by Michael Stack
Why are so many young families having a difficult time making ends meet?
Many young people feel the dream of owning a home will never be within reach. While a born optimist, for the first time in my life I’m starting to actually believe that their fears may be justified. The inflation and accompanying asset bubble that has been created by profligate government spending and hyperaggressive Monetary policies has created a historic income and wealth disparity in our country. If you were not on that asset bubble train when it left the station you may be out of luck.
Unfortunately, our leadership class has devolved into having a mindset which believes they can only correct such problems by redistributing wealth and spending more. Every new “creative” solution they come up with just throws more coal on the fire and the asset bubble train speeds further from the station. Those left there holding, yes you guessed it, the empty calories of false promises.
When was the last time anyone heard a politician say that we need to stop or even slow spending. I mean seriously, I do not remember the last time I heard a genuine cost cutting proposal that wasn’t a redistribution strategy cloaked in Equity, Climate change or some other “Just cause”.
U.S. National Home Price Index are 70% higher now than they were at the last peak. The last peak was August 2006 just before the collapse of the Subprime credit market. When that bubble burst it took us into the “great recession”, a historic 18 months pull back. I will repeat, we are now 70% above those last artificially induced price levels.
Super aggressive Monetary Policy
Simplistically, printing or digitizing more dollars reduces the value of the those in your pocket. This drives inflation, devalues currency and makes your disposable income shrink. In that scary world, real things hold value, paper things (401k, savings, cash) don’t. Everyone knows the historic examples – Weimar Germany, Brazil, Venezuela.
The $7 trillion in the Federal Reserve balance sheet would look like a four-story building of $100 bills piled over the entire area of a football field.
Our spending driven leverage relative to GDP at 124% has reached historic highs. Borrowing or leveraging money during financial stress is risky. We have essentially doubled our debt to GDP ratio since the last major financial crisis in 2008 and are at levels unprecedented in the last 100 years.
The current U.S. National debt clock registers $34.6T. Click here if you dare: U.S. National Debt Clock : Real Time.
What can you do?
Face it, the smart money is already on-board the proverbial asset train. If you did not get on or were too young to have the capital necessary to buy a ticket, you really only have one option: speak with your vote.
Last March, Federal Reserve Chairman Powel’s took a victory lap, outlining the recent drop in Inflation. The bad news, Chair Powell noted, is they have decided to slow the pace of the decline in the Fed’s securities holdings.
In layman’s terms, they are going to keep the financial heroin in the system.
The FED is going to continue to run a very loose monetary policy and as a result continue to create hot asset inflation. At this point the asset train may be rounding the bend, out of sight, and yes, you are still standing at the station.
Future taxpayers, you are being punked. You must convince your elected officials that the “Borrow and Spend” policies and behaviors of the past are robing you of a financial future. Demographically you will end up holding the bag for the mountain of debt being generated on “your behalf”.
Even if your generation never actually can pay off the debt you will be left with a currency that is so depleted that your parent’s standard of living will just be memory. One way or another you are going to be held accountable for $34T in debt. Back to our visual 34 X 6 = 204 feet or a twenty-story building of $100 bills covering an entire football field.
The political class are like sheep. You need to hold their hand and show them that their “power” depends upon insuring your financial future. If they are borrowing and spending your future every time they come up with some new great social agenda just ask “what is that going to cost me”?
The easy money has been made by someone else. If you want a shot of catching the runaway asset train or getting it to come back to the station, dramatically change your thinking. Dramatically change the demands you place upon our, and eventually your leaders.
Stop falling for empty financial calories and the promise of free money from the political class.
My father’s first house cost $15k in 1960. Today that house is on the market for 21 times that amount. What will your first house and your children’s first houses cost? Do the math: will you even be able to come up with the downpayment?
The author is a retired NYC financial services professional now living in Bellows Falls.
Discover more from Vermont Daily Chronicle
Subscribe to get the latest posts sent to your email.
Categories: Commentary
in god we trust//// wrong, we trust pickpocketpowell and grammy smellen yellen to guide us to our future wealth/// oh,yes, and our wonderful vermont governor, house and senator members that sold you out with the covid kill shot/// remember in november if you are still alive///
Out Of Control Inflation: It Now Takes At Least $177,798 For A Family Of 4 To Live Comfortably In The US Good luck with that young people. You’re screwed I’m afraid.
The point of “Equity” is equal outcomes not equal opportunity. In order to achieve equal outcomes in standard of living the Left will make everyone equally poor, except for our ruling class of course. The rulers will achieve this by taxing and regulating the middle and upper middle class out of existence.
Michael, I agree with your message to our children. But, I also see the national debt or private debt as a supertanker that is extremely slow to turn around.
And, there is a more immediate gut punch coming to them and all of us that rely upon heating fuels to get us through the winter. The clean heat standard (a.k.a. S. 5) is designed to raise our fuel costs by 70 cents per gallon; that’s a $140 increase for a full tank.
It must be stopped now or after the Public Utility Commission sends its operating rules to the Legislature next January. House and Senate will have to agree to put it into effect; without again asking: “what is that going to cost”?
When Governor Scott vetoed it last year, seven Republican Senators and three Democrats voted to sustain the veto but lost by one vote. We must find 11 Senators to vote against the PUC package or sustain the Governor’s veto. That is something we can do for our children and retired seniors. We know how to do this.
Organize and reach out to your Senators and tell them your 2026 vote will be determined by how they vote. Start talking with neighbors, your fuel dealer for political advice and support, write letters to editors and commentaries to Digger and the Daily Chronicle. This ‘Rube Goldberg’ S. 5 can be tabled next April. It must be a bi-partisan effort and I am determined to find those Senators and you should also — for your children that want to stay in Vermont.
S. 5 is a speeding truck on an icy road.
Fact of the matter is, we don’t need a selection season to get rid of the despots. If people are serious about turning over the seats and the tables – organize a recall and demand their removal per the Constitution – you know, the Law of the Land! The People have the authority to pull the triggers at will – the People have to have the
the guts to utilize the authority. The despots are not in charge, they are pretending to be – it’s a belligerent, criminal occupation and they’re getting away with it.
How Boomer to suggest that younger generations need to tighten our belts after the previous generations rang up all this debt. Where was this concern when Trump signed off on $2 trillion in unfunded tax cuts?
You guys have pulled this crap for 40 years. We’re all older, let’s raise the drinking age. Our kids don’t need schools, let’s privatize them all. Makes me sick
While I wholeheartedly agree with the gist of this fine article, I must take issue with one point.
Yes, a young couple still CAN afford their own place. They just have to make a few sacrifices. What do I mean? Look, anyone can afford land. You just have to a) know where to look and b) lower your expectations. You can still buy land for $1k-$2k per acre. Is that going to be a 15 minute commute from where you work? Probably not. Are you willing to commit to a 45 minute to one hour commute? Then probably yes.
So you acquire your land. Now what? How about buying a cheap camper, plop it down, and live out of that. Then, work on building a traditional house a little at a time as you can afford it. Start with 800 sq ft, enough to live comfortably in. Learn how to do stuff yourself! It’s called carpentry, not rocket science, for a reason. Ask family and friends to help and-or teach you what you don’t know.
Or how about this? Find a run-down old farmhouse for yourself and buy that. You can find a fixer-upper with a few acres for less then $150k. Why? Because no one wants to buy it and do the work! But if you’re young, that’s when you have the energy to do the work. My sister and brother-in-law went this route. First they fixed up a small part of it and lived in that as they worked on the rest. Sure, it took them ten years to complete the entire house, but they did it right. When they moved on from there, they got $750k for it. Talk about sweat equity!
So yeah, it can be done. Our ancestors did it, people in our immediate families have done it. Problem is, it comes with a commitment to hard work, and THAT seems to be the real sticking point to me. Everyone wants a turnkey McMansion with all the latest conveniences and luxuries. If that sounds like you, my advice would be to quit complaining then. You’re right, if you’re an average couple, you’ll never save up a down payment in today’s economy for a half-million dollar house. And be thankful for that. You won’t have to worry when you’re under water on your mortgage in 3-5 years. That’s when you’re really stuck and have no options.
But keep complaining. I’m sure big government will come along and solve all your problems.
It’s no big mystery that whenever the gov’t subsidizes something you get more of it, it gets devalued and the price goes up for everyone else. Housing is a good example.
The last real estate devaluation was caused by the federal gov’t penalizing institutions for making loans only to those they determined could pay them back…messing with a tried and true business model. The result was people who were not good prospects for mortgages getting homes and not being able to make the payments, producing more underwater equity (ironic, since it was done in the name of “equity”).
Now we have Biden using public funds to pay off privately contracted college loans to bribe certain demographics for votes. Now, democrats in the State of Vermont want to provide housing “loans” (gifts) to people based on their skin color or claims of heritage. Too many of these payouts are based on the honor system and are, according to the laws of human nature, being taken advantage of by unqualified persons. Vermont taxpayers subsidize the lifestyles of junkies and vagrants, and big surprise, we get more junkies and vagrants. STOP PAYING PEOPLE FOR DOING NOTHING USEFUL.
Re: “Yes, a young couple still CAN afford their own place. They just have to make a few sacrifices..”
Not only do they have to make sacrifices (and don’t we all?), they have to know what sacrifices to make, and what to keep.
And it’s only a matter of time until the sacrifices will require complete capitulation and subservience by all. The ‘crisis’, of which Mr. Stack speaks, is inevitable. And those who refuse to acknowledge this circumstance will be most affected by it. It’s going to border on being dreadful. It’s already horrific for too many of our children and their families. Ironically, it will be a mere straw that finally breaks the camel’s back.
One glaring question comes to mind. Who has been in charge of the straws all these years? And the answer is important. Because they should never be listened to in the future, nor allowed to manage anything else ever again.
No, it’s not the parents or the voters, per se. We have a corrupt majority of special interest groups running the show and personally benefiting from it. They are conflicted social workers, healthcare providers, government employees, school board members, teachers, administrators, and legislators. We all know who they are. Don’t forget them. They will try to reinvent themselves as they are always want to do.
It won’t be long now until one straw or another causes the inevitable ‘crisis’. Those in charge, conflicted as most of them are, are clearly now feeling helpless in their inability to manage these affairs, because there is no one-size-fits-all panacea. Everyone will have to think for themselves… make whatever ‘sacrifices’ they must… and avoid the effects of the collapse as best they can.
Godspeed.