The American Dream is on life support … the growing unhappiness of Young America … what they’ve chosen as their path for escape … how to benefit from it
David Sweede and his wife have a joint income of more than $200,000 per year…and they’re struggling.
From Sweede, as reported in MarketWatch:
I can’t even fathom spending money right now on a vacation.
We’re definitely not doing what you would think somebody with our income could do with the money. We just can’t.
Last week, MarketWatch ran a piece titled “A $100,000 salary no longer buys you a middle-class lifestyle” and the details were sobering.
From MarketWatch:
The median income for a four-person family was $114,425 in 2022, according to the Census Bureau.
Yet a confluence of data now shows that with the rising costs of housing, child care and healthcare, the typical American family with this income is just getting by, with little cushion for unexpected expenses, savings or planning for the future without making significant compromises.
The financial-information site SmartAsset, which connects people to financial advisers, told MarketWatch that based on 2024 estimates using the MIT Living Wage Calculator, a family with two adults and two children in large U.S. cities now must spend $117,500 annually simply to cover basic needs…
In 79 of the 100 largest U.S. metropolitan areas, the cost of basic necessities for a family of two adults and two children exceeds the median family income in that area, the [Economic Policy Institute] estimates.
Being middle-income, in other words, no longer affords a middle-class quality of life in many parts of the U.S.
We could look at this issue from many angles, but let’s focus on younger Americans
How is this financial struggle affecting them?
From USA Today last month:
Happiness and well-being among Americans has recently plummeted and a new cohort is leading the downward spiral: young people.
The World Happiness Report released Wednesday showed that self-reported data from those under 30 knocked the U.S. out of the top 20 happiest countries for the first time since the annual report was initially published in 2012.
But why, exactly?
It’s a complicated, multivariate answer.
We could point toward the rising toxic influence of social media, or the disintegration of the American nuclear family, or the increasingly polarized condition of our national politics. But let’s zero in on the financial aspect of all this, which is more of our beat here in the Digest.
Here’s Scott Galloway, a clinical professor of marketing at NYU, speaker, author, and public figure, from a recent episode of the Julia La Roche podcast:
For the first time in our nation’s history, a 30-year-old is not doing as well as his/her parents were doing at 30. That’s never happened before.
An average 70-year-old is 72% wealthier than they were four years ago. The average person under the age of 40 is 24% less wealthy.
What we have in the quote-unquote “most prosperous economy in the world” is a generation of youth that is less well-off financially, more anxious, more depressed, more obese, and more likely to be addicted to opiates, and generally, feels shitty about America…
Back in December, Bloomberg put more numbers on this growing wealth gap:
Americans aged 70 and older have seen their share of collective wealth surge during the pandemic.
As a group, these older baby boomers have accumulated more than $14 trillion in additional net worth since the end 2019, based on Federal Reserve data. Their share of the country’s wealth has jumped to a record 30% last quarter, even though they account for 11% of the population.
What’s behind this wealth increase isn’t complicated – home and stock prices have exploded thanks to the trillions of dollars poured into the economy, and older Americans are more likely to own these two assets than younger Americans.
Despite the simple explanation, the bottom line is the same…
Younger Americans feel left behind financially and they’re angry about it.
Here’s a meme illustrating this sense of financial frustration/anger:
The investment impact of young America’s disillusionment
Say you’re 28…
You have tens of thousands of dollars’ worth of student debt… you have three roommates and still your monthly budget is stretched… buying a home is so far out of reach it’s laughable… you don’t own stocks… you’ve watched costs of everyday items rise over the last four years while your paycheck hasn’t kept up… and each day, you see people on social media post photos of their lavish lifestyles and vacations…
How are you going to “catch up” in this situation?
The answer for many young people is something older investors like me might not have seen coming…
Crypto.
Let’s go to a study that the crypto exchange Coinbase published last fall called “The State of Crypto: Age, Access, and Agency”:
Go to school, get a job, buy a home, work your way up.
For older generations, the unspoken deal was that if you followed the rules and showed drive and resilience, you had a real shot at economic opportunity and prosperity—the American Dream.
Younger generations report that deal is no longer available: just 9% of Gen Z (ages 18-25) and 19% of Millennials (26-40) say the American Dream is achievable for everyone.
On top of school and other debts, high housing costs, and high inflation, an outdated financial system stands in their way, built on legacy institutions that aren’t serving their needs…
Yes, younger people are checking out of the status quo—but they’re actively engaged in building something new.
Instead of following conventional paths, they’re adopting new, flexible models of work, ownership, and finance that don’t rely on legacy middlemen.
Let’s jump ahead in the report to see how this new direction is impacting the crypto market:
Nearly two in five (38%) [from Gen Z] say crypto and blockchain can increase economic opportunities for them in ways traditional finance can’t, versus 26% of older people.
More than one in three (31%) own crypto, versus 12% of older people.
About one in four (38%) see crypto as the future of finance, versus less than three in 10 (28%) older people.
There’s a short-term and long-term impact of this interest in crypto from Young America
Let’s begin with the long-term.
You might be reading today’s Digest thinking “Jeff, you lost me when this turned toward crypto. It’s a scam – a complete waste. I will never invest in it.”
Fair enough. I won’t try to change your mind.
But younger generations don’t share your opinion. And we’re not too far away from these same younger generations finally have a lot of money with which they’re going to flood the crypto market.
From Galaxy:
Over the next couple decades, older generations will pass trillions of dollars of money and assets to their children, dramatically changing the face of U.S. wealth.
These younger “digital native” generations have very different investment behaviors than their parents and grandparents, including a much higher propensity for Bitcoin and crypto…
Millennials are due to inherit the largest wealth transfer in history. Baby Boomers & older generations account for less than 1/3 of the US adult population but collectively hold 2/3 of US household wealth ($96 trillion), more than 11x the wealth owned by Millennials & younger generations.
Over the next two decades, Cerulli Associates estimates that $84.4 trillion is set to be transferred from Baby Boomers and older generations to younger generations, with Millennials being the primary beneficiary.
Coldwell Banker estimates that Millennials will hold 5x as much wealth by 2030 than at the start of the decade largely due to inheritances.
And before you assume they’ll put it into the stock market like you did, here’s Policy Genius:
Gen Zers are more likely to own cryptocurrency (20%) than they are to own stocks (18%).
Younger generations are almost equally likely to own cryptocurrency (21%) as they are to own real estate (20%)…
Gen Z and millennials are more than twice as likely to turn to social media first with a financial question (8%) compared to Gen X and baby boomers (2%).
Given the size of the coming wealth transfer combined with the attitude toward digital assets, might it not be worth investing just a small amount of money into the most popular cryptos to benefit from this coming tsunami of capital flooding the crypto market?
“Jeff, it’s still a waste because I don’t have two decades to wait.”
Fair – but there are also the shorter-term impacts of young America’s disillusionment that I referenced a moment ago…
Forget “intrinsic value” and just follow the money flows
For argument’s sake, let’s just say that crypto has zero real value.
But at the same time, what if these value-less altcoins were soaring triple and quadruple digits, offering lifechanging returns in, let’s call it, one year?
Would you care about that lack of real value as you watched your net worth balloon in a very real way?
Would you be able to view an altcoin as a wealth-building tool and use it as such, even if it was every bit a fad akin to tulip bulbs in the Dutch Golden Age, Beenie Babies in the 1990s, and NFT Bored Apes in 2021/2022?
Today – right now – swells of young people are funneling their meager savings into whatever new crypto has the momentary spotlight. This is sending the values of these small cryptos “to the moon” as is the popular phrase.
See for yourself…
Below, we’re looking at the top 25 crypto coins by return on investment over the past year, from CryptoCurrencyChart.com.
If you have trouble with the font, the top three returns are:
- GPU Coin: 1,942,657%
- Aurora: 125,309%
- Ace: 102,010%
Imagine you caught wind of young Americans flooding into the altcoin Aurora, so you invested $2,500 and caught, say, 100,000% of its 125,000% move.
Congrats, you’re a millionaire.
Specifically, you’re now worth $2.5 million…in one year…thanks to a “worthless” altcoin…and a bunch of angry young Americans looking for their ticket out.
Obviously, the wrinkle here is “how do you find this Aurora-type altcoin?”
Last week, our crypto expert Luke Lango held a live event to discuss this question.
From Luke:
What cryptos should you be buying to give yourself a chance to make major returns in 2024?
Well, we’ve developed a powerful quantitative system to help you achieve just that.
To put it as succinctly as possible, it uses the core quantitative stage analysis strategy in High Velocity Stocks and modifies it slightly to find cryptocurrencies on the verge of a breakout – tokens that could soar hundreds of percent in a matter of days, weeks, and months.
This quant trading system has already proven highly successful in stock-picking…
And now, it’s precision-tuned to master gains in the crypto market.
As strange as it might sound, forget intrinsic value of altcoins… forget their rubber-meets-road functionality… forget everything except what really matters to your wealth at the end of the day…
Is the price of the asset rising during the period in which you own it?
This is the essence of Luke’s new approach to the crypto market. If you want to watch a free replay of last week’s event, click here.
In any case, be aware of the growing discontent/anger of our younger generations
We’ve focused on its relationship to the crypto market today, but there are countless other spider webs that have the potential to impact your wallet. Here are just three…
Taxes: “rich people should pay their fair share”
Student debt: “the President should cancel my student debt”
Demographics: fewer young people are getting married and having children, which will add massive strain to our current tax and social security systems.
Bottom line: Our nation is changing. Make sure to keep a pulse on what’s happening.
Have a good evening, Jeff Remsburg
