Over the past seven years, despite the constant posturing, confused propaganda and endless platitudes about inflation this, and unemployment that, the Fed's goal has been a very simple one: to get everyone to liquidate their savings and to spend, spend, spend, either on trinkets in the economy, or by "investing" in the "market."
The Fed did this by confusing cause and effect, and pushed stocks to record highs thanks to the debt monetization and reserve creation pathway known as Q.E., even as the actual economy was imploding, in the process only enriching the wealthiest asset holders. In doing so it led not only to record inequality, but also unprecedented instability in what was once the discounting mechanism known as the "market", and now - seven years into the biggest, and final, reflation experiment of all time - not a month passes without some asset classes suddenly flash crashing.
But that doesn't matter to the Fed: it is now all-in, and its only purpose is to strip every American of their savings, first "voluntarily" through greed ("oh look at today's record high in the S&P500 - I wonder how much my neighbor made today"), or suasion (negative rates) until finally actual confiscation (see Executive Order 6102) will be enforced.
This is the neo-Keynesian prerogative 101.
Sadly for the Fed, when it comes to the biggest (not to mention most indebted) U.S. generation, the Millennials, the Fed has failed in indoctrinating them with the most basic fallacy of modern and not so modern economics - that one must spend, spend, spend their way to prosperity.
According to a new survey by Bank of America and USA Today, millennials ages 18 to 34 say they have a clear understanding of their financial situation and 44% are prepared for a rainy day, with three months of living expenses saved up. But 75% say they worry about their finances "often" or at least "sometimes," with 39% saying they are "chronically stressed" about money.
All of this is understandable: after all Millennials, as we reported before, have a 50% chance of being found living in their parents basement, as a result of unaffordable housing, gargantuan debt, and terrible job prospects.
The survey admits as much: "This pressure can be traced back to factors outside of their control, like uncertainty in the job market, a volatile global economy and student loan debt, according to the report."
That's not the bad news, at least not for the Fed.
The bad news is that according to the BofA survey, the top financial priorities of Millennials are the following:
- 70% said being debt-free was a top priority
- 63% said having an emergency savings fund was a top priority
- 62% said spending less than they earn was a top priority
These just happen to be, in descending order, the three most hated concepts to every neo-Keynesian. They also explain why the Fed will fail each and every time in its attempt to force an entire generation to lever up when the three things said generation wants more than anything is to have no debt, and to live within its means.
That's not all.
In a separate survey conducted by BlackRock, WSJ reports that the Millennial generation is not only likely to be frugal, it is almost certainly not going to be investing in the so-called HFT-rigged, Fed-manipulated casino known as the "market."
Nearly four in 10 people surveyed said they want to make sure they have enough cash saved as a security blanket for an emergency before they save for retirement. And the vast majority said they find it difficult to keep up with bills and save for retirement at the same time.
That squares with other recent data from U.S. Financial Diaries, a project of the New York University Financial Access Initiative and Center for Financial Services Innovation, which found many households are saving regularly for small, short-term emergencies, such as an unexpected dip in income or a spike in expenses. But those emergencies happen so often it prevents them from building up larger amounts to put toward long-term goals.
More than a third of respondents in the BlackRock survey also said investing money felt risky, and they were afraid of losing money–even though only 7% said they had actually lost money on a past investment. And a full 72% said they did not see investing as a way to help them reach their financial goals.
The punchline: nearly half of people ages 25 to 34 agreed that “what you might earn investing isn’t worth the risk of losing your money,” the most of any other generation.
Two out of three agreed that “investing is like gambling.” And despite having decades to save for retirement, 70% of their portfolios are in cash or cashlike investments, according to BlackRock.
This is bad news to BlackRock whose entire business model revolves around fooling naive individuals that they can make money participating in a ponzi scheme which only generates commission for the likes of BlackRock; everyone else better pray that Janet Yellen's next fainting spell isn't her last.
In an environment where cash is paying nothing, and bond yields are well below where they were for the past 40 or 50 years, Mr. Koesterich argued younger workers will need to embrace the volatility of the stock market if they want to generate the returns they need to live comfortably for decades in retirement.
“The math is what it is, and it’s hard to get around it,” he said.
Well, Russ, the math on a world that has $200 trillion in debt and $50 trillion in GDP is even worse, and yet everyone is getting around it.
But this is the worst possible news for the Fed because after the baby Boomers grow tired of flipping stocks, and cash out their securities to the Fed and the primary dealers and retire, suddenly all those trillions in "paper wealth" will be totally worthless to their holders as they will have nobody to sell to. And a market, especially one as rigged as this one, only works if there is at least one sucker on the table.
Surprisingly, perhaps because they lived in their parents basement for too long, the Millennials simply refuse to be that "last sucker on the table" one last time.