The majority of young people have a “favorable” view of socialism…
It’s the fault of false capitalism, not true capitalism…
⚠️ Do you really believe the GDP numbers? Robert Kiyosaki just issued his boldest warning yet — and he says the clock’s almost out of time.
Dear Reader,
One recent poll revealed that:
Sixty-two percent of Americans aged 18-29 years harbor a “favorable” impression of socialism.
Thirty-four percent of the same youthful cohort harbor a favorable impression of communism.
It is true, youth is often given to fanciful flights. The youthful heart triumphs often over the youthful head.
Thus the gorgeous promises of socialism and communism seduce them.
Yet as recently as 15 years ago… the youthful cohort declared for capitalism over socialism.
What has changed? Why do today’s youth have such heat against capitalism?
The answer — I believe — reduces to a case of mistaken identity.
They believe capitalism has failed them. Yet capitalism has not failed them.
It is today’s false capitalism that has failed them.
The Young Can’t Afford Homes
First consider housing. Many aspiring youthful homeowners have been frozen from the housing market.
They simply cannot afford the purchase.
The median United States home price hovers presently at $411,000 — some 40% above 1990’s median home price — adjusted even for inflation.
The median United States house price rises 5.8 times above the median United States income.
In 1990, the median house price came in at twice the median income. And home price increases have doubled income increases since 1985.
Bankrate reports that Americans must presently earn some $111,000 to meet the down payment on the median home — a gobsmacking 50% increase since 2021.
Meantime, mortgage rates have doubled since 2022.
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You Can’t Buy a Home if You Don’t Have a Job
All the while, the youthful wallow in the siege of an “employment crisis.”
Reports The Wall Street Journal:
Recent college and high-school graduates are facing an employment crisis. The overall national unemployment rate remains around 4%, but for new college graduates looking for work, it is much higher: 6.6%... That is about the highest level in a decade — excluding the pandemic unemployment spike — and up from 6% for the 12-month period a year earlier.
That rate… applies to people ages 20 to 24 looking for work who have at least a bachelor’s degree.
Young graduates typically face a higher unemployment rate than their counterparts who have been in the workforce longer, but the gap is growing wider between older workers and the young.
The unemployed — as a rule — do not purchase houses.
Nor do they “get ahead.”
Today’s Young Are Worse Off Than Their Parents
Reports the United States Treasury Department:
Over the last few decades, there has been a pervasive sense of a decline in intergenerational mobility. A report in Science found that 90 percent of children born in the 1940s earned more than their parents did at age 30, while only half of children born in the mid-1980s have done the same. As a result, young adults that judge their well-being by comparing their earnings to their parents may be dissatisfied…
Many changes have contributed to an increasing sense of economic fragility among young adults. Young male labor force participation has dropped significantly over the past thirty years, and young male earnings have stagnated, particularly for workers with less education. The relative prices of housing and childcare have risen. Average student debt per person has risen sharply, weighing down household balance sheets and contributing to a delay in household formation.
Need we wonder, then, why the youthful cohort has turned from capitalism?
I do not believe we need to, no.
Yet again: It is not capitalism that has failed them. It is false capitalism that has failed them.
Blame the Fed
Enter now the villain of our woeful tale — the Federal Reserve.
The Federal Reserve is the principle author of the false capitalism under which we languish.
For years and years it has inflated asset bubbles of every model and make — a housing bubble, a stock bubble — an everything bubble.
This it has accomplished through the artificial suppression of interest rates.
Whom has Federal Reserve manipulation profited, primarily?
The answer is mature Americans. That is because they are the central owners of assets.
Whom has Federal Reserve manipulation punished, primarily?
The answer is the youthful. That is because they lack the wherewithal to purchase assets.
They cannot profit from asset appreciation because they do not own assets.
Thus they are frozen out… and left to scratch along as they can.
The Fed’s Gift to Older Americans
Economics commentator John Mauldin:
The income and wealth inequality that now plague us are, to a great degree, the result of persistently and artificially low interest rates. This goes back long before the Great Financial Crisis… rates have been generally falling since the early 1980s.
Artificially low interest rates represent a “gift” to asset holders — and an anti-gift to non-asset holders:
Interest rates are the price of money, and money helps you make more money. Hence, lowering its price is a gift to those who are in the best position to invest it…
Until recently, the most sophisticated “investing” most Americans did was to have a bank savings account or maybe a certificate of deposit. And for a long time, that was enough.
An average person could save a little of every paycheck, make risk-free 5% or 7% yields, and build up a nest egg or the down payment on a house. That is now impossible.
“But it’s even worse,” argues Mr. Mauldin:
Those same low interest rates encourage speculation that raises asset prices, particularly for housing. So lower-income people have to spend more just for a place to sleep…
Similarly, low interest rates subsidize job automation. In the long run, that’s actually good for workers, but in the here-and-now it eliminates jobs and suppresses wages…
That can’t go on indefinitely.
It’s Time to Clear Capitalism
I hazard the fellow is correct — it cannot go on indefinitely.
Yet capitalism is not to blame. The false capitalism spawned by the Federal Reserve is to blame.
Thus an innocent defendant has been pitched into infamy… and the youthful are hot to pack him off to the gallows.
It is time to clear capitalism of all charges, and restore its blackened name.
It is time to haul false capitalism into the dock.
It is time to haul the Federal Reserve into the dock.
Brian Maher
for Freedom Financial News
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