The demand for credit and debt is driven by generational values, historical habits, and psychological desires. These in turn are premised on evolving notions of the good life. If someone thinks material consumption equates with the good life, then chances are that person will get much farther into debt than another person that values non-material staples as supporting the good life— i.e. family, community, and friendship. Where you put your energy and money communicates something strong about the person you are and the way you will interact with the world.

American baby boomers were born into a world of cheap oil, plentiful jobs, and expansionary foreign policy and were raised by Depression-era parents that wanted to give them the amenities that they never had the chance to enjoy. This engrained an historical sense that physical growth was unlimited and that the “world was there for me”.

Today’s so-called Millennials (children of baby boomers) are growing up in a starkly different world of peak oil, global warming, shrinking jobs, and diminished material standard of living, but one with unprecedented interconnection. Material opportunities are contracting, but social opportunities are expanding. The new motto emerging is more like: “We are in the world and for each other.” A collapse of material prosperity has given way to the increasing possibility of experiential and social richness.

Consequently, there has been a huge shift in attitudes about the “good life” between generations, largely unnoticed and unreported in traditional media. Only the symptoms of this shift are being reported—social media revolutions, Arab Spring, the Occupy Wall Street movement, young popular dissident authors in China, and pop-driven musical critique of conservative fundamentalism in Pakistan.

The motivating underlying philosophy for younger generations, has not been effectively brought to light. Around the world there has been a coalescing of youth around active principles of liberation, opportunity, and creativity energized through fulfilling experience and application as the currency of the good life. This stands in contrast to older generations where possession was the ideological linchpin of the good life, driven by desires for security, entitlements, and predictability.

This has enormous implications for the world economy and each generation’s relationship with debt. Younger generations don’t want to own things as much as they want to be able to access them and use them (think “shareware”). As a result non-material goods (relationships) or quasi-material goods (access to the internet) are gaining greater importance than material goods (huge LCD TVs).

According to the prevalent thinking of many young people, useful debt leverages utility around experience and development, more than the acquisition of material goods. Credit should be used as an investment to expand experiential personal and interpersonal growth opportunities that pay different kinds of dividends, whether a job (money to do other things), education (learning), travel (diversity), a peak experience (enjoyment), or funded time as a volunteer (service). The focus is not on the “thing” but its “use.”

“Use value” vs. “thing value”

This “use value” focus of youth is in many fundamental ways incompatible with “thing value” assumptions of previous generations. Sharing resources and goods is more attractive to younger generations because it reinforces experience and relationship. Consumption for consumption’s sake is at odds with this preference. Again most consumer credit has been extended to buy unnecessary things, even as these unnecessary things have driven a global consumer economy. This along with government entitlements and military spending has been largely responsible for U.S. consumer debt and national debt.

Younger generations are simply not willing to buy into entitlement and consumption at anywhere close to the same scale as their parents. They rightfully see these pyramid schemes as rigged: as generationally unfair (i.e. federal entitlements), environmentally untenable (heavily wasteful of energy and material), and undesirable from a lifestyle standpoint (requiring more money and tangential time and energy to purchase and maintain then they are worth): Welcome to the "De" generation: De-Ownership, De-Materialization.

Even if they wanted to go the way of their parents, Millennials know they can’t. The world won’t support it. This massive decrease in consumption by the young will ensure a steep drop in the need for debt but require a radical creativity in world economic premises and organization.

The post-WWII mindset, “I need to get mine, so asset values have to go up and up,” warped credit supply and assessments of reality, especially in the housing market. Driven by historical patterns and psychological desires, it became an article of faith that house prices could only go up, leading eventually to the housing bubble (not only “up” but “very up” so everyone can get rich!). Actually, without easy credit the nominal market value of houses, what people are willing or capable of paying for, has dropped rather precipitously. Price retracing reflected not losses but readjustments in nominal value to reality.

This dynamic between “use” and “thing” value plays itself out even in ideas of social progress. Those inclined toward possession-oriented, “thing” value, feel and act on an underlying assumption that the more money and attention they can attract to themselves, their cause, or their organization the better the world will be. People of this mindset end up counterproductively vying against each other to be the lead spokesperson in “saving the world,” fracturing limited resources in order to fund limited visions in a situation that fundamentally requires cooperation to be effectively solved. To be viable, personality and mission-driven idealism will have to cede itself to collaborative problem-solving pragmatism, i.e. “use” over “thing.”

The evolving preference for “use” over “thing,” application over possession, follows a stewardship mentality that stems from the limitations and opportunities of the emerging world: We pass through this life. We don’t really “own” anything. We use it and share it and then we leave this life. “It’s mine,” only makes sense if you deny your own mortality. Rather, you have responsibility for something in your temporary care and control. In fact the burdens of ownership—insurance, maintenance, storage, time, taxes—are seen by many in the younger generation as getting in the way of the good life. Nominal ownership is preferred only insomuch as it may create opportunity for autonomy (i.e. doing what you like to your house without interference from a landlord).

There is a new mandate emerging: It’s about what you can do for others as a facilitator of life growth, not solely what you can do for yourself, the self-seeking mover and shaker, the “heroic,” approval-needy individual. Much of the past psychology of debt and the failed material American Dream, involves people “taking and expanding”—taking on any debt liability and using what ever credit means necessary to build a heroic narrative: “My big house, my great reputation, my huge salary all must grow (exponentially) to Olympian heights.”

This mentality is based in things that one “owns.” Even non-material qualities like identity, ideology, reputation, celebrity, and character have been commodified and bought and sold in this framework. Eliminate this need to seek self-affirmation through consumption and commodification, and you can immediately eliminate many trillions of dollars of potential debt.

Status-oriented worth also leads to a desire to cut corners, to engage in fraud to aggrandize one’s image. When you distort the image around a “thing,” whether that thing is one’s reputation or a “complex” exotic derivative, it is a lot easier to misrepresent value and to dupe others. When a thing has to prove its value in actual use, then it becomes a lot more difficult to misrepresent its worth. Bernie Madoff extracted his illegal profits through his reputation. People did not closely examine his actual investment products. People focused on “who he was” and not “what he did.” The first refers to “thing value”; the second has to do with “use value” and quality.

A society based in individual heroism, guarantee, and security will in all likelihood destroy itself. Why? If your own narrative, wealth, power, and image in the eyes of others is paramount, you won’t risk your status in learning, making mistakes, or trying new approaches when the old approaches fail. If you merely look at your own situation, and use your negotiating power to leverage greater benefits from larger arenas, you tend to become isolated from the needs of others. You become entitled, believing that others create their own fate and that you alone “earned your benefits.”

Entitled individualism also erodes the skills and perspectives needed to analyze challenges on a systemic scale and cooperate with others in order to meet those challenges. “Thing value” and the habits that go with it are not only obsolete but quite hazardous in the present context. They also cost too much. Politicians can promise gold-plated benefits to everyone, but they won’t be able to deliver. They are hoping you vote based on a promise, not its viability. The cure: Vote on reality, not wish.

Today’s youth care relatively little about your reputation, your estimate of yourself, or your pretty speeches. They want to know what exciting phenomenon can you produce or create? What inspiring ideas or provocative words can you contribute to this larger conversation? What actions have you taken to solve the problem? This goes for young people in deciding about the performance of politicians. They will not simply pledge their allegiance to a politician based on hype or past support. Have you exerted your power on behalf of opportunity for all? Have you stayed connected to us? Have you ensured fairness? Have you gotten the job done? For Obama the answer has come back a stout, “no,” so the younger American generation has little use for him.

The same is true for the promises of great prosperity if young people just take out stratospheric student loans to pay off their overblown university education costs. That promise is not panning out. A new way forward is required and young people know their lives depend upon it. Older generations have a choice, to extend and pretend and hope they die before the consequences show up, or change premises and learn to serve a larger purpose in tune with the younger generations. This will be discussed in the next parts.

(by Zeus Yiamouyiannis, Ph.D., copyright 2011)


About this series: Given accelerating conditions and trends in Europe, the U.S. and Asia, debt will be renounced, forgiven or written down, and how that process unfolds is now of paramount importance. Will private entities who dined so gloriously on their profits now eat their losses? Can the public who has seen its fortunes commandeered mount an effective response? Will there be convincing practical alternatives to a rigged world economy based in debt expansion and servitude? The answer is "yes" to all three, contends this five-part series by longtime contributor Zeus Yiamouyiannis. The series offers practical analyses and blueprints for liberating the world from debt and thus freeing its people to pursue greater, more productive purposes. CHS

Unleashing the Future: Advancing Prosperity Through Debt Forgiveness (Part 1)
(November 28, 2011)

If this recession strikes you as different from previous downturns, you might be interested in my new book An Unconventional Guide to Investing in Troubled Times (print edition) or Kindle ebook format. You can read the ebook on any computer, smart phone, iPad, etc. Click here for links to Kindle apps and Chapter One. The solution in one word: Localism.

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