Are High Home Prices Turning American Millennials Into the New Serfs?

Monthly Market Commentary: March 1, 2017

Last month’s we discussed the poor financial conditions of millennials. According to the Federal Reserve Bank of New York wages for the typical recent college graduate working full time have risen just 1.6 percent over the last 25 years, after adjusting for inflation. At the same time, student debt burdens for the typical bachelor’s degree recipient who borrowed for college have increased about 163.8 percent. The Huffington Post explained that, “In 1990, the typical college student graduated with debt equivalent to 28.6 percent of her annual earnings. By 2015, that number had shot up to 74.3 percent. Stagnant wages and the jump in student debt levels has prompted growing concern among government policymakers and financial industry executives that student debt risks slowing U.S. economic growth as households reduce their spending to make their student loan payments.

Furthermore, since 2004, homeownership rate for people under 35 have dropped by 21 percent, easily outpacing the 15 percent fall among those 35 to 44 old.

Various studies show that homeowners tend to vote more than renters. Under the title, Have millennials given up on democracy? The Guardian discussed the issue of millennials being less interested in democracy than their parents or older age groups: “Chief among the accusations levelled at millennials is that of political apathy. But the real problem could be even worse than disengagement: it seems many members of Generation Y could be ready to back a despot. A large-scale survey of political attitudes conducted by the Lowy Institute for International Policy in Sydney found that just 42% of Australian 18- to 29-year-olds thought democracy was “the most preferable form of government”, compared with 65% of those aged 30 or above…. Millennials themselves, asked why they do not back democracy, mostly say it “only serves the interests of a few” (40%) and that there is “no real difference between the policies of the major parties” (32%). A similar malaise is expressed across western democracies.

I also discuss Tyler Cowen’s new book The Complacent Class. Cowen believes, “society may be returning to a cyclical view of history in which human progress is no longer something we will automatically expect. We may take a generation or so to adjust to the new reality. Millennials are already leading the way. They are the least angry group of Americans politically, perhaps because they have grown up with more realistic expectations than their elders.

Unsurprisingly, the millennial generation is the least entrepreneurial of all. According to Cowen, millennials are “most committed ideological carriers” of the new spirit of complacency.

Also, my friend Michael O’Higgins will make the case for precious metals.

I am also enclosing a letter which describes precisely how governments function. It will make you laugh (or cry).

Finally, concerning the millennials apathy towards democracies remember that as Alice Walker observed, “The most common way people give up their power is by thinking they don't have any.”

With kind regards
Yours sincerely
Marc Faber 

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