Following the conventional path is a dead-end. It isn’t easy to carve a path outside the well-worn pathways of debt servitude, but it is possible.
America has become a nation bifurcated into haves and have-nots, and this is generating large-scale, enduring economic, social and political consequences. In a nutshell, older generations who bought homes and other assets at low prices decades ago have benefited enormously as credit-asset bubbles have pushed the value of these assets to the moon. These generations are wealthy not from any boost in national productivity–they’re wealthy simply because they happened to buy assets in the early stages of a multi-generational bubble
Younger generations are experiencing a double-whammy: they’re priced out of homes and other assets and they’re being crushed by the stagflation that comes with credit-asset bubbles: now that the deflationary impact of globalization has faded, the super-low interest rates of ZIRP (zero interest rate policy) and vast expansions of credit and currency have finally generated embedded inflation and suppressed the only real engine of stable prosperity, increasing productivity.
This generational / class divide has led to giving up on the American Dream–or the Chinese Dream: in China, Financial Nihilism is called lying flat or let it rot, expressions of individual rejection of the social pressures to overwork and sacrifice one’s life for a rat-race with rapidly diminishing returns. This is an apt description of Financial Nihilism.
That the American Dream–homeownership and steady improvements in earning and wealth–is out of reach of most young Americans is painfully obvious, and their response is Financial Nihilism: borrowing and spending freely to enjoy whatever is still within reach and giving up on homeownership and retirement, a trend captured in acronyms such as YOLO (you only live once).
This may sound carefree, but it is a profound expression of despair and hopelessness. This reality is visible in headlines such as these
So dumb! They could have the American Dream, if they didn’t “borrow and spend freely to enjoy whatever is still within reach and give up on homeownership and retirement.” They make their failure come true by being irresponsible, and then they whine and complain and convince themselves that they’re not at fault. But they are blowing it, blowing their futures, and their lack of discipline and productivity will end up making things even worse. I started with nothing, worked hard, saved and invested my money instead of blowing it on silly things, and down the road when I get to my 60’s I’ll be ready to enjoy a decent retirement.