As the bull market turned ten years old last week, it is worth examining whether the efforts of the Federal Reserve, during former Chairman Ben Bernanke’s leadership, to avoid another 1930s-style debt deflationary crash, sparked a new generation of socialists.
Bernanke’s quantitative easing (QE), also known as large-scale asset purchases, inflated asset prices and bailed out baby boomers at the political cost of pricing out millennials from many asset markets, including homes and the stock market. That has since driven wealth inequality across the country to levels never seen before.
When expansionary monetary policy drives asset prices higher than wage growth, the average person, or the entire bottom 90% of Americans, fall behind the curve. The faster the asset-fuelled economy expands, the wider inequality becomes. This threatens the social contract based on the belief that as the economy grows, the better off everyone becomes, or the idea that capitalism works for everyone.
One of the side effects of money printing is starting to be realized.
A new Harris/Axios Poll shows Generation Z and millennials are embracing socialistic policies and principles more than ever.
Young Americans are trapped with insurmountable amounts of debt, low-paying gig-economy jobs, and priced out of starter homes, so they have to rent, along with rising expenses that has left the generation broke.
This helpless generation will be 37% of the electorate in 2020 and more than 75% of the workforce by the mid-2020s, and “socialism” is no longer a word that is frowned upon amongst the group.
With no end to their financial troubles in sight, 50% of younger Americans would prefer to live in a socialist country.
To make matters worse, 37% of Americans as a whole are now leaning towards a socialist over a capitalist economy.
Younger voters want universal healthcare, free college and the abolishment of ICE than the electorate as a whole, per the Poll.
The poll identifies the top three voting issues on the side of socialism and liberal politics vs. that of President Trump and conservative ideals.
- The top three voting issues for Gen Z, according to the Harris poll, are mass shootings, racial equality, and immigration policy and treatment of immigrants.
- Millennials’ top issues are access to health care, global warming/climate change and mass shootings.
- Gen X’s top issues are: access to health care, terrorism/national security and the national debt — the same top issues for boomers and older.
With younger generations financially penalized under QE to prevent the economy from a deflationary collapse, the Fed may have inadvertently transformed tens of millions of young Americans into socialist.