I don't think this explains why upper middle class suburban kids wear "ghetto" clothes. I think it has more to do with a kind of insecurity about being wealthy, and in particular a fear of being "spoiled."
It kind of reminds me of how a lot of kids I knew in college (myself included) got a kick out of living a bit more rugged than usual--for a while I bragged about not having a pillow, for instance, partly because there seemed to be a competition going on among my friends for who could be most frugal.
(Of course, saving is a good idea and plenty of people have trouble affording college, so it would be silly to begrudge them for that. But there's definitely a kind of signalling going on, too, and I don't think it's as related to peacocks as this post's author claims.)