You are 100% right. Inequality can only be sustained when most people see a way up, so they feel "temporarily embarrassed millionaires" instead of being poor. When things get to a point where they feel like anything they do is a dead end and there is no chance of breaking out of poverty, that's when things get very nasty and society gets shaken up fundamentally.
I think humanity self-destructs if it gets close to the singularity while still in a capitalistic society. You either immediately transition to socialism or have civil war erupt in every country simultaneously.
