms definitely rank at the very top, while small and medium-sized enterprises and residents all rank in invisible positions at the back. As for correcting mistakes? Correcting mistakes is out of the question; stability maintenance (weiwen) can only be used to replace error correction. It's a very simple problem: liquidation will trigger dissatisfaction. What is the CCP's response?

Right, basically you don't even have to guess: it's strengthening control rather than repairing the institutional direction, which is the exact opposite of Roosevelt giving hope to the desperate. What is the final characteristic? It is provoking voting with one's feet. For instance, in the year 2025, the $1.04 trillion of capital flight calculated for China by Bloomberg illustrates this phenomenon. In 2025, there was also a white paper on cross-border wealth flows, which gave the magnitude as approximately 15,200 individuals with assets over 100 million yuan completing emigration, triggering about 1.17 trillion yuan in capital flows—a volume equivalent to Hainan's GDP for an entire year—and China's net outflow of high-net-worth individuals has ranked first in the world for many consecutive years. These are third-party data; hey, I've marked them very clearly, so everyone can take them as a reference for magnitude rather than precise statistics, but the direction is definitely not wrong. That group of people who understand extractive risks best has already completed their personal liquidation; simply put, it's moving their assets out of this extraction radius. So it can be said like this.

That the rich running (run) and the bottom class lying flat (tangping) are two ends of the same three-stage model: one votes with money, and the other votes with their wombs. So what should young people do? Let's put the real problem on the table first. Young people are not facing a problem of whether they work hard or not, but rather how to allocate their own unplunderable capital—namely time, health, skills, and the choice to run (run)—in an environment where the odds of striving are steadily deteriorating and the rules are set by the extractors. There is a strategy that is basically a guaranteed loss: complete involution (rat race). What is the essence of complete involution? It's just burning oneself for a bad odds table. But complete lying flat (tangping) is giving up compound interest, which is also a very unwise practice. This is equivalent to shouldering the losses of liquidation oneself. Therefore, I think the answer is the third way, which is strategic contraction plus building anti-fragile positions. I feel that starting from the mindset, the antidote to learned helplessness was actually given by Seligman himself: it's rebuilding a sense of control. Operationally, it is one

One move is to split the world in half. For things that are systematically uncontrollable, such as housing prices, policies, or macro cycles, you should just let go and stop internal friction over them. Individuals are completely controllable, such as skills, health, savings rate, geographical location, and information access. You need to concentrate your firepower on these. In a word, it is about stubbornly tackling what is controllable, which I think is the correct way to use lying-flat. So, what is lying-flat as a whole? It is a strategic resource reallocation, rather than a total surrender. Then there is finance. Since the negative checklist of the seven-item set has already come out, copying it in reverse gives us the defensive checklist. The seven-item set says starting a business is a minefield, so you guard your cash flow and do not make heavy-asset high-stakes gambles during a contraction period. It says a mortgage is a minefield, so you minimize irreversible long-term debt, and if you really cannot reduce it, you just cut it off directly. It says pushing kids in education is a minefield, so you convert that education money into a usable skill for yourself or your child, so that when a window period arrives, you can just run. The seven-item set says leveraging investments is a minefield.

Then you must remember that in this deflationary environment, cash flow itself is your position. In fact, it can be summarized by three core principles. First, maximize cash flow, minimize the debt-to-equity ratio, and aggressively boost personal capability and risk resistance. This is actually the personal version of Richard Koo's balance sheet recession theory, the difference being that you are actively choosing it rather than passively falling into it. Going a step higher, there is capability and the right to exit. What kind of capability should you cultivate in yourself? Well, cultivate those that allow you to run and have clear trends, such as AI applications and English cross-border business. To put it bluntly, it is the ability to monetize across regions and platforms, the ability not to be tied down to a single employer or a single country. There is also the scarcest thing, which I have repeatedly emphasized: the ability to obtain true information and independent judgment. As for the right to exit, well, although we do not have the money of the rich, we can learn the mindset of the rich. What does this mean in terms of capability? It means remote-accessible language skills.

Skills and asset diversification are all low-cost exit options. As everyone knows, the biggest function of an option is to hedge risks. In other words, the value of an option lies not in exercising it, but in having the confidence. Having the ability to run does not mean you must run; its biggest benefit is that it makes you no longer fear when you choose to stay—you are choosing to stay, rather than being trapped. This matter itself is a cure for learned helplessness. Therefore, I summarize the seven-item set as follows: First, the seven-item set and lying-flat are two sides of the same coin; one side is risk disclosure, and the other is rational exit. Once you understand this, you no longer need to experience internal friction over whether to involution or to lie flat. Second is the issue of clearance. The real problem of clearance is always who bears the losses. Under an extractive structure, losses are designed by the Chinese Communist Party to flow downward, secretly and slowly, toward the household sector. Identifying this direction will allow you to guard your cash flow. The last thing is the exit option, which buys you confidence, not.

An airplane ticket. Let me give you a small action you can complete today: download or open a bookkeeping software, and calculate one number. What number? Liquid assets divided by monthly necessary expenses, which is called the months of cash flow redundancy. If it is lower than six months, starting this month, stop all investments, cut all non-essential consumption, and make up this number to six first. This is your first puzzle piece to resist the entire clearance process. Alright, that is all for today's broadcast. If you like the show, please click the share button below. If you want to support me, you can join the membership channel to watch in-depth programs for every driver. Welcome to join the ruthless people from behind, and see you in the next episode.