Debt Doesn't Work In an Ever Changing Job Market
Hey Jessieconomists
The previous generation lived in a world very different from ours, their values and mindset cannot keep up with the fourth industrial revolution and are misguided in the way they educate their kids on how money works. In the previous baby boomer generation debt was still manageable, and people could reasonably leverage their future income to acquire reasonably priced assets.
One of the reasons debt worked in their era was the stability of the job market. They could work for companies for 30 or even 40 years without ever changing jobs and ensuring that stable income and wage increases that kept up with inflation and living standards.
Image source: - metro.co.uk
Debts aren't met
One of the reasons Millenials are saddled with so much debt is due to several reasons. One is the increased cost of education and putting young people into a competitive market place that has competition not regionally but globally as companies can outsource many digital skills to anyone across the globe.
The next would be the greed of the banks that have made the debt more expensive and the baby boomers sitting on cash and property, making asset prices higher hundreds of multiples more elevated than they are worth.
Finally, the point of the post is that jobs aren't as reliable as they used to be and don't pay a living wage for many people. We have a generation of homeless workers which is only getting more significant with time. While the previous generation could change jobs 1 - 2 times in a career, the average millennial will change jobs up to 7 times in their career.
Unemployment is on the rise
Despite what you're told about first world countries like the US where unemployment is so low, it's the numbers that are not being reported correctly. We're not removing people who work but do not have enough to have a living wage, we're counting people who work temporary jobs or multiple jobs to meet their living requirements, we're not counting those who have retired as unemployed, and it makes the numbers look better than it is and we're being misled.
Work is getting disrupted again
Now with the introduction of automation, we will see even more jobs being stripped from the marketplace and drive up competition. This will only see more debt not being honoured, and we will see rising defaults which will bring down a number of sectors from education, cars, homes and many businesses running up major debt to stay afloat.
It will have a knock-on effect that could bring down the economy as we know it today.
Let's connect
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The Under-Employed. People with college degrees working at Walmart and such are very common.
Will say that in many areas of the US that if you are half way skilled in the right fields you can find a job in less then a week with minimal effort.
Part of the issue with many that can't find work is they think a degree in the Arts or some other bullshit degree means they are ready for the real world. Nobody told them it's great to love Irish Dance, but once your out of college you need a degree that will actually allow you to support yourself. Instead they tell her follow her heart...blah blah blah...problem is except for a few amazing dancers nobody makes a living in dance. Without a real degree you spent $180k to have fun dancing for 4 years and now need to go back to school and get a real degree. Obviously this is about someone I know...by the time she was done she had nearly 400k in student debt and starting working a real job 7 years later then most her piers as she tried for years to find a way to make that Arts degree work for her.
Oh yes, that too is a problem where overkilled labour is pushing out unskilled labour who are of course the most vulnerable. That's still good to know, I wonder how my skills as an SEO would fair in the US market and if I could make a decent living accounting for the cost of living etc.
If you're going to have passion degree you either need to use it to start a business like your own little dancing school for example or be someone's trophy partner lol. Educational institutions are irresponsible they're happy to take your money and saddle you with debt but don't tell you there's any market for this overpriced skill. Courses are not costed on their ability to generate an income which means its completely artificial.
I can't understand how anyone would sign up for 400k in student debt its complete madness.
A powerful article. My kids are going through exactly these things and it’s very tough. They need a lot of help to keep them out of debt. And the poor wages and instability of jobs are astounding.
You hit the nail on the head. I am now educating them for the new world.
✍️
It's unfortunate but it's good that you are teaching your kids early of what is going to happen so they can protect themselves even when their peers aren't. People are going to get blindsided when they're sitting with 20-year mortgages and their job won't be around in 5 - 10 years and if interest rates ever go up it will make it even worse for these people and they will lose everything they've worked for
I think the whole American continent is going down in flames.
South America was already a mess and the situation is spreading through other countries. Central America is going down the same road...
And I think it's only a matter of time until the economy of the USA will blow up in a big bang. The whole economy is being faked and the Government will not be able to fake it forever. One day... their mega bubble will burst.
The fact that it is running this long when there are so many clear signs that it shouldn't lead me to believe it's being prompt up by so many lies, fraud and faked numbers that when it does correct it's going to be far worse than people imagine. I agree its a mega bubble, we're living in a financial fantasy world for sure
In Australia if you are employed for only 1 hour a week you are counted as employed in the job statistics.
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What kind of shitfuckery is that? I've actually been reading up about a lot of shit the aussie government are up to, its amazing how they keep it so quiet. Like the Nauru concentration camps and the funding of war on Timor-leste country and the ASS bill that allows them to spy on you!
Plus they are pushing through the $10,000 cash ban. We are a UN trial country I am sure of that.
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they're becoming more authoritarian by the day, more control means less chance of people being able to break free once they see where this is going. Aussies need to start paying attention before its too late. 10k might sound like an okay limit but if we start there where does it stop? I'd never support any sort of cash ban
Exactly and that's what people here are saying maybe $10k today then $8k and $4k etc. It's a ban on transactions over 10k nothing about having more then 10k in hand sofar at least. We already have bank bail in law as it was snuck through last Christmas from memory.
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Interesting seems like a way to also keep more surveillance over businesses and peoples purchasing behaviour if you can't make large cash transactions. I hope it wakes people up and they realise that it was never your money, the medium of exchange you only borrowing from the government.
It's also funny how these laws won't apply to government officials who take huge bribes in cash or other forms of gifts.
All true my friend.
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With interest rates being low so do returns on assets, it will be increasingly difficult for the society as a whole to pay for future debt obligations.
At the individual level, the middle class is getting squeezed as the wealth gap widens. Aging population adds on to healthcare costs and it's the middle/lower income groups that are getting the worst hit.
Overall the level of easy credit has gotten too high. The problem is the credit generated are not distributed to the right people who can turn it into actual productivity. I am afraid this isn't going to end well
I agree and the issue is they are out of tricks to keep it going, the moment interest rates rise that debt is pretty much going to hit insane default levels and bring everything down. Since they can't they need to keep printing leading to runaway inflation. If they go negative interest rates, there could be a run on the banks with people pulling their money and keeping it in commodities or crypto
Once the baby boomers retire over the next 10 years we'll have far less money "invested" too and the Millenials who are supposed to prop up the economy won't be able to because they don't have money for investments. Then prices of homes, cars and everything else needs to correct or face poverty for the majority of the world who is living paycheque to paycheque servicing debt.
I agree completely the money hasn't been injected into value generation and it's only being hoarded. I feel the same way and its a case of when not if it pops
Hi dear friend @chekohler.
This article is almost apocalyptic.
I do not know the basis of calculation to obtain these statistical figures, the truth is that governments will always try to make up these. Recall that the unemployment rate is an important macroeconomic indicator.
This behavior that you describe (with baby boombers and all that) adapts to a pattern of capitalist economy which has shown, despite any detractor opinion, to be the one that provides greater well-being to the population. This we can affirm if we compare with other economic models that have failed in many parts of the world.
The economy is a constantly evolving monster, it does not stop. It is constantly changing and remains in a delicate balance. Then we must evolve along with it. The indebtedness model no longer corresponds to the present.
To all this we must add the area where we are doing economic activity. The Venezuelan economy in a total catastrophe of oceanic proportions.
Monetary restrictions of 10K usd, are utopian dreams in my country.
I believe that there are still many opportunities for success and realization of future plans in many economies of the world, in which citizens enjoy financial freedom. It is only a matter of a new vision and adaptability to the new times.
Your friend, Juan.
The truth is seen as not good enough for the people or we'd realise that they aren't doing a good job and we would revolt by taking away more of their power and these structures thrive on having more power.
It was a capitalist economic model but gone bad by the use of bad money, money that can be created out of thin are will always give those closest to the source more power than others.
I agree the economy needs to evolve to strip it from things that don't improve it and we need a money that can keep up with technology and fiat isn't it
I agree there is always room for opportunities in every country some just take a bit more effort and ingenuity to create
Dear @chekohler
Interesting choice of topic. Grear read from the very start.
It amaze me how little people know about finances and idea behind creating debt and printing money. I'm always happy to learn something new.
I always assumed that main reason was the fact, that population has been growing rapidly. And that was driving economies. More people = more debt = more wealth.
Millenials are kind of ... doomed. Dont you think?
Will upvote once my vP will reach 100%.
Yours, Piotr
No one was taught about money at school and their parents didn't bother to learn further than how to spend money. Sadly people don't give it much thought, they focus on what they can do with it, not what it can do for them.
Yes you are correct they bigger population meant more debt and more wealth because there was always another sucker to feed the ponzi and buy up from the next guy for a profit but it wasn't going to last forever
I think they are not doomed, they will just have to change their lifestyle from what we have now. I think communal living, off the grid living, will become more popualr
Hi @chekohler
Honestly, the title of your publication says a lot.
I particularly identify with this publication, since I live it every day, and there is something to consider and that is the country where everyone can read this publication.
but you're also right about one thing.
We have to know and learn how to get ahead in spite of economic difficulties.
Greetings from Venezuela, a country that fights for its freedom.
There will always be people who do better than others during tough economic times, its those who were living within their means and not too exposed to debt and overleveraging themselves. People who are cash-rich in a sense.
The correction will affect everyone differently, but I think it's needed if we are to build a more responsible and inclusive economy, that or we all die poor
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