Why Millennials Should Pay Attention to Monetary Policy
July 20, 2015
With all the media coverage of the Federal Reserve, it is surprising that few commentators have discussed how U.S. monetary policy harms millennials. Though monetary policy often flies below the radar of tax and regulatory reform, misguided actions by the Fed can and do have major negative effects, especially on young people, says Jared Meyer of Economics 21.
- A slow economy disproportionately affects new entrants to the labor force. Bureau of Labor Statistics data show that the unemployment rate for 20- to 24-year olds in June was 10 percent, compared to 4 percent for those 25 and over. The teen unemployment rate was 18 percent.
- The Fed's policies have resulted in inflated values for housing. But young Americans do not own houses. In the first quarter of 2015, homeownership for Americans under 35 years old declined to 35 percent -- the lowest on record since the Census Bureau began tracking these statistics in 1982.
- The dollar's purchasing power has declined by over 80 percent since the early 1970s.
- The Federal Reserve signed off on hundreds of risky bank mergers that were blatant political bargains between megabanks and activists.
Short-term winners, including some investors and homeowners, are currently benefiting from the Federal Reserve's policies, but the young and the economy as a whole are losers.
Source: Jared Meyer, "Why Millennials Should Pay Attention to Monetary Policy," Economics 21, July 13, 2015.
Browse more articles on Economic Issues