{"id":2330797,"date":"2024-08-26T04:20:02","date_gmt":"2024-08-26T08:20:02","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/the-fed-that-made-millennials-rich-can-bankrupt-them-too\/"},"modified":"2024-08-26T04:32:11","modified_gmt":"2024-08-26T08:32:11","slug":"the-fed-that-made-millennials-rich-can-bankrupt-them-too","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/the-fed-that-made-millennials-rich-can-bankrupt-them-too\/","title":{"rendered":"The Fed That Made Millennials Rich Can Bankrupt Them Too"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">20<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fthe-fed-that-made-millennials-rich-can-bankrupt-them-too%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2330797&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>A recent article\u2064 in The Wall Street Journal highlights a significant\u2062 improvement in the financial status of millennials, driven largely by actions\u2062 taken by the Federal Reserve. According to \u200ba report from the St. \u200cLouis Federal Reserve Bank, the <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/dragging-your-feet-on-marriage-heres-a-robust-case-for-tying-the-knot-amid-a-recession\/\" title=\"Dragging Your Feet On Marriage? Here\u2019s A Robust Case For Tying The Knot Amid A Recession\">median net worth<\/a> for millennials\u200c born in the \u20621980s and 1990s\u200c has dramatically increased, doubling and quadrupling respectively between\u200c 2019 and 2022. Millennials and older Generation Z individuals\u2062 now have an average net worth 25% higher than that of Generation X and Baby Boomers at the same age. Overall wealth for these groups has\u200c more than tripled from $4.5 trillion to\u2062 $14.2 trillion, largely thanks\u2062 to rising real \u2063estate values.<\/p>\n<p>However, this wealth increase also masks the\u200b challenges millennials\u200d faced entering adulthood during the Great Recession, when <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/median-net-worth-soared-37-from-2019-to-2022-fed-study-finds\/\" title=\"Fed study: Median net worth surges 37% from 2019 to 2022.\">low\u200d interest\u2064 rates<\/a> and poor\u200d financial policies contributed to\u200d widespread economic hardship. The Federal Reserve&#8217;s later \u200bmonetary easing during the COVID-19 pandemic, \u200caimed at stabilizing the economy, inadvertently fueled inflation and exacerbated wealth inequality. Younger generations \u2062who were able to purchase homes before \u200binterest rates rose benefited from the asset price increases, whereas those who could not\u200c have \u200cincreasingly been locked out of\u200d the housing market. The\u2063 <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/rising-baby-name-trend-could-become-the-new-normal-is-our-nation-in-danger\/\" title=\"Is the Rising Baby Name Trend a Threat to Our Nation?\">article raises concerns<\/a> about the Fed&#8217;s role in wealth\u200b inequality and\u200d the long-lasting impacts of its monetary policies.  <\/p>\n<p class=\"readmore\">\n    <button onclick=\"showReadMore()\" id=\"readmorebtn\">Read more&#8230;<\/button>\n<\/p>\n<hr id=\"line\">\n<span id=\"more\"><\/p>\n<div>\n<p>A recent <a href=\"https:\/\/www.wsj.com\/personal-finance\/millennials-personal-finance-real-estate-50742ffe?mod=trending_now_news_1\" target=\"_blank\" rel=\"noreferrer noopener\">article<\/a> in The Wall Street Journal cited new survey data to document a dramatic turnaround in the financial outlook of the millennial generation. The improvement, as with the reason millennials&rsquo; professional lives began with such a rocky start, has much to do with actions taken by the data compiler: the Federal Reserve.<\/p>\n<p>It doesn&rsquo;t take a rocket scientist to see an association between Fed policies and their effects on Americans&rsquo; financial lives. It provides yet another data point reinforcing that the Federal Reserve should move as far away as possible from the money-printing policies that have defined the last two decades of monetary and economic policy.<\/p>\n<h2>Wealth Measures Growing<\/h2>\n<p>An analysis by the St. Louis Federal Reserve Bank found that, adjusted for inflation, median net worth more than doubled for millennials born in the 1980s, and more than quadrupled for those born in the 1990s, from 2019 through 2022. (Median net worth refers to the 50th percentile of wealth and therefore minimizes the distortionary effects of a few people who have achieved extremely high net worth.) <\/p>\n<p>The St. Louis Fed also found that millennials and older members of Generation Z had on average a 25 percent higher net worth than those in Generation X or the Baby Boom generation around the same age.<\/p>\n<p>Overall, a Federal Reserve analysis concluded that the total wealth of millennials and older Gen Z members had more than tripled from the first quarter of 2020 to the first quarter of 2024, growing from $4.5 trillion to $14.2 trillion. The reason for the growth in net worth seems obvious, with the lion&rsquo;s share coming from real-estate appreciation.<\/p>\n<h2><strong>Boom-and-Bust Cycles<\/strong><\/h2>\n<p>On one hand, the on-paper improvement in millennials&rsquo; finances tends to even out the horrific start many had to their professional and financial lives as adults. Many struggled to find jobs and establish their careers coming out of college, as the Great Recession and resulting economic stagnation ravaged finances well into the 2010s.<\/p>\n<p>Along with other actors in the financial system, the Fed played a role in precipitating that economic crash. Unrealistically low interest rates and an emphasis by DC policymakers on increasing home ownership led to many families buying homes they could not afford. The financial losses on those subprime mortgages led the banking system to seize up in the second half of 2008, and the convulsions rippled through the economy for years.<\/p>\n<p>Over a decade after a financial crash prompted by easy money, what did the Federal Reserve do? It turned on the printing presses <em>again<\/em>, this time due to the Covid-19 panic. While some degree of financial easing may have proved justified as a response to lockdowns, the Fed kept quantitative easing for far too long into 2022, helping to <a href=\"https:\/\/thefederalist.com\/2021\/11\/17\/how-the-federal-reserve-keeps-stoking-inflation\/\" target=\"_blank\" rel=\"noreferrer noopener\">stoke the inflation explosion<\/a> that continues to harm families.<\/p>\n<p>That quantitative easing helped prop up asset values, contributing to the run-up in home prices that has helped some millennials increase their net worth. But that increase in asset prices has come with costs that go well beyond excessive inflation.<\/p>\n<h2><strong>Exacerbating Inequality<\/strong><\/h2>\n<p>The Journal article cites other Fed data to note that inequality has grown for millennials, with the inflation-adjusted gap between the richest 20 percent and poorest 20 percent growing compared to Baby Boomers at a similar age. As a professor quoted in the article noted, &ldquo;One of the biggest wealth divides, especially for millennials, is did you buy a house in 2020 or before, or after? Or not at all?&rdquo;<\/p>\n<p>The Fed&rsquo;s quantitative easing from 2020 through 2022 lowered interest and mortgage rates, increasing asset values &mdash; but only for those lucky enough to purchase back then. Higher mortgage rates have now locked out many families who didn&rsquo;t purchase a few years ago. Paradoxically, high interest rates haven&rsquo;t led to a softening of home prices; many families are unwilling to forfeit their existing low rates by moving, so supply remains incredibly tight, preventing the market from adjusting to a &ldquo;new normal.&rdquo;<\/p>\n<p>Those lucky enough to get on the housing ladder while the Federal Reserve was printing money during lockdowns have a major leg up on their net worth. By contrast, those who couldn&rsquo;t get on that ladder during that period now face an uphill climb that could last for years, even decades.<\/p>\n<h2><strong>End the Easy Money<\/strong><\/h2>\n<p>The fact that Federal Reserve policies have played such a critical, and obvious, role in millennials&rsquo; economic fortunes speaks to the failures of the past two decades. It also provides tangible evidence as to why the Fed should get out of the asset-purchasing business, rather than trying to micromanage the economy from Washington.<\/p>\n<p>As I wrote <a href=\"https:\/\/thefederalist.com\/2023\/11\/28\/why-the-federal-reserve-should-keep-its-grubby-mitts-off-the-mortgage-market\/\" target=\"_blank\" rel=\"noreferrer noopener\">back in November<\/a>, for the past two decades, Americans have become <a href=\"https:\/\/thefederalist.com\/2021\/07\/16\/why-you-should-blame-the-federal-reserves-easy-money-for-todays-inflation\/\" target=\"_blank\" rel=\"noreferrer noopener\">addicted to easy money<\/a> and cheap debt. Weaning ourselves off ultra-low interest rates won&rsquo;t be easy, but the sooner we do it, the better we&rsquo;ll be. Ignoring the problem would just drag out the agony and threaten another catastrophe.<\/p>\n<hr>\n<p>      Chris Jacobs is founder and CEO of Juniper Research Group, a <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/game-show-judges-assess-players-on-their-unknown-knowledge\/\" title=\"Game Show Judges Assess Players on Their Unknown Knowledge\">policy consulting firm based<\/a> in Washington, and author of the book &#8220;<a href=\"https:\/\/www.amazon.com\/dp\/1645720020\">The Case Against Single Payer<\/a>.&#8221; He appeared in the 1995 &#8220;Jeopardy!&#8221; Teen Tournament and is on Twitter: <a href=\"http:\/\/twitter.com\/chrisjacobsHC\">@chrisjacobsHC<\/a>.<\/p>\n<\/p><\/div>\n<p><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A recent article in The Wall Street Journal highlighted new survey data showing a significant shift in the financial prospects of the millennial generation. This positive change, much like the initial challenges millennials faced in their careers, is largely attributed to measures implemented by the Federal Reserve. <\/p>\n<p>It&#8217;s clear that there is a connection between Fed policies and their impact on Americans&#8217; financial situations, reinforcing the argument that the Federal Reserve should distance itself from the money-printing strategies that have characterized monetary and economic policy over the past two decades.<\/p>\n<p>**Wealth Measures Increasing**<\/p>\n<p>An analysis from the St. Louis Federal Reserve Bank revealed that, when adjusted for inflation, median net worth more than doubled for millennials born in the 1980s and quadrupled for those born in the 1990s between 2019 and 2022. (Median net worth represents wealth at the 50th percentile, reducing distortions caused by individuals with extremely high wealth.) Additionally, it was found that millennials and older members of Generation Z had an average net worth about 25 percent higher than their Generation X or Baby Boomer counterparts at similar ages.<\/p>\n<p>Overall, a Federal Reserve study indicated that total wealth among millennials and older Gen Z members surged from $4.5 trillion to $14.2 trillion between early 2020 and early 2024\u2014an increase of more than threefold\u2014primarily driven by rising real estate values.<\/p>\n<p>**Boom-and-Bust Cycles**<\/p>\n<p>While this apparent improvement helps mitigate some of the difficulties many millennials experienced as they entered adulthood during challenging economic times following college\u2014particularly during and after the Great Recession\u2014their struggles were significant as they sought employment amid prolonged economic stagnation throughout much of the 2010s.<\/p>\n<p>The Fed played a role in triggering this economic downturn through its policies; low interest rates combined with government efforts to boost home ownership led many families into unaffordable mortgages. The fallout from these subprime loans contributed to a banking crisis in late 2008, which had lasting repercussions on both finance and broader economic conditions.<\/p>\n<p>More than ten years after this financial collapse fueled by easy credit practices, what did the Federal Reserve do? It resumed its money-printing activities again due to panic surrounding Covid-19. While some level of financial easing may have been warranted during lockdowns, critics argue that quantitative easing continued too long into mid-2022\u2014contributing significantly to ongoing inflationary pressures affecting families today.<\/p>\n<p>This quantitative easing helped sustain asset prices which benefited some millennials through increased home values; however, these rising asset prices also came with broader negative consequences beyond just inflationary issues.<\/p>\n<p>**Exacerbating Inequality**<\/p>\n<p>The Journal article points out additional data indicating growing inequality among millennials; specifically noting an increase in income disparity between top earners (the richest 20 percent) versus lower earners (the poorest 20 percent) compared to Baby Boomers at similar life stages. A professor quoted remarked on how critical timing has become: \u201cOne of biggest wealth divides for millennials is whether you bought a house before or after mid-2020\u2014or not at all.\u201d<\/p>\n<p>The Fed&#8217;s quantitative easing measures from early pandemic years lowered interest rates which inflated asset values\u2014but only benefitted those who managed purchases during this period while locking out others who missed out on buying homes then due to higher current mortgage rates now preventing many families from entering today\u2019s market altogether. Ironically enough though high-interest environments haven\u2019t softened housing prices either since existing homeowners are reluctant sell given favorable low-rate mortgages they currently hold leading supply shortages preventing any adjustment towards what could be considered \u201cnormal\u201d market conditions again soon enough either way!<\/p>\n<p>Those fortunate enough able enter housing markets while federal monetary policy favored them enjoy substantial advantages regarding personal net worth compared against those unable access such opportunities back then facing uphill battles potentially lasting years if not decades ahead still trying catch up financially overall!<\/p>\n<p>**End Easy Money Policies**<\/p>\n<p>The evident influence exerted by Federal Reserve policies over millennial fortunes underscores failures witnessed across two decades\u2019 time span thus far! It also serves as concrete evidence advocating against continued involvement within asset purchasing realms instead favoring less interventionist approaches allowing natural market forces dictate outcomes without micromanagement attempts originating Washington D.C..<\/p>\n<p>As I previously noted last November: Americans have developed dependencies upon cheap debt\/easy money habits cultivated over extended periods now requiring adjustments moving forward! Breaking free ultra-low interest rate reliance won\u2019t come easily but sooner we tackle issue head-on better off we\u2019ll ultimately find ourselves down road ahead avoiding prolonged suffering risking further calamities arising otherwise! <\/p>\n<p>Chris Jacobs is founder\/CEO Juniper Research Group\u2014a Washington-based policy consulting firm\u2014and author &#8220;Case Against Single Payer.&#8221; He participated Teen Tournament &#8220;Jeopardy!&#8221; back \u201995 &amp; can be followed @chrisjacobsHC via Twitter!<\/p>\n","protected":false},"author":521,"featured_media":2330798,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/thefederalist.com\/wp-content\/uploads\/2024\/08\/Couple-in-Front-of-House.jpg","fifu_image_alt":"","footnotes":""},"categories":[546],"tags":[13123,7498,39258,16175,7511],"class_list":["post-2330797","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-federalist","tag-economics","tag-fed","tag-financial-risks","tag-millennials","tag-wealth"],"fifu_image_url":"https:\/\/thefederalist.com\/wp-content\/uploads\/2024\/08\/Couple-in-Front-of-House.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2330797","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/521"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2330797"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2330797\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2330798"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2330797"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2330797"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2330797"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}