Thanks Fed, for Shorter, Poorer Lives

Gold Market Discussion

Thanks, Fed!


Researchers at the Federal Reserve know what they have done to the Millennial Generation, and it isn’t pretty. 

But don’t expect them to stop.

Ryan McMaken at the sound money, free market Mises Institute has examined a new Fed report on how the Millennial Generation is doing at this stage of their lives compared to prior demographic groups, the Gen X’ers and the Baby Boomers. 

Ryan McMaken
Ryan McMaken, Mises Institute

The Fed report concludes that, “Millennials are less well off than members of earlier generations when they were young, with lower earnings, fewer assets, and less wealth.”

Here’s one quick fact from the Fed’s researchers that provides a general idea of the overall findings.  “Average real labor earnings for young male household heads working full time [were] 18 percent and 27 percent higher for Generation X and baby boomers, respectively, than for millennials.

McMaken’s article, available here, dismisses the usual explanations:

“A common response in the media has been to blame Millennials for buying ‘too much avocado toast,’ or for having too many other luxury tastes that render them incapable of building wealth. That may be true of the minority of Millennials who spend much of their lives on Instagram, but the Fed report itself concludes that the consumption patterns of Millennials are not significantly different from those of other groups when incomes and other factors are taken into account.

“In other words, Millennials are not any more profligate than the Baby Boomers or Gen X’ers who came before them.”

“Millennials are less well off than members of earlier generations when they were young, with lower earnings, fewer assets, and less wealth.”

– Ryan McMaken, Mises Institute

So what is behind the diminished circumstances of our fellow Americans?  How about contrived interest rates that have made savings a losing proposition?  Capital formation, the engine of growth, just doesn’t make sense in a funny money regime of bailout bills, stimulus spending, Quantitative Easing, “injection of liquidity into the banking system.”  It makes less sense with each unbalanced budget, record deficit, and debt ceiling increase.

The gradual impoverishment of the people is inevitable when the monetary system is governed by bureaucrats and the self-interest of those they serve, instead of by the reliable impartiality of gold.

McMaken writes,

“All of this, of course, happened on the Fed’s watch, and was just the latest example of how the myth of Fed-engineered economic stability has always been a myth.

“So, we have a group of workers who start out their careers in a bad labor market, brought on by more than 20 years of money-pumping by Volcker (later in his term), Greenspan, and Bernanke.

“But once those Millennials were able to get jobs, they then were faced with a world that was particularly hostile to saving, home purchases, and investment for lower-income workers.

“Our current situation is marked by endless monetary activism marked of near-zero interest rates and asset inflation which rewards those who already own assets, and have the means to access higher-risk investment instruments that offer higher yields.

“Meanwhile, banking regulations have been re-jiggered by federal politicians and regulators to favor established firms and the already-wealthy.”

Fed chairmen brag about their “powerful tools,” but those tools have given us slow growth and reduced earnings.

LIfe Expectancy Drops for Third Year in a Row

Meanwhile, it looks like 2018 will be the third straight year that American life spans have decreased.  No surprise there.  Prosperous people live longer than impoverished people.  Ever notice how neatly the shorter life span trend overlays with the bureaucracies’ massive intrusion into the health care field?  In other words, Washington is doing to our life spans just what it has done to our money.

Life Expectancy Chart 2016
Chart shows beginning of life expectancy drop in 2015 that has continued to decline for three (3) consecutive years since

What can you do?  The government is not likely to return to an honest money standard, one that lubricates commerce and enables savings and capital formation.  One that allows people to “live long and prosper.”

But you can begin to insulate yourself from some of the effects of the Fed’s malperformance, including the slow grinding impoverishment of the people that lowers their life spans, by owning gold