July 2024. The U. S.
economy continues to show no signs of stopping. Housing prices hit all time highs. The S&P 500 hits an all time high, and the combined net worth of all Americans crossed $150 trillion.
But while the U. S. has been booming for decades, one group has been left behind.
Young people older Americans saw their share of wealth increased by 12% since 1989, while those under 40 saw a decline of nearly 50%. And now, for the first time in 200 years, 30 year olds are poorer than their parents. The social contract that is now no longer in place for the first time in the U.
S. is history. A 30 year old is no longer doing as well as are his or her parents, were What went wrong?
This is America, the broken generation. The United States. The land of opportunity.
From the beginning, America was different. Unlike the rest of the world, it didn't matter who you were or where you came from. Everyone had a shot at the American dream.
However, the reality on the ground today is bleak, and the dream is more like a nightmare. In 1985, the average home was four and a half times the median household income. Today, this number has ballooned by 50% to seven times in a matter of 40 years.
Life has become two times as expensive. One of the main drivers for this affordability crisis is underdevelopment. It's called Nimby.
Not in my backyard. City planners say the attitude is spreading and causing widespread social disruption across many major U. S.
cities. Land owners have fought against new developments to preserve their quality of life and to ensure their property values stay high. Specifically, housing starts as a proportion of the US population have dropped by 30% compared to before 2000.
This means that as the population continues to grow, the number of homes per person is declining. Drving up real estate prices. This reduced housing development has compounded over the years and has created a major shortage of housing.
Take a look at San Francisco. In 2024, the city only approved 16 housing permits and seven of those were for single family homes. This is a city of a million people, and the surrounding metro area has 7 million people and all they approved was 16 housing permits.
At the same time, the share of homes owned by older generations has grown significantly compared to the past. The proportion of homes owned by Americans over 55 has increased by 23%, while home ownership among those under 55 fell 19%. Older generations have gobbled up real estate like candy, and they have created a system that benefits them meaningfully lower taxes on capital gains, the ability to forgo taxes through a 1031 exchange, and much, much more.
These homeowners are staying in their homes longer than ever. 54% of them own their homes outright. The rest have locked in historically low interest rates.
And to make matters worse, HELOC’s allow its homeowners to tap into their home equity without having to sell. The result? They have no incentive to sell.
This, in addition to low development, has kept the housing market artificially tight. Empty nesters are living in large homes that are mostly unused, while young people struggle to get by. Concurrently, a new player has entered the housing market.
Private equity. When I was in business school, there was nothing sexier in this entire world than private equity. It's exactly where you went.
If you wanted to one day own an island. And one of my classmates just bought an island. Private equity currently owns 240,000 single family homes in the United States.
Now, this is only 5% of the overall single family home until market, which is small, but the ownership is concentrated in the Sunbelt. And this doesn't include ownership in apartments, which have a much, much higher corporate and private equity ownership rate. Analysts have shown that select Sunbelt markets have over 50% ownership by private investment firms, by concentrating their ownership in key markets.
They're able to drive down property management and service costs while having an outsized role in dictating market rents. For example, between 2020 and 2023, rents for a two bedroom detached home rose by about 44%. In Tampa, 43% in Phoenix and 35% in Atlanta.
Compare this to the national average of 24%. The average home buyer can't compete against private equity. These firms are able to buy large swaths of home in one go and make unconditional offers with cash.
Furthermore, unlike mom and pop landlords, corporate landlords are highly sophisticated and will do everything to generate additional yield, even breaking the law. Recently, the Attorney General of Washington, D. C.
filed a case against 14 corporate landlords for price fixing through the analytics company RealPage. RealPage helped landlords optimize rents across 4. 5 million units in the United States.
And here's the shocker RealPage is owned by private equity firm Thoma Bravo. By taking data from millions of units, RealPage is able to optimize pricing. And as you can see, the value of data to these corporations is in the billions.
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The end game for corporate ownership of homes is very obvious. To own as many homes as humanly possible. And to create forever renters out of would be homebuyers.
And it seems like they are well on their way of achieving their goal. It's projected that private equity will own 40% of U. S.
single family home rentals by 2038 times their current ownership. This will likely increase the rent paid by renters, making it more challenging for them to save up and buy a home, while at the same time reducing the housing stock available to be bought, driving up prices further. Historically, housing has been a big wealth store.
But with limited supply created by older generations and increasing competition for private equity, wealth is declining among younger generations. Since 1989, wealth held by those under 40 has declined by nearly 50%, while wealth held by boomers has increased. There are few common explanations older generations give for this.
The first is that young people don't work hard enough or they're lazy. And this is somewhat true. In 1985, the average workweek was 35 hours.
Today it's around 34 hours, making us 3% lazier. Now, you don't need a PhD to see that this is not the issue. The second point raised is that young people spend money unnecessarily And although young people spend more money on experiences and technology, they actually spend less on physical goods.
Balancing out most increases in spending. The primary contributor to higher spending with young people is the increased relative value of housing, health care, and education. In fact, if you remove housing from the equation, younger generations spend less on average.
And contrary to popular belief, Gen Z and millennials are saving more of their earnings than older generations. Lastly, people will claim that young people are unskilled and need more education. But this is absolutely unfair.
Every subsequent generation has become more educated than the last. And Gen Z will continue this trend and become even more educated than millennials. This, though, is expected because society has pushed down the narrative that college is necessary to progress in life.
This would be fine and dandy if there was a value to education. But sadly, college is more expensive and less beneficial than ever. In 1980, the cost of attending a four year college program, when adjusted for inflation, was $10,000.
Today, it's nearly $29,000. That's a 3X increase. But why?
One simple word bloat. From 1976 to 2018, U. S.
college enrollment grew by 78%. But at the same time, full time faculty grew by 92%. Okay, that doesn't seem too bad.
But administration, administration grew by 164%. And other non administrative professionals 452%. That means that the professional staff at universities has far outpaced the growth of students.
Colleges are spending more and more money on things other than education. More admin staff, more consultants. More fancy buildings.
More of anything but education. To make matters worse, even if you get an education, it doesn't really solve anything. In 1980, households with a four year college education earned $100,000 per year.
Today, they earn $118,000 per year. This is a real increase of 18%, which seems good on the surface. However, during the same period of time, the cost of a four year education has increased from $40,000 to $115,000, a real increase of 188%.
So here's the marketing pitch for college. You can increase your earnings by 18% by spending 190% more than previous. Unlike in the past, it is no longer a path to economic prosperity.
Instead, young people are forced into a perpetual education and credential machine. What once required a bachelor's degree and entry level experience now requires a master's degree and 300 years of experience. The cherry on top.
It will cost you everything. Given how expensive education is, most students have to take out large student loans. Currently, the total balance of student debt in the United States is $1.
7 trillion. This number has grown two times faster than wages over the last 20 years. But this isn't limited to student loans.
With rising living costs and stagnating wages. The only way to make ends meet for young people is accumulating more and more debt. Since 2013, credit card debt has increased 26%, auto debt 14%, and mortgage debt 44%.
This increase is happening while young people are earning 13% less than they did in 2013. But this isn't the only that the young people need to worry about. While personal consumer debt has been rising and young people are more indebted than ever.
The United States of America has gone on a debt binge unlike anything the world has ever seen. Fiscal responsibility has become a forgotten concept in the United States. Since the removal of the gold standard, politicians have discovered that there is no consequence to printing endless amounts of money.
And over the last 60 years, government debt has grown three times faster than GDP and now sits at $35 trillion versus GDP of $27 trillion. The only time debt was this high in US history was World War two. The bloodiest, most destructive conflict in human history.
This debt is obviously not free and has associated interest costs. Currently, the US is spending 16% of their annual budget on interest, or $624 billion. That's enough money to pay off all student debt in three years.
Sadly, there's literally no mechanism to stop the government from spending money. It does not have. Elected officials are not applying it to balanced budgets.
It cannot be fired for overspending. They aren't measured on returns, on invested capital. All they need to do is spend the money and campaign for votes.
Now, $35 trillion sounds like a lot of money. And it is. But what if I told you that the real debt number is much, much higher?
Let me break it down. National debt is $34. 6 trillion.
State level debt adds $1. 9 trillion to the mix. Unfunded Opeb liabilities are another $1 trillion unfunded pension liabilities.
$7 trillion. And the biggest, baddest of them all. Socialism Security and Medicare contribute to a whopping $80 trillion of additional liabilities.
Therefore, the total actual debt held by the United States government stands at a staggering $123,875,000,000,533 million. That is five times greater than the US GDP. Or put another way, $370,000 per American.
But in reality, if you're over 50, you probably won't have to worry about this debt. Most of this debt won't impact you. The lives of older generations will be fine.
Instead, this spending will benefit old people and levy attacks on the future of young people. So if we exclude those over 50, the tax amounts to over $600,000. A person.
To make matters worse, the high cost of living is leading young people to have fewer children. Without a sharp increase in immigration. This will likely reduce production and worsen the debt burden.
But why and how would the government spend so much money knowing it's nearly impossible to ever pay it back? Do they not care about young people and their future? The short answer?
They don't. The Founding Fathers of the United States are often revered as godlike figures. They are thought of as distinguished and experienced individuals who sought out to create the framework for the greatest nation the world has ever seen.
Surely these men must have been wise and old. Let's see. James Monroe 18.
Aaron Burr 20. Alexander Hamilton 21. James Madison 25.
Thomas Jefferson 33. John Adams 40. And George Washington, a distinguished 44.
If you include everyone who signed the Declaration of Independence, the average age was 44. Now, let's take a look at Congress today. The average age.
58. What about the Senate? 64.
What's the median age in the United States? 38. How can people nearly twice the age of the average American, truly understand the challenges they face?
They can't. How are elected officials near the end of their lives supposed to behave fiscally responsible when their decisions won't burden them? They won't.
Mitch McConnell took office in 1985 and is currently 82 years old. He can barely communicate. Yet he decides your future.
Joe Biden is 81 years old and was elected to office in 1970. Before any millennials were even born. Today, he's proposing major spending bills that he will never see to completion.
John McCain. Elijah Cummings and Diane Feinstein all died while in office. These were people who were voting on the future of the United States, but would never see it.
How is this okay? Young people are seeing rising costs of living and stagnating wages across the country. Wealth is continually growing, with older generations, while young people get poorer and poorer.
Education continues to increase in price while becoming less valuable in the market. Consumer debt is rising rapidly, burdening young people more than ever. The US continues to spend money like it grows on trees, handing out benefits to the old while taxing the young.
And all of this happens while young people are split between red and blue. Wake up. The solution isn't Democrat or Republican.
We've seen both parties come in and out over the decades, and your lives have continued to get worse. They took away your dream of starting a family. You said nothing.
They took away the chance to own a home. And you said nothing. They spend on programs for the old and tell you to work forever.
And you said nothing. And now, as you are tied up for a lifetime of servitude, will you let them drain you of every last bit of your future? Or will you stand up and say, enough is enough?
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