Why Americans Have No Economic Future

Summary

The U.S. economy is booming, with housing prices and stock markets hitting all-time highs, but young Americans are falling behind, experiencing a 50% decline in wealth since 1989. The 'Nimby' attitude, underdevelopment, and private equity's growing control over the housing market are exacerbating an affordability crisis. High costs of living, stagnant wages, and increasing debt are burdening the youth, while older generations benefit from favorable policies and low housing supply, leading to a broken social contract and a bleak future for America's younger generation.

Takeaways

• 📈 The U.S. economy is booming with housing prices and the S&P 500 reaching all-time highs, and the combined net worth of Americans surpassing $150 trillion.
• 🔍 A significant wealth gap exists, with younger Americans experiencing a nearly 50% decline in wealth share since 1989, while older Americans saw a 12% increase.
• 🏘️ Housing affordability has worsened; the average home price is now seven times the median household income, up 50% from 4.5 times in 1985.
• 🚫 The 'Not In My Backyard' (NIMBY) attitude has led to underdevelopment, contributing to a housing shortage and inflated real estate prices.
• 📉 Housing starts as a proportion of the U.S. population have dropped by 30% compared to before 2000, exacerbating the housing shortage.
• 🏡 Older generations are holding onto real estate, with a 23% increase in home ownership among those over 55, while ownership among those under 55 fell by 19%.
• 💰 Private equity firms own 240,000 single-family homes in the U.S., and their concentrated ownership in key markets is driving up rents and making it harder for average buyers to compete.
• 📊 Rent for a two-bedroom detached home rose significantly in select Sunbelt markets, outpacing the national average.
• 🏛️ Corporate landlords are using sophisticated strategies to generate additional yield, including potentially illegal activities like price-fixing through companies like RealPage.
• 📉 Wealth among those under 40 has declined by nearly 50% since 1989, while the wealth of boomers has increased, leading to intergenerational inequality.
• 💡 The script challenges common misconceptions about younger generations being lazy, overspending, or unskilled, highlighting that they are saving more and are more educated, but face systemic economic challenges.

Q & A

What economic milestone did the S&P 500 and the combined net worth of all Americans reach in July 2024 according to the script?

In July 2024, the S&P 500 and the combined net worth of all Americans hit all-time highs, with the latter surpassing $150 trillion.

How has the wealth distribution changed among different age groups in the U.S. since 1989?

Since 1989, older Americans have seen their share of wealth increase by 12%, while those under 40 have experienced a decline of nearly 50%.

What is the 'Nimby' attitude and how does it affect housing affordability?

The 'Nimby' attitude, which stands for 'Not in my backyard,' is a resistance to new developments by land owners to preserve their quality of life and property values. This has led to underdevelopment, causing a housing affordability crisis as the number of homes per person declines, driving up real estate prices.

Why has housing development in the U.S. declined over the years?

Housing development has declined due to the 'Nimby' attitude and land owners fighting against new developments. This has resulted in a 30% drop in housing starts as a proportion of the U.S. population compared to before 2000.

What is the impact of private equity on the housing market and why is it a concern?

Private equity firms currently own a significant number of single-family homes in the U.S., particularly in the Sunbelt region. Their concentrated ownership allows them to influence market rents and property management costs. This can lead to higher rents and reduced housing stock for potential buyers, exacerbating the affordability crisis.

How has the cost of attending a four-year college program changed from 1980 to the present day?

The cost of attending a four-year college program, adjusted for inflation, was $10,000 in 1980 and has increased to nearly $29,000 today, marking a 3X increase.

What is the role of RealPage in the housing market and why is it controversial?

RealPage is an analytics company that helps landlords optimize rents across millions of units in the U.S. It has been controversial due to allegations of price-fixing through the use of its data, which is owned by private equity firm Thoma Bravo.

What is the projected ownership of U.S. single-family home rentals by private equity firms by 2038?

It is projected that private equity will own 40% of U.S. single-family home rentals by 2038, which is a significant increase from their current ownership.

How has the U.S. government's debt grown over the last 60 years and what are the implications?

Over the last 60 years, the U.S. government debt has grown three times faster than GDP and now stands at $35 trillion. This debt growth has implications for future generations, who will bear the burden of interest payments and potential economic instability.

What is the total actual debt held by the U.S. government, including unfunded liabilities, and how does it compare to the U.S. GDP?

The total actual debt held by the U.S. government, including unfunded liabilities such as Social Security and Medicare, is a staggering $123.875 trillion, which is five times greater than the U.S. GDP.

What is the demographic discrepancy between the Founding Fathers of the United States and current members of Congress and the Senate?

The average age of the Founding Fathers who signed the Declaration of Independence was 44, while the current average age in Congress is 58 and in the Senate is 64, which is nearly twice the median age of the United States at 38.

Outlines

00:00

📈 Economic Boom and Generational Wealth Gap

The U.S. economy in July 2024 is experiencing an unprecedented boom with housing prices and the S&P 500 reaching all-time highs, and the combined net worth of Americans surpassing $150 trillion. However, this prosperity has bypassed the younger generation, with those under 40 seeing a nearly 50% decline in wealth since 1989, while older Americans saw a 12% increase. The script highlights the social contract's breakdown, where for the first time, 30-year-olds are poorer than their parents, questioning the American dream's accessibility. The affordability crisis is exacerbated by underdevelopment, with 'Nimby' attitudes leading to a 30% drop in housing starts relative to the population, causing a housing shortage and skyrocketing real estate prices. San Francisco's example in 2024, with only 16 housing permits approved, illustrates this issue. The older generation's increased home ownership and benefits like lower taxes and the ability to avoid taxes through 1031 exchanges have created a system that favors them, while younger people struggle.

05:00

🏘️ The Impact of Corporate Landlords and Data Analytics on Housing

The script discusses the growing influence of corporate landlords and private equity firms in the U.S. housing market, which now owns 240,000 single-family homes, particularly concentrated in the Sunbelt region. Their ability to make large, unconditional cash offers and optimize rents through data analytics firms like RealPage, owned by Thoma Bravo, gives them an outsized role in dictating market rents. This has led to significant rent increases in select markets, outpacing the national average. The Attorney General of Washington, D.C., has even filed a case against corporate landlords for price-fixing through RealPage. The script also criticizes the value of higher education, which has become more expensive and less beneficial, with administrative bloat in colleges contributing to the problem. Despite increased education levels, younger generations are facing a bleak economic outlook, with student loan debt at $1.7 trillion, growing faster than wages.

10:02

📊 The Crushing Burden of Debt on Young Americans

This paragraph delves into the financial challenges faced by young Americans, including rising consumer debt across credit cards, auto loans, and mortgages, coinciding with a 13% decrease in earnings since 2013. The U.S. government's fiscal irresponsibility is highlighted, with debt growing three times faster than GDP, now totaling $35 trillion, and interest costs consuming 16% of the annual budget. The script argues that the real debt is much higher when considering state debt, unfunded pension liabilities, and Social Security and Medicare, amounting to over $123 trillion, or $370,000 per American. The intergenerational impact is stark, with older generations largely unaffected by this debt, while younger generations face a future of financial hardship. The script also points out the potential economic consequences of a declining birth rate among the young, which could reduce production and worsen the debt burden.

15:02

👴🏻👵🏻 The Disconnect Between Older Politicians and Young Americans

The final paragraph addresses the disconnect between the average age of U.S. Congress members and the median age of the country, suggesting that officials who are nearly twice the age of the average American cannot truly understand or address the challenges faced by the younger population. It criticizes the longevity of political careers, with some officials voting on the future of the country without living to see it. The script calls for young people to take control of their future, suggesting that the solutions to their economic struggles lie beyond traditional party lines. It ends with a call to action for the younger generation to subscribe to 2and20 for more analysis on finance and economics, implying the need for better understanding and advocacy for their economic interests.

Keywords

💡Housing Prices

Housing prices refer to the cost of residential properties. In the video, it is mentioned that housing prices have hit all-time highs, indicating a significant increase in the cost of homes. This is a key factor contributing to the affordability crisis and directly impacts the financial struggles faced by younger generations who are trying to enter the housing market.

💡Wealth Disparity

Wealth disparity refers to the unequal distribution of assets and wealth among different groups in society. The video highlights that older Americans have seen their share of wealth increase, while those under 40 have experienced a decline, creating a significant wealth gap that affects the economic prospects of younger generations.

💡NIMBY (Not In My Backyard)

NIMBY is a term used to describe the opposition by residents to new developments in their local area, often to preserve property values and quality of life. The video explains that this attitude has led to underdevelopment and a shortage of housing, which in turn drives up real estate prices and exacerbates the affordability crisis.

💡Housing Permits

Housing permits are official authorizations required to start construction on new housing units. The video uses the example of San Francisco approving only 16 housing permits in 2024 to illustrate the extreme scarcity of new housing development, which contributes to the housing shortage and high prices.

💡Private Equity

Private equity refers to investment funds that purchase and manage companies or assets that are not publicly traded. In the context of the video, private equity firms are buying up single-family homes, contributing to the housing market tightness and potentially driving up rents and property prices, which affects affordability for young people.

💡HELOC (Home Equity Line of Credit)

A HELOC is a type of loan that allows homeowners to borrow against the equity in their homes. The video mentions that older homeowners can tap into their home equity without selling their properties, which may reduce the supply of homes on the market and keep housing prices high.

💡Student Debt

Student debt refers to the loans taken out by individuals to finance their education. The video discusses the growing burden of student debt, which has reached $1.7 trillion in the United States, and how it affects young people's financial stability and ability to save for other major expenses, such as buying a home.

💡Educational Inflation

Educational inflation is the phenomenon where the cost of education rises faster than the rate of inflation, making it increasingly expensive to obtain a degree. The video points out that the cost of attending college has tripled since 1980, while the real earnings increase for college-educated households has been significantly lower, questioning the value of higher education.

💡Government Debt

Government debt is the money owed by a government to its creditors. The video emphasizes the massive and growing U.S. government debt, which is now at $35 trillion, and discusses the implications of this debt for future generations, suggesting that it represents a significant burden on young people.

💡Unfunded Liabilities

Unfunded liabilities are obligations for which no current funds have been set aside to meet. The video mentions unfunded pension liabilities and Social Security and Medicare as part of the broader issue of the United States' fiscal unsustainability, which will impact the economic future of young people.

💡Generational Wealth Transfer

Generational wealth transfer refers to the passing of assets from one generation to the next. The video discusses how older generations have accumulated wealth through real estate and other means, while younger generations face a decline in wealth, suggesting an imbalance in the transfer of economic resources.

Highlights

U.S. economy shows no signs of stopping with housing prices and S&P 500 hitting all-time highs and a combined net worth of $150 trillion.

Young people under 40 have experienced a nearly 50% decline in wealth share since 1989, while older Americans saw a 12% increase.

For the first time in 200 years, 30-year-olds are poorer than their parents, signifying a broken social contract.

The average home price is now seven times the median household income, a 50% increase from 1985.

Underdevelopment, driven by the 'Not in my backyard' (Nimby) attitude, is causing a housing affordability crisis.

Housing starts as a proportion of the U.S. population have dropped by 30%, leading to a housing shortage.

In 2024, San Francisco approved only 16 housing permits, reflecting a severe lack of new housing development.

Older generations have increased their home ownership by 23%, while those under 55 have seen a 19% decrease.

Older homeowners are staying in their homes longer, with 54% owning outright and benefiting from low interest rates and HELOCs.

Private equity firms own 240,000 single-family homes in the U.S., with concentrated ownership in the Sunbelt region.

Rents for a two-bedroom detached home rose significantly in select Sunbelt markets, outpacing the national average.

Corporate landlords are accused of price-fixing through analytics companies like RealPage, owned by private equity.

It is projected that private equity will own 40% of U.S. single-family home rentals by 2038, creating forever renters.

Wealth held by those under 40 has declined by nearly 50% since 1989, while boomers' wealth has increased.

Young people are working the same number of hours as in 1985, debunking the myth of laziness.

Gen Z and millennials spend less on physical goods and save more of their earnings than older generations.

The cost of a four-year college education has increased three times faster than wages, making it less beneficial.

Student loan debt in the U.S. stands at $1.7 trillion, growing faster than wages over the last 20 years.

U.S. government debt has grown to $35 trillion, with 16% of the annual budget spent on interest.

The actual total debt held by the U.S. government is over $123 trillion when including unfunded liabilities.

The high cost of living and debt burden is leading young people to have fewer children, worsening the debt situation.

Young people are facing a future of servitude due to irresponsible government spending and policies favoring older generations.

Transcripts

July 2024.

The U.S.

economy continues to show no signs of stopping.

Housing prices hit all time highs.

The S&P 500 hits an all time high, and the combined

net worth of all Americans crossed $150 trillion.

But while the U.S.

has been booming for decades, one group has been left behind.

Young people older Americans

saw their share of wealth increased by 12% since 1989,

while those under 40 saw a decline of nearly 50%.

And now, for the first time in 200 years,

30 year olds are poorer than their parents.

The social contract that is now no longer in place

for the first time in the U.S.

is history.

A 30 year old is no longer doing

as well as are his or her parents, were

What went wrong?

This is America, the broken generation.

The United States.

The land of opportunity.

From the beginning, America was different.

Unlike the rest of the world,

it didn't matter who you were or where you came from.

Everyone had a shot at the American dream.

However, the reality on the ground today is bleak,

and the dream is more like a nightmare.

In 1985, the average home was four and a half times

the median household income.

Today, this number has ballooned by 50%

to seven times in a matter of 40 years.

Life has become two times as expensive.

One of the main drivers for this affordability

crisis is underdevelopment.

It's called Nimby. Not in my backyard.

City planners say the attitude is spreading and causing

widespread social disruption across many major U.S.

cities.

Land owners have fought against new developments

to preserve their quality of life and to ensure their property values

stay high.

Specifically, housing starts as a proportion of the US

population have dropped by 30% compared to before 2000.

This means that as the population continues to grow,

the number of homes per person is declining.

Driving up real estate prices.

This reduced housing development

has compounded

over the years and has created a major shortage of housing.

Take a look at San Francisco.

In 2024, the city only approved 16

housing permits and seven of those were for single family homes.

This is a city of a million people,

and the surrounding metro area has 7 million people

and all they approved was 16 housing permits.

At the same time, the share of homes owned by older

generations has grown significantly compared to the past.

The proportion of homes owned by Americans over 55 has increased

by 23%, while home ownership among those

under 55 fell 19%.

Older generations have gobbled up real estate like candy,

and they have created a system that benefits them meaningfully

lower taxes on capital gains, the ability to forgo

taxes through a 1031 exchange, and much, much more.

These homeowners are staying in their homes longer than ever.

54% of them own their homes outright.

The rest have locked in historically low interest rates.

And to make matters worse, HELOC’s allow its homeowners

to tap into their home equity without having to sell.

The result?

They have no incentive to sell.

This, in addition to low development,

has kept the housing market artificially tight.

Empty nesters are living in large homes that are mostly unused,

while young people struggle to get by.

Concurrently, a new player has entered the housing market.

Private equity.

When I was in business school,

there was nothing sexier in this entire world than private equity.

It's exactly where you went.

If you wanted to one day own an island.

And one of my classmates just bought an island.

Private equity currently owns 240,000

single family homes in the United States.

Now, this is only 5% of the overall single family home until market,

which is small, but the ownership is concentrated in the Sunbelt.

And this doesn't include ownership in apartments, which have a much,

much higher corporate and private equity ownership rate.

Analysts have shown that select Sunbelt markets

have over 50% ownership by private investment firms,

by concentrating their ownership in key markets.

They're able to drive down property management and service costs

while having an outsized role in dictating market rents.

For example, between 2020 and 2023, rents

for a two bedroom detached home rose by about 44%.

In Tampa, 43% in Phoenix and 35% in Atlanta.

Compare this to the national average of 24%.

The average home buyer can't compete against private equity.

These firms are able to buy large swaths of home in one go

and make unconditional offers with cash.

Furthermore, unlike mom and pop landlords,

corporate landlords are highly sophisticated

and will do everything to generate additional yield,

even breaking the law.

Recently, the Attorney General of Washington, D.C.

filed a case against 14 corporate landlords for price

fixing through the analytics company RealPage.

RealPage helped landlords optimize rents across

4.5 million units in the United States.

And here's the shocker

RealPage is owned by private equity firm Thoma Bravo.

By taking data

from millions of units, RealPage is able to optimize pricing.

And as you can see, the value of data to these corporations

is in the billions.

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And now back to the video.

The end game for corporate ownership of homes is very obvious.

To own as many homes as humanly possible.

And to create forever renters out of would be homebuyers.

And it seems like they are well on their way of achieving their goal.

It's projected that private equity will own 40% of U.S.

single family home rentals by 2038 times their current ownership.

This will likely increase the rent paid by renters,

making it more challenging for them to save up and buy a home, while

at the same time reducing the housing stock

available to be bought, driving up prices further.

Historically, housing has been a big wealth store.

But with limited supply created by older generations

and increasing competition for private equity,

wealth is declining among younger generations.

Since 1989, wealth held by those under 40 has declined

by nearly 50%, while wealth held by boomers has increased.

There are few common explanations older generations give for this.

The first is that young people don't work hard enough

or they're lazy.

And this is somewhat true.

In 1985, the average workweek was 35 hours.

Today it's around 34 hours, making us 3% lazier.

Now, you don't need a PhD to see that this is not the issue.

The second point raised is that young people spend money

unnecessarily

And although young people spend more money on experiences

and technology, they actually spend less on physical goods.

Balancing out most increases in spending.

The primary contributor to higher spending with young people

is the increased relative value of housing,

health care, and education.

In fact, if you remove housing from the

equation, younger generations spend less on average.

And contrary to popular belief, Gen Z and millennials

are saving more of their earnings than older generations.

Lastly, people will claim that young people are unskilled

and need more education.

But this is absolutely unfair.

Every subsequent generation has become more educated than the last.

And Gen Z will continue this trend and become even more educated

than millennials.

This, though, is expected because society has pushed down

the narrative that college is necessary to progress in life.

This would be fine and dandy if there was a value to education.

But sadly,

college is more expensive and less beneficial than ever.

In 1980, the cost of attending a four year college program,

when adjusted for inflation, was $10,000.

Today, it's nearly $29,000.

That's a 3X increase.

But why?

One simple word bloat.

From 1976 to 2018, U.S.

college enrollment grew by 78%.

But at the same time, full time faculty grew by 92%.

Okay, that doesn't seem too bad.

But administration, administration grew by 164%.

And other non administrative professionals 452%.

That means that the professional staff

at universities has far outpaced the growth of students.

Colleges are spending

more and more money on things other than education.

More admin staff, more consultants.

More fancy buildings.

More of anything but education.

To make matters worse, even if you get an education,

it doesn't really solve anything.

In 1980, households with a four year college

education earned $100,000 per year.

Today, they earn $118,000 per year.

This is a real increase of 18%, which seems good on the surface.

However, during the same period of time, the cost of a four year

education has increased from $40,000

to $115,000,

a real increase of 188%.

So here's the marketing pitch for college.

You can increase your earnings by 18%

by spending 190% more than previous.

Unlike in the past, it is no longer a path to economic prosperity.

Instead, young people are forced into a perpetual education

and credential machine.

What once required a bachelor's degree and entry level experience

now requires a master's degree and 300 years of experience.

The cherry on top.

It will cost you everything.

Given how expensive education is, most students have to take out

large student loans.

Currently, the total balance of student debt

in the United States is $1.7 trillion.

This number has grown two times faster

than wages over the last 20 years.

But this isn't limited to student loans.

With rising living costs and stagnating wages.

The only way to make ends meet for young people is accumulating

more and more debt.

Since 2013, credit card debt has increased 26%,

auto debt 14%, and mortgage debt 44%.

This increase is happening while young people are earning

13% less than they did in 2013.

But this isn't the only that the young people need to worry about.

While personal consumer debt has been rising

and young people are more indebted than ever.

The United States of America

has gone on a debt binge unlike anything the world has ever seen.

Fiscal responsibility has become a forgotten concept

in the United States.

Since the removal of the gold standard,

politicians have discovered that there is no consequence

to printing endless amounts of money.

And over the last 60 years, government debt has grown

three times faster than GDP and now sits at $35 trillion

versus GDP of $27 trillion.

The only time debt was this high in US history was World War two.

The bloodiest, most destructive conflict in human history.

This debt is obviously not free and has associated interest costs.

Currently, the US is spending 16% of their annual budget

on interest, or $624 billion.

That's enough money to pay off all student debt in three years.

Sadly, there's literally no mechanism to stop the government

from spending money. It does not have.

Elected officials are not applying it to balanced budgets.

It cannot be fired for overspending.

They aren't measured on returns, on invested capital.

All they need to do is spend the money and campaign for votes.

Now, $35 trillion sounds like a lot of money.

And it is.

But what if I told you that the real debt number is much,

much higher?

Let me break it down.

National debt is $34.6 trillion.

State level debt adds $1.9 trillion to the mix.

Unfunded Opeb liabilities are another

$1 trillion unfunded pension liabilities.

$7 trillion.

And the biggest, baddest of them all.

Socialism Security and Medicare contribute to a whopping

$80 trillion of additional liabilities.

Therefore, the total actual debt held by the United States

government stands at a staggering $123,875,000,000,533

million.

That is five times greater than the US GDP.

Or put another way, $370,000 per American.

But in reality, if you're over 50, you probably won't have to worry

about this debt. Most of this debt won't impact you.

The lives of older generations will be fine.

Instead, this spending will benefit old

people and levy attacks on the future of young people.

So if we exclude those over 50, the tax amounts to over $600,000.

A person.

To make matters worse, the high cost of living is leading

young people to have fewer children.

Without a sharp increase in immigration.

This will likely reduce production and worsen the debt burden.

But why and how would the government spend so much money

knowing it's nearly impossible to ever pay it back?

Do they not care about young people and their future?

The short answer?

They don't.

The Founding Fathers of

the United States are often revered as godlike figures.

They are thought of as distinguished

and experienced individuals who sought out

to create the framework for the greatest nation

the world has ever seen.

Surely these men must have been wise and old.

Let's see.

James Monroe 18.

Aaron Burr 20.

Alexander Hamilton 21.

James Madison 25.

Thomas Jefferson 33.

John Adams 40.

And George Washington, a distinguished 44.

If you include everyone who signed the Declaration

of Independence, the average age was 44.

Now, let's take a look at Congress today.

The average age.

58. What about the Senate? 64.

What's the median age in the United States? 38.

How can people nearly twice the age of the average

American, truly understand the challenges they face?

They can't.

How are elected

officials near

the end of their lives supposed to behave fiscally responsible

when their decisions won't burden them?

They won't.

Mitch McConnell took office in 1985 and is currently 82 years old.

He can barely communicate.

Yet he decides your future.

Joe Biden is 81 years old and was elected to office in 1970.

Before any millennials were even born.

Today, he's proposing major spending bills

that he will never see to completion.

John McCain.

Elijah Cummings and Diane Feinstein all died while in office.

These were people who were voting on the future of the United States,

but would never see it.

How is this okay?

Young people are seeing rising costs

of living and stagnating wages across the country.

Wealth is continually growing, with older generations,

while young people get poorer and poorer.

Education continues to increase in price

while becoming less valuable in the market.

Consumer debt is rising rapidly, burdening young people

more than ever.

The US continues to spend money like it grows on trees,

handing out benefits to the old while taxing the young.

And all of this happens

while young people are split between red and blue.

Wake up.

The solution isn't Democrat or Republican.

We've seen both parties come in and out over the decades,

and your lives have continued to get worse.

They took away your dream of starting a family.

You said nothing.

They took away the chance to own a home.

And you said nothing.

They spend on programs for the old and tell you to work forever.

And you said nothing.

And now, as you are tied up for a lifetime of servitude,

will you let them drain you of every last bit of your future?

Or will you stand up and say, enough is enough?

Take your future into your own hands.

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