Housing price inflation was great for the baby boomer generation. They sacrificed the livelihoods of future generations so they could say "My house makes more money that I do." Unfortunately, no one ever stopped to ask where this money was coming from. It came at the expense of future generations.

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It's no secret our economy is in bad shape. The unemployment rate remains high at 9.6 percent, consumers are not consuming and banks are not giving out loans. Housing prices, whose perpetual increases have been the backbone of income wealth generation and security, are plummeting. Years of inflating the housing market has come back to bite us (just as many warned).

Housing price inflation was great for the baby boomer generation. They sacrificed the livelihoods of future generations so they could say "My house makes more money that I do." Unfortunately, no one ever stopped to ask where this money was coming from. It came at the expense of future generations.

"We were all corrupted by the housing boom, to some extent. People talked endlessly about how their houses were earning more than they did, never asking where all this free money was coming from. Well the truth is that it was being stolen from the next generation," writes Iain MacWhirter in The Herald. "Houses price increases don't produce wealth, they merely transfer it from the young to the old - from the coming generation of families who have to burden themselves with colossal debts if they want to own, to the baby boomers who are about to retire and live on the cash they make when they downsize."

Now, because an entire generation depended not on manufacturing and real economic growth, but on bubble economies and endless housing price increases, the American economy is nothing but a nation of consumers buried in debt with no end in sight. Young Americans are going to suffer.

A recent article by the Wall Street Journal practically cried out for pity for the baby-boomer generation. According to the WSJ, baby boomers will be unable to spend as much as they used to.

"We will have to learn to make do with a lot less in material things," said Gary Snodgrass, a 63-year-old health-care consultant in Placerville, Calif. The financial crisis slashed his retirement savings 40 percent and the value of his house by about half.

Well, boo-hoo. What do you expect when an entire economy is based on an inflated housing market? That bubble will inevitably burst. This is Murphy's law at its finest. Right before retirement this bubble baby boomers relied on and sacrificed future generations to has finally burst.

Okay, maybe I'm being too harsh. In truth, the vast majority of baby boomers were just doing what their financial advisors told them to. In 2008 I remember hearing not to worry, to invest in real estate, to invest in American financials (although that was good short-term advice thanks to the bailout) and to ignore all the hype about a bubble bursting. Our economy was just going through a cycle. Good advice, MBA man.

The reality is that the housing bubble was not driven by supply and demand and it was not the fault of over-aggressive consumption (well, not entirely). Prices in the bubble, even now, exist because banks were willing to lend. Most people will borrow as much as they can, leveraging everything from food and shelter to Lamborghinis (if they could). Banks have been willing to lend to these overzealous borrowers because they are in a position to manipulate the government, which means that banks can either push their risks onto the taxpayer or just insure their investments through the government. Sound familiar?

Americans have been sold down the river. We sat back for far too long and just watched as our manufacturing capabilities were shipped overseas. The middle class and future generations were sacrificed so the top 1 percent could triple their income. America was shammed into relying on an economy propped up by the inflated housing market and vapid debt-based consumption, causing us to witness 3 decades of wage stagnation and an economy that is now visibly circling the drain. America can no longer sit idly by amidst the destruction of our future generation's livelihood.

http://www.economyincrisis.org

Authors Website: www.economyincrisis.org

Authors Bio:
Writes for EconomyinCrisis.org. Attends school at The Ohio State University, part-time, earning a BS in Business Finance.