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The American Dream is so 1950's

Having to face a different reality than the preceding Boomer and Greatest Generations, many Millennials and Generation Xers express their disdain about both the pervasive economic environment and the overall quality of life they are able to obtain.  As the aftermath of the Financial Crisis of 2008 fails to level off, and indeed continues to enlarge the breach between the haves and the have-nots, the general feeling that emerges and is often expressed can be summed up in one single hopeless sentence: “We were told lies”.

Everything that they were told weren't lies... until they were. What lies were they told? If you go to College, you will have a good job waiting for you and, if you work hard, you will fare better than your parents did.  Now these generations mostly drown under the weight of student loans that they cannot get rid of even if they are forced to declare bankruptcy.  And where are the returns for that investment?  The few that may argue against that question are the exception that proves the rule.

The American Dream rests on the affirmation that, through hard work, each generation will fare better than the preceding.  Now, the American Dream has materialized in wage serfdom sprinkled with fairy dust over progressively shattering hopes and dreams. 

The script that our parents repeated were also repeated by their parents.  Hell, it was even in our history textbooks growing up.  For their generations, it panned out.  But they themselves dismantled or exploited the system that made it a truism.  Today, ironically, many people that don’t go to college are often better off than many of the ones that did.  Tuition costs have risen well above recorded rates of inflation for half a century, significantly hobbling the possible returns on that investment.

Recent economic research indicates that neither the Millennials nor the Xers will live better or enjoy a higher quality of life than the Baby Boomers. That is the new economic trend. In fact, Millennials and Xers will have to work twice as hard just to get to where their parents were, and even then there is no guarantee of that. 

Look at this graph. It reveals that younger generations really do face a difficult future. Every group through early-wave Boomers has seen upward jumps in their lifecycle income—all the way up until 2012. But every younger generation that has not yet reached age 60 has experienced no such progress.

From 1983-2010, the real median net worth approximately tripled for Americans over the age of 74 and doubled for the age of 65 to 74. And here is the kicker! It fell 30% for Americans aged 35 to 40. Why do younger generations lag behind?

An obvious explanations is their inferior median income growth. With less income, there is less to save.  A less obvious explanation is that previous generations used to share their wealth to a greater capacity as they became senior citizens, as can be easily observed in the graph above. The scenario we are looking at now is that the wealth will have to be pried from their cold, dead hands.