There are currently riots going on in Chile, Hong Kong and Lebanon. While in every place they are caused by complex local issues, there is a global problem that is an underlying trend: low interest rates which make it impossible for young people to save for their future and at the same time push housing prices to become unattainable. And people with no future are easy to take to the streets. Cryptocurrency offers an alternative in the form of taking away governments’ power to control people’s money.
A Global Generational Revolution Is Brewing
At least 17 people have already died in Chile as a result of clashes between protesters and security forces that were sparked by a minor hike in public transportation prices. In Lebanon members of different religious and ethnic sects have joined forces to fight against a tax on Whatsapp calls. And the people of Hong Kong continue their protests against the administration, despite the fact that the extradition law to mainland China that triggered it has already been withdrawn.
Other incidents of anti-government protests recently occurred in Catalonia, Spain, Bolivia, Ecuador, Guinea and Iraq. These events are the result of varied local issues that appear to be unconnected, but the fact that they are all happening around the same time suggests there might be an underground current bringing them to the surface right now.
Looking at the different protest movements around the world, the common denominator that stands out is that they are all led by young people or that young people are the most militant group. The youthful spirit was often a factor in riots or revolutions in the past, but organization of persistent protests required more established powers such as labor unions or political parties to lead the way. Analysts have came up with a few reasons that might explain this, such as the spread of social media and fears about climate change, but economic anxiety appears to be the driving force.
Losing Your Ticket Into the Middle Class
The global economy is locked in a situation which was never seen before in modern times. Many of the most powerful central banks in the world now offer historically low or even negative interest rates, in a way that distorts the normal economic functioning in areas beyond their control. Much has been written about the hazardous effects of this practice on investors and businesses, but negative rates are also detrimental to the lives of young people and how they perceive their chances of making a future for themselves.
The most obvious way this happens is by punishing people who want to plan for the future. Central banks hope that lower interest rates will push consumers to spend more, so this is not an unintended consequence, and as a result saving fiat money no longer makes sense. Young people understand that the value of any savings will only deteriorate, and in some cases be completely wiped out, by inflation. This is at the same time that banks will charge them interest on their debts. However, the most profound way low interest rates hurt young people is in its unintended consequence in the housing market.
Buying property is the most common way people in previous generations have stored their wealth. In many countries, getting onto the property ladder is considered the ticket into the middle class and economists have warned that young people are postponing marriages and not having kids of their own due to not having the prospect of owning a home one day. People who have little to lose also have little to fear, and thus clashing with armed police or soldiers during riots is not as much of a deterrent as it is to older people with assets to lose.
It should be no surprise than that the young people of Hong Kong are the most persistent protesters so far, as the city has the world’s most expensive housing market. In a place where a parking spot for your car costs almost US $1 million, now it is hard for people who need to be entering the workforce to imagine ever being able to stop paying the sky-high rent and finally buy a permanent home of their own. This is in sharp contrast to the older folks who only become more rich as the housing prices rise and thus much less likely to want to rock the boat.
Under these conditions, and with central bankers determined to keep lowering interest rates no matter the side effects on real-estate prices, riots can only be expected to spread further around the world. We can also expect to see more young people turn to radical ideas to change the economic status-quo that is crushing them, such as moving to a cryptocurrency-based system where those in power no longer have a monopoly on the flow of money.