The price of cheap credit and inflated tuition
By many reports, the millennial generation is the most educated generation in US history—and by some stretch. Take a look at this graph from Pew Research.

Millennials On Track to be the Most Educated Generation to Date

Yet, they have a problem. Despite all this higher education, they have the highest levels of unemployment of any work demographic and they make 20 percent less than their parents did at the same stage of life.

On top of all this, they also have a crushing amount of student loan debt. As Inc. Magazine reports:

Americans owe more than $1.2 trillion in student loans, and Millennials are carrying most of that debt. And they’ll be carrying it for a long, long time, according to a new survey of 1,000 Millennials by ORC International, commissioned by the PR firm PadillaCRT. Almost two thirds of respondents reported having at least $10,000 in student debt. More than a third said they owed more than $30,000.

Some people think that cutting back on avocado toast will solve these problems for millennials. But it goes much deeper than a few simple splurges.

The cruel combination
In many ways, millennials are victims of a cruel combination: systemic debt and asset bubbles and an antiquated education on how money works.

Charles Hugh Smith published and important blog post at the end of May called “Will the Crazy Global Debt Bubble Ever End?”. In the post, he detailed how most consumer debt is not backed by physical assets but instead by the ability of the borrower to pay the debt.

In recent years, near-zero interest rates have led to continued expansion of consumer debt. In fact, it now sits at $12.73 trillion. That’s higher than it was during the third quarter of 2008, which was right when the financial world collapsed.

Of course, during this time income has not gone up. As Smith shows, inflation adjusted median household income has been flat since 1998, and those in the bottom 90% of earners have actually seen their incomes go down.

So, we continue to see increasing amounts of debt but no growth in income to service it. How does this continue? Again, artificially low interest rates from the central banks.

This is what the banks wanted. It gives the appearance of growth without actually creating true growth.

The high cost of basic needs
In the meantime, as Smith points out, “state-protected cartels” have increased their prices to astronomical levels.

Line chart showing Price Changes (1996-2016) with over inflation at +55%

You’ll notice that two of the very basics needed for life: food and shelter have seen 50% inflation since 1996, while clothing has held steady at a little under 0%.

College tuition and textbooks are 200% more expensive. That’s astounding—and criminal.

For decades, the cardinal rule of success in the US was to go to college and get a good degree. This was the foundational step to then getting a high paying job, buying a house, and investing for retirement in a 401(k).

These are, of course, all old rules of money.

Buying into a lie
The millennial generation bought into this dream one hundred percent. That is why they are both the most educated generation and the worse off financially. In the time while they were getting their college education, the cost was inflating at astronomical levels while the cost of living was going up, employment was going down, and incomes were shrinking.

In the meantime, the cost of cheap consumer goods like TVs and smartphones plummeted, thanks to cheap overseas labor and production. The perfect storm happened. Millennials racked up both consumer debt thanks to cheap credit card rates and assumed their highly-inflated education costs would pay off in high paying jobs to cover the debt.

It is working out quite differently. The result, as USA Today reports, is that while 48% of millennials feel optimistic about their financial future, which is higher that both gen X (37%) and baby boomers (22%), they also have the highest levels of stress regarding their finances. They stress four hours on average per week about money, compared to two hours for gen X and one hour for baby boomers.

How Generation Z approaches money
Generation Z, the little brothers and sisters of the millennials have watched from the stands—and they want to do things different.

According to a new study by the Center for Generational Kinetics, the youngest generation coming into adulthood approaches money very differently that preceding generations.

For one, they “avoid debt like the plague.” When it comes to college, they’ve learned their lesson. Most seek education that won’t leave them in debt. Most plan to work while attending college to avoid debt and a quarter of them plan to use savings to pay the costs.

This debt avoidance also gives birth to a high value on saving. With many Gen Z folks still in their teens, 12% have already started saving for retirement and 35% say they will start in their twenties.

Perhaps most surprising is how Get Z plans to fund retirement: “At least 52% in the Center for Generational Kinetics study said they planned to pay for retirement with personal savings, 28% will continue to work and 26% will depend upon government assistance.”

So, while Gen Z is learning a valuable lesson about the old rules of money—that going to college isn’t a great investment—they are doubling down on two others: save money and stay out of debt. They are also buying into the myth that a job provides financial security.

Where to start
Still these are at least green shoots in the financial literacy landscape of America. If the monopoly that is higher education in this country is broken by a generation that refuses to play the game, that can force a lot of change that is positive.

For both the millennials and Generation Z, it’s not too late, but it starts with financial education and understanding how money works in today’s economy. My blog post, “15 Must Have Financial Education Lessons to Gain True Financial Literacy”, is a good place to start.

Source: http://www.richdad.com/Resources/Rich-Dad-Financial-Education-Blog/June-2017/Why-Our-Most-Educated-Generation-is-Struggling-Fin.aspx

Here's the problem as I see it.

1- Banks and credit unions loan too much money. My local credit union will loan 40 years on a house now and 7 to 10 years on vehicles. Thus, creating a system where no one will ever actually own their own truck or home.

2- people do not care how much something costs as long as they can make the minimum monthly payment.

3- people are not pursuing they're own dreams. Instead they do what they're told to do, thus creating a system of employees, not innovators and pioneers.

4- most young adults feel that all the economic opportunities are already taken by somone else.

5- the cost of living is way too high. New homes in my area are selling for over 400k. A new diesel truck costs 60k or more! Crazy!

6- young adults spend thousands on college instead of using that money to start they're own business.

As I see it, if the cycle continues, in the long run, it will create two classes of people. The extremely rich and the poor who work for them. The rich will own everything. They will own all the farms and real estate, they'll own all the businesses

Thrash

EMMAACHILE:
Here's the problem as I see it.

1- Banks and credit unions loan too much money. My local credit union will loan 40 years on a house now and 7 to 10 years on vehicles. Thus, creating a system where no one will ever actually own their own truck or home.

2- people do not care how much something costs as long as they can make the minimum monthly payment.

3- people are not pursuing they're own dreams. Instead they do what they're told to do, thus creating a system of employees, not innovators and pioneers.

4- most young adults feel that all the economic opportunities are already taken by somone else.

5- the cost of living is way too high. New homes in my area are selling for over 400k. A new diesel truck costs 60k or more! Crazy!

6- young adults spend thousands on college instead of using that money to start they're own business.

As I see it, if the cycle continues, in the long run, it will create two classes of people. The extremely rich and the poor who work for them. The rich will own everything. They will own all the farms and real estate, they'll own all the businesses

You have laid down some very good points - This current young generation has largely been sold out by their parents on the gamble that the entirely fabricated economic system of the last 70 years (since WWII) which has been little more than a roulette wheel can be spun again in their favour. Therefore households rather than building and establishing profitable and sustainable sources of labour have relied on employment and credit to blow the heads of their young sky high, teach them divorce, lifestyles,vain science and other imaginations rather than HARD WORK from the dirt up. In fact hard work has been despised and mocked in many communities and cultures as it does not bring enough glory to the parents.

What is needed now is for young people to wake up and stop leveraging their souls for image. Many are IT literate and skilled and need to become self starting and learn to live on the scraps which they put brick on brick and pay down the foolish debts. Activities like starting a poultry farm (https://thebigbookproject.org/agri/poultry-farming/how-to-start-for-beginners/), even with 1 or 2 chickens if that's all you can afford, turning all that book stuff into something that someone can use.

Younger people need not be ashamed of being poor but willing and hard working. The humble will be the ones to laugh when the debt bubble finally bursts.

Also get over yourselves and marry - don't pamper each other - hit the dirt and work together:Ecclesiastes 4:9-12

9 Two are better than one; because they have a good reward for their labour.

10 For if they fall, the one will lift up his fellow: but woe to him that is alone when he falleth; for he hath not another to help him up.

11 Again, if two lie together, then they have heat: but how can one be warm alone?