Sunday, November 17, 2019

How the Millennials Priced Themselves Out of Housing, Rent, Health Insurance, and Tuition

Excerpt from my upcoming book "How Not to Become a Millennial"

If there was a rockstar politician that the Millennial generation squealed like teenage girls at an Elvis concert over, it was Barak Obama.  He was everything they were programmed to want.  A polished, intelligent, socialist-light, black gentleman, who was going to cut through the politics of Washington and *finally* bring some sort of justice and fairness to the people.

And he did.

Facing the financial crisis of 2009 he increased government spending more than any peace-time president before him in real terms.  He ran deficits well over a trillion dollars for the first half of his presidency and paid for it by printing money.  That money went to a potpourri of social and socialist programs, but as it pertained to Millennials specifically, Obama started lending money directly to students under the federal government so those students would not have to deal with any of those icky, mean, evil private lenders.

To the untrained, ignorant, and young Millennial eye, this seemed great.  It seemed as if President Obama was going to help them.  He was finally doing something to help lower tuition unlike all politicians in the past.  But as it is with every deal with the devil, when you don’t adhere to reality, there is a price to pay.  Because in flooding the college market with $100 billion a year in extra student loans, all he really did was jack up the price of tuition. 

If you really wanted to lower tuition you would DEPRIVE colleges of money, NOT FLOOD THEM WITH HUNDREDS OF BILLIONS MORE.  You’d cut all government loans and lending to students.  You would also, ironically eliminate all scholarships and parental money from flooding the college market as well.  And if you REALLY wanted to lower tuition, a year of high school seniors should boycott college for just one semester, depriving all colleges of tuition money, forcing them to drastically cut prices. 

But the honest truth is President Obama, though well-intended, was woefully ignorant and uneducated about economics, just like the Millennials he was trying to help. And in voting for him, all Millennials managed to do was jack up their own tuition and their own student loan balances, of which they would pay unnecessary interest on for at least a decade to come.  The Millennials simply shot themselves in the foot.

The deal with the devil gets worse.

Because money doesn’t just stay in one place once it’s printed.  It circulates.  So once those trillions of dollars came hot off the presses they went into the hands of contractors, welfare recipients, college students, and the millions of other people who got some of that newly minted money.  But no matter who got it or how many people did, that money inevitably and invariably ended up at the same place – the bank.  And banks make money by lending it out.

If you think about it, banks only lend money for large purchases people normally can’t pay cash for.  Thus relegating most loans to four key areas:

·        Mortgages
·        Auto loans
·        Corporate buybacks/investing (when a company either buys back its shares or the shares of other companies on the stock market)
·        Health emergencies (typically via a home equity loan or credit cards)

And though according to the Consumer Price Index there is no inflation, if you look at what the proceeds of those bank loans went to purchase, you’ll find there is INDEED a ton of inflation in the market when it comes to:

·        Housing prices
·        Auto prices
·        The stock market (stock prices), and
·        Health insurance/costs

In other words, in printing off all of that money, Obama (and Bush Jr and more recently Donald Trump) merely flooded these respective markets with money, driving up their prices.  So all the Millennials really managed to do in voting for Obama and all that *free* money he was going to give them, was

·        Price themselves out of the housing market
·        Drive up rents
·        Drive up the price of cars
·        Price themselves out of the stock market/retirement market, and
·        Drive up insurance/health care costs

The Millennials made their deal with the devil.  Now they’re paying for it in spades.  Even if the “devil” was a very nice, well-intending, politically correct, socialist-light president.


'Reality' Doug said...

"But the honest truth is President Obama, though well-intended,"

Is that a brain fart or a socially adroit fib?

Anonymous said...

"well-intended" my ass

Take your pick: extreme ignorance or just plain evil, there is no other choice.

john smith said...

There are no accidents or unintended consequences. As long as the Federal Reserve is allowed to exist it doesn't matter who you vote for. To quote Baron von Rothschild; "Give me control of a country's currency and I don't care who thy elect". It is all really simple as Occam's Razor tells us it should be.

Tucanae Services said...

Think tuition is high now?? Wait till its free!

Society will pay the bill in ways yet unforeseen. Like say burgeoning incompetence with certificates.

Robert What? said...

I do feel bad for the millennials. They listened to their "elders" and got screwed.

Piroko said...

It IS amazing how effective manufacturing and offshoring have been at suppressing inflation in consumer goods. A hundred years from now when economists actually understand what happen, they'll be amazed at how long goods prices were able to remain relatively flat.

Anonymous said...

Well intended? Yeah right, this fake American hates this nation and its people.