Inflation Concerns Cut Across All Generations

Those of us that experienced the 1970s and 1980s know the costs of inflation well.  Inflation makes it more difficult and risky to save and plan for the future.  It also creates a sense, rightly or wrongly, that one's earnings fail to keep up.

Now we are seeing inflation rates that are like that in the 1970s.  All Americans, especially young people, are rightly concerned.  

According to a Harvard/Harris Poll most young people correctly view excessive government spending and Federal Reserve money printing as the reason for inflation:

    Q: Are you concerned about increased inflation?
    18-34 Very/Somewhat Concerned: 87%
    All: Very/Somewhat Concerned: 88%

     Q: Are you concerned or not concerned that spending an extra $5 trillion dollars for the Biden infrastructure and families plan will lead to ...
   (18-34 only)

    Higher taxes down the line:  81%

    Runaway inflation: 78%

    Economic uncertainty: 79%

    Lower economic growth: 76%

    Negative impact on your finances: 76%

Young people are rightly concerned about all of these things.  More spending will mean higher taxes and higher rates of inflation (as government prints money to pay for these things).  Ditto on economic growth and impact on one's finances.    

Standing up for free speech

Miss New Jersey contestant lays out the case for free speech and against cancel culture.  Brave and inspiring.  Read about it here.  

Miss Northern Highlands Justine Murray went off on campus censorship on stage at the Miss New Jersey pageant:

“Our generation is experiencing an epidemic of censorship and entitlement. And it’s because our professors and our celebrities are teaching students to be narcissists, to believe that any of you that differs from their own is an existential threat,” she said in a video posted to Twitter of the competition.

“And this is what I experienced on my own campus with censorship to the point where people believe that speech is violence so that they can threaten other people with violence, simply because they disagree with them.”

—

“It is listed first under the Bill of Rights for a reason. Without it, all other liberties crumble. But today, we’re watching free speech get hammered to the ground by the very institutions that are supposed to promote diversity of thoughts,” she said.

“The mere words ‘I’m offended’ are now being used as an excuse to silence students, fire professors and cancel people simply because they do not know the popular line of thought,” she continued.

Well put.

Millenials Shifting to the GOP

Author Ryan Girdusky has crunched numbers on millennial voting patterns.  He documents a shift of millennial voters to the Republican Party.  The biggest shifts have been in the Midwest--a battleground area in national and state elections.

Here's an interview with Ryan by The Hill

This is very good news for lovers of freedom and economic opportunity.  

 

Young Swiss Reject Climate Taxes, Regulation

 Voters in Switzerland rejected three referendums that would have limited CO2 placed new taxes on motor fuel and airline tickets.  This was all part of a plan under the Paris Climate Agreement.  Other referenda would have banned the use of pesticides and chemicals in farming setting back one of mankind's great technological advanced.   BBC reports: 

Switzerland's policy on fighting climate change has been thrown into doubt after voters rejected key measures in a popular vote.

A referendum saw voters narrowly reject the government's plans for a car fuel levy and a tax on air tickets.

The measures were designed to help Switzerland meet targets under the Paris Agreement on climate change.

Many voters appear to have worried about the impact on the economy as the country tries to recover from Covid-19. 

The referenda drew particularly strong opposition from young voters who rejected the measures in overwhelming numbers.  

One reason the vote failed was lack of agreement among climate activists. Many rejected it because the law did not go far enough. But what is particularly interesting about this referendum is that the strongest opposition came from young people. 60-70% of the 18-34 year old voted No in the three categories.

 Perhaps this is a sign that younger voters are starting to reject the heavy-handed, top down approach to climate issues so favored by the ruling classes in the EU and United States.   

More here

A downside of remote work for young people: missed promotions

Bloomberg reports that lots of millennials are fed up with 100% work from home.

While experienced employees often have established professional networks and dedicated home offices, younger staff say the pandemic has left them under-informed and cut off from their teams. There are now growing concerns that they are missing out on career opportunities older colleagues took for granted.

Well over half of staff aged 21-30 stressed the importance of being able to meet and work with colleagues in person again, according to a 6,000-person survey carried out for Sharp Europe, a part of Sharp Corp., results of which were shared with Bloomberg. Nearly 60% said working in a modern, collegiate office environment has become more important to them over the past year.

I've been blogging about how the lockdowns harmed the careers and mental health of young people. The shift to work at home may be great for older workers who have connections in the workplace. Young people may find work at home enjoyable in the short term but not so pleasant in the longer term.

Get Ready for a Decade of Financial Repression

There's some interesting data in the new Biden Budget.  The budget assumes that inflation will be between 2.1 and 2.3 percent from 2022 to 2031.  That will be above both short and long term interest rates.  That means investors can expect a negative return on low risk assets--things such as bank deposit account and CDs--for the next decade.  The chart below is an excerpt from the economic assumptions section of the Biden budget.

Financial repression--setting interest rates below the rate of inflation--will devastate small savers.  This includes poor and middle income Americans.  It will also hurt young people trying to accumulate wealth for the purchase of a home and the elderly who are generally more likely to favor low risk assets.   

Financial repression also contributes to the growth of inequality.  Wealthy individuals and the large banks have greater ability to take risk or to engage in sophisticated investment strategies that will yield higher returns.  Poor and middle class Americans as well as smaller bank and financial institutions have less ability to bear risk.  

This is further evidence that young Americans are and will face a far more difficult investing environment that previous generations did.

Gen Z: Staying Afloat with Credit Cards

 Young Americans were particularly hard hit by the lockdowns and by the slower than expected recovery from the pandemic.  Given the combination of the twin shocks of the Global Financial Crisis and the COVID pandemic, it is not surprising that Millenials and Gen-Zers have had a harder time building wealth than previous generations as seen in the cart below.