Saturday, August 1, 2020

My Daughter Offers Her Thoughts on How Millennials View our Monetary System

This blog is and has been devoted to watching for events that might lead to major changes in our monetary system. So far, we have not seen major changes to the US dollar based monetary system that is administered by central banks such as the Federal Reserve. This despite the fact that we have seen two major financial crises unfold in just the last 12-13 years.

One thing we have learned during this journey is that the ability to sustain any monetary system and any currency depends upon maintaining the public trust. Since modern fiat currencies no longer are anchored to anything related to the real world economy, public trust and confidence is everything.

As time goes by, my generation is starting to pass the torch over to a younger generation A generation that never lived during a time when national currencies were any different than they are today. So, it is clearly important to try and understand how this younger generation feels about our money and our monetary system. Do they trust it? Do they see it remaining unchanged for a long time to come? Do they see radical changes coming to it?

This blog has featured interviews with some of the leading experts in the world on these very same issues. This time I wanted to try and get some input from a non-expert from the upcoming generation. I believe this kind of input is invaluable because we need to understand what those who will take over from us are thinking and how they feel about the system we have and its prospects for the future.

I am happy to report that my daughter kindly agreed to do an interview with me to offer up at least one sample of opinion on these important issues. I was impressed with the time she took to think through the issues raised by these questions to offer her unvarnished, honest opinions. Below is the Q&A style interview with a few added comments just afterward.


What do you think of as being money?

A: People my age have a reputation for "killing" lots of old industries and practices, and carrying physical cash is one of them. I'm accustomed to thinking of money in the abstract, represented by digital numbers and my plastic debit card as the tool to access them. Since I have an understanding of the fact that our money is no longer backed by the gold standard from growing up in your house and why that is problematic, I don't picture physical money when I think about our monetary system. I think it has evolved from everyone deciding what a certain piece of paper is worth to everyone agreeing that digital numbers on a screen are accurate.  I think of silver or gold as more like precious elements than money (more akin to diamonds) because they are so far removed from our monetary system.

Do you think the present economic system in the US is fair and provides equal opportunity for everyone? Why or why not?

A: I think no existing economic system is perfect and capitalism is no exception. As someone who values independence and self reliance, I believe capitalism is the best option available to us because it is the least restrictive. But I do think there are inherent problems and inequalities that emerge. For example, the inflated cost of education is crippling my generation and keeping us from building wealth. I also think that there is a cycle of poverty that exists in some communities or families not because of laziness, but because of lack of support or access to needed resources. I think major companies can quickly turn into monopolies and that wealth is concentrated within a small percentage of people. But I prefer those risks and challenges to the lack of opportunity available to me in other economic systems.

 It is worth noting that lots of millennials disagree with me, though. Because they feel oppressed by the system and economic hardships they have faced (many of us are underemployed for our degrees), they think a more socialist economy with built in support would benefit them. OR they genuinely think capitalism is harmful to certain populations and that socialism will better protect those populations. I disagree because I think no matter what type of system you have, there will always be inevitable greedy, selfish people who aren't concerned about the well being of others and would take advantage of any economic system, including socialism. I would rather have some people enjoy their concentrated wealth and leave me alone than govern or dictate what I do with my own money. So this question reflects my own personal outlook and I'm not sure if it represents the majority of my generation or not.

Do you trust that the money you have saved in the bank today will maintain its purchasing power five years from now?

A: Not at all. Inflation rises constantly. It might be a seemingly negligible amount over 5 years, but when you look at it over 20 years it is pretty shocking.

How does the high cost of obtaining a college education impact your life and your outlook for your future? 

A: My personal future is unique to this question because I studied hard and earned scholarships that covered the bulk of my education. My remaining debt still impacts me, but it isn't as utterly crippling as other students'. But only a small number of students are lucky enough to be awarded scholarships, so I'm going to focus on the problem as a whole instead of my own specific circumstances.

I personally believe this is one of the most devastating problems our generation faces, and until something changes it will make it difficult for all millennials to own homes, start families, or save for retirement. I think people from older generations don't always realize how expensive it is to obtain a college degree and how underpaid graduates are. According to, the average cost of tuition and fees (not including housing, food, textbooks, etcc.) was $10,116 for the 2019 - 2020 school year. Multiply that by 4 and the cost for a Bachelor's Degree is $40,464. The average cost of tuition and fees at a private school for 2019 - 2020 was $36,801. That degree costs $147,204. That's the same price as a home, so imagine starting out your adult life with the same amount of debt as a mortgage, but without actually owning a home.

How much you can earn with that degree does depend on your field, which is a choice that you as an individual are responsible for. But as someone who has job hunted several times in the past few years, I can tell you confidently that there are thousands of jobs across multitudes of different fields that pay less than $40,000 per year and still require a Bachelor's degree. If earning a degree is the only entry ticket to your field and your family can't afford to pay $40,000 - $140,000 for your school, you are stuck with student loans. Those loans accrue so much interest that many students end up paying double the amount of the original loan and using half their lifetime to do so. It isn't sustainable. 

When you're stuck making payments of $200 - $300 per month for so many years (average student loan payment amount according to this source: (, that impacts your ability to live comfortably or to save money for the future.

Is a college degree today worth starting out life with a large debt burden for the average student who must borrow significantly to pay for a college education?

A: It depends on your field. If you work in the STEM field, for example, it is worth it to earn a degree because your income will allow you to pay off your loans and still accrue wealth and save for the future. But if you aren't talented in a particularly well-paying field like that, I think a college education is becoming an unrealistic expense. I would advise students (and plan to advise my own children) that if scholarships are not available to them, they should earn a two-year degree at a community college in their field first. Then complete their Bachelor's Degree for two more years.

If their field of choice doesn't yield well-paying jobs, I definitely wouldn't advise them to earn a degree in that field. I do not think every student should waste money on college for an art or theatre degree for example if that isn't something they can already afford, because they won't be able to pay off their debt and live comfortably with a degree that doesn't offer them a lucrative career path. I would advise them to earn a trade certification or a different degree and pursue their passion alongside it rather than use money on it. I think a Bachelor's Degree has become more of a status symbol to some people than a tool, and it encourages students to waste their money on something that won't benefit them financially at all.

I value the experiences I had throughout my traditional 4 years away at school, but I think those experiences are more of a luxury than a necessity for starting out well in life. I'm speaking strictly from an economic perspective rather than an emotional one when it comes to the inherent value of a college degree. Until the price point changes or graduates' earning potential changes, I would advise anyone to proceed with caution before taking out too many student loans.

Do you think that the monetary policies of the central bank for the US (Federal Reserve) have any impact on your life? If so, in what way?

A: I'm sure they probably do, but I'm not well-versed enough in the policies to answer. I think most people younger than me (23 or so and below) would answer the same way. 

The US monetary system is based on people having confidence in the US dollar as its currency. Do you have long term confidence in the US dollar as money? 

A: No, I think inflation and our national debt are too problematic. Everyone just pretends the debt doesn't exist, but that power could shift someday.

Ten years from now, do you think the US dollar will still be the currency used in the US?

A: I would still consider 10 years to be relatively short-term. I think the dollar will still be used as currency within 10 years, and I think most millennials would agree with that and would be shocked to consider the alternative. But I think it is certainly possible our economic instability could change things sooner than I anticipate.

There is general agreement that a "wealth gap" exists in the US today. A wealth gap meaning that more and more of the wealth of the nation is concentrated in fewer people's hands. Do you have thoughts on what may have caused this situation? 

A; I think it is just a natural outcome of capitalism.

Do you think any policies by the US government or the Federal Reserve have contributed to this so called "wealth gap"?

A: Possibly, but I would need more context or examples.

Some argue that massive money creation by the central bank can contribute to the wealth gap because more of the created money tends to flow towards those who already own more wealth and wealth related assets like stocks and real estate. The argument is that those assets get inflated due to money creation and benefit those nearer the top of the wealth spectrum the most. Especially billionaires who own huge corporations and lots of stock in those corporations that may benefit disproportionately from the monetary stimulus injected by the central bank. (eg, Amazon, Apple, Facebook, etc). (see this recent blog article for an example of this theory)

Do you have any thoughts on that theory?

A: That theory seems valid to me. I can't pretend to be an expert on exactly how the flow of money works within our economy, so this is totally based on my perception of things. But I do get the sense (Iike we referenced in other questions) that money tends to get concentrated amongst extrememly wealthy people, and the money creation/inflation seems like it could definitely be part of the reason why our capitalist economy has such a massive and unfair gap.        

Millennials face a challenge because the US debt burden has grown substantially in recent years and as the "Boomer" generation retires, there are massive entitlement programs that have to be funded (Social Security, Medicare, etc). Do you think the US debt and its future entitlement obligations is a real problem for younger people or nothing to really be concerned about? 

A: It is a huge problem, because if the United States can't sustain social security for such a large influx of people and continues to create more debt, our money becomes increasingly less valuable. That matters from a global perspective. 

In general, do you think millennials are supportive of our present financial and monetary system or would prefer it be significantly changed? 

A: I think most people would prefer it be significantly changed because they do not feel that the present system has supported their best efforts to basic things like income stability, home ownership, retirement savings, and general wealth.

What changes do you think most millennials would want, if any?

A: Many people want more government regulations for large companies on a variety of different things. Healthcare, environmental protection, certain human rights regulations like requiring businesses to offer maternity leave as one specific example. Many people believe in the Bernie Sanders-type ideology that heavily taxing the billionaires and redistributing that money within government programs is going to make an impact on their lifestyle or on general poverty. 

I am a mixture - I do think there are situations where one standard set by the government would be beneficial (like certain specific environmental or human rights regulations). But I think too many restrictions like that chokes capitalism. And I don't generally believe in wealth redistribution because I think the government will do that inefficiently. I don't trust politicians with that money any more than I trust billionaires with it.
My added comments: Obviously this is one sample of opinion and in any group there will be diversity of opinion. However, I feel like many of these answers are very much in line with what I see over and over from younger people who offer up their thoughts on these kinds of issues. 

I want to thank my daughter Julie for taking time to do this interview and share her honest views for readers here. I will add that if you happen to visit the Dallas Texas area (if and when we get to visit places again), Julie authors a blog on off the beaten path places you might enjoy. You can find her blog here.

Added note: Next week I will have a followup article prompted by the comments in this interview and after that an article that takes a deeper dive into the US Household Distribution of Wealth.

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