The Millennials’ Money Pt. 1

By J.D. Alt

The ebook Diagrams & Dollars has been a top-seller on Amazon (in the category “macroeconomics”) for over a year now. There have been many requests for a paper-back version. In deciding to undertake that mission, I started to expand the original long essay into something that would be more book-like in length—and before I knew it, the effort morphed into something else: a different “frame” for the whole argument. The new “frame” evolved as I was reading Millennial Momentum by Morley Winograd and Michael D. Hais, which views U.S. history from the perspective of a repetitive cycle of four archetypal generations. Every eighty years or so, this cycle repeats, beginning with a “civic” generation—and each of these “fourth turnings” (as they are referred to in the book) is accompanied by dramatic, traumatic, social upheaval. When the upheaval is finally resolved, the “civic” generation is firmly in control, and things settle down, but with a dramatically changed social structure. The “civic” generation that is now leading us into the next “fourth turning” are the Millennials—the children of the baby-boomers—and they now, specifically, are the target audience for the book.

Before I complete—or even decide to publish—the book, I’d be grateful for feedback and responses to some key sections of it. With that in mind, this is the first of several posts presenting these key sections for comment by the NEP readers.



Those who have known them as parents or teachers will likely tell you that today’s Millennial generation—the children of the baby-boomers—are unique: they are unique in their romantic relationships, their fealty to and sense of personal communities, their pursuit of entertainment and fun, their work-ethic and entrepreneurial interests, their sense of fairness and justice. Generational historians tell us that Millennials are the leading edge of a “fourth turning”—a repetitive cycle of generational archetypes which, every eighty years or so, sets society off in a new direction. I’d like to add to these observations with the proposition that what is most unique about today’s Millennials—and what will make their role in the current “fourth turning” uniquely historical—is the fact that they are positioned to be the first generation in human history to explicitly understand, and effectively utilize, democratically issued sovereign “fiat money”.

The essential reality and potential power of modern fiat money—which has yet to be fully realized and managed by any modern society—can be summarized in the following statement:

While it remains true that the number of dollars any individual can spend is ultimately limited to what he or she can “earn”, the number of dollars individuals can spend collectively—as a sovereign nation—is (with one cautionary caveat) unlimited.

The purpose of this small book is to introduce the topic of this “modern money” to the Millennials themselves—to make them aware that the above statement is very much a possibility and, furthermore, to help them see that it is very much in their interest to grasp hold of and nurture that possibility. This is not a message their parental generations are inclined to send, chiefly because boomers and the interim gen-Xers (let’s lump them together as “BGX”) are entrapped—conservatives and liberals alike—in an ideological “money box” from which they cannot, or will not, allow themselves to logically escape. To understand this entrapment, a short bit of history will be helpful.

In August 1971 President Richard Nixon took the United States—and thus the rest of the world—off the monetary “gold standard” which had prevailed, in one form or another, for much of modern history. The gold standard, in general, was the way nations had sought to protect the value of money by requiring printed dollars to be convertible, on demand, to a specific amount of gold. In theory, this guaranteed conversion to gold limited the amount of money that could be created, thus protecting, it was believed, against governments diluting monetary value by simply “printing” dollars when they were needed.

Nixon took his unprecedented action primarily in response to French President Charles de Gaulle’s decision to demand that the United States convert the U.S. dollars held in France into the promised gold. Other nations began to follow suit, and it suddenly became apparent that the U.S. did not have enough gold to make good on its obligation. Nixon’s solution, at the time, was considered to be temporary—the gold standard (which everyone still believed was an essential tool of monetary value) would be reinstated as soon as the nations of the world could agree to a new set of rules. This new agreement, however, never materialized, and the U.S. (along with everyone else) found itself operating with a pure, sovereign “fiat” currency—that is to say, money that is issued by “declaration” of the sovereign power and which is not “convertible on demand” to anything other than itself.

The surprise—although it was never publicly or consciously noted—was that neither did the sky collapse nor did the dreaded hyper-dilution of monetary value (inflation) come to pass. Even though U.S. dollars could no longer be converted to gold, they still retained their “value”; (we’ll find out why a little later.) Nor did the generation that was just coming into power—the baby-boomers—take any notice of what had happened. All the monetary procedures that had been put in place to protect against the government issuing more dollars than it had gold to redeem were left untouched. Everyone proceeded to think and behave exactly as they had before 1971. That is to say, they behaved as if the quantity of dollars available in the world was somehow a limited “resource” for which everyone—including the sovereign government itself—had to compete to have a share of.

As it turned out, this perspective was reinforced by the fact that the boomers were an archetypal “idealist” generation, driven by the need to force “reality” to conform to a rigid ideology—and a central component of their particular ideology is the idea of “competition”. If “money” isn’t a scarce resource, why would we have to compete for it? And if we don’t have to compete for money, the ideology of competition itself—everyone getting a “fair shake” on the playing field but being personally and solely responsible, nevertheless, for their own success and well-being—that ideology would be undermined. Hence, the idea that “money is scarce” and must be competed for was, and continues to be, maintained and reinforced on all fronts by the BGX generations.

As I’m about to demonstrate, however, there’s another way to look at money—not at a different kind of money, but at the same money we’ve had for the past 44 years, since Richard Nixon inadvertently reconfigured the world without anyone realizing it. In this new way of understanding money, certain things do NOT change at all, namely that for individuals money is, in fact, a scarce resource that must be earned and carefully managed. This is because individuals—and families, and businesses, and state and local governments as well—are the USERS of money and not the CREATORS of it. The CREATOR of money, as we just noted, is the sovereign state—and where the sovereign state is a functioning democracy, it follows, logically, that the USERS of the money are, collectively (but not individually) the creators of it. The distinction is subtle but, as I intend to illustrate, it is overwhelmingly important.

What I believe and hope is that, being the first “civic” (cooperatively oriented) generation to come to power in the first modern era of pure “fiat money”, the Millennials will also be the first to grasp its astonishing “cooperative” possibilities. While the “idealist” BGX generations have been less interested in desired outcomes than on insisting that those outcomes be achieved in accordance with their ideological “rules”, the “civic” Millennials view the world as a pragmatic problem to be solved by whatever method works best. They are focused on understanding and achieving the desired outcomes themselves—and, as it turns out, this is exactly what modern fiat money is ideally suited to accommodate.

I fervently wish for Millennials to get the message, because if they do succeed in grasping and carrying it forward they will, as a result, stand a fighting chance of resolving the monumental dilemmas we (their loving parental generations) have bequeathed for them to grapple with.

What follows has three more parts: Part 2 is an essay, Diagrams & Dollars, which lays out in an easily visualized fashion the basic realities of how a modern, sovereign fiat money system works. This essay was first posted on the UMKC economics blog, New Economic Perspectives, in early 2014, and was subsequently published as a small Kindle ebook on The version included here has been adapted from the original.

Part 3—Rules and Values—explores why the ideological driven generation of the boomers cannot “compute” the realities of modern fiat-money (as described in the diagrams)—and why they cling so rigidly to a set of monetary regulations that, in many ways, defy logic. As the Millennials, coming to power, attempt to untangle and modify the illogical monetary “rules” of the past 80 years, they can expect a forceful and likely strident, push-back from the waning BGXers. In anticipation of this contentious resistance, it will be useful to have a basic understanding of what, in fact, is motivating it. To help deflect the push-back, Part 2 will also explore why the end of monetary scarcity for collective society does NOT mean the end of the benefits of competition, nor does it mean the creation of a welfare state, or the demise of merit-based rewards, creative entrepreneurship, self-actualization and personal achievement. If anything, modern fiat money builds on these American values in ways the BGXers could never imagine.

Part 4—The Opportunity of a Millennium—is a sampling of how cooperative democracy and modern fiat money can enable the Millennials to actually solve some of the most intractable dilemmas they have been given to live with. I’ll explore five examples (which, I predict, we’ll find are interestingly interconnected):

  • Building a Free Lifetime Education System
  • Mitigating Climate Change
  • Creating “work” in a Hyper-Automated Economy
  • Building a Housing Infrastructure that leaves nobody in the cold
  • Reversing the Desertification of Planet Earth

Some explanation is required as to why this book is being written by an architect and not an economist. The best answer I have is that this, really, is more of an “architectural” issue than an economics one. Here’s a brief explanation of what I mean: When I was teaching architectural design at UNCG many years ago, my favorite design problem for first year students was the reconfiguration of a small cafeteria in the Student Union. The cafeteria was infamous for daily collisions between people carrying trays full of food and people trying to get trays to put their food on. Before I’d let the students begin redesigning, however, I asked them to spend some time observing and taking notes about what was going on in the cafeteria. Their first assignment was then to draw a set of diagrams that illustrated and explained what they’d observed, and another set of diagrams illustrating how they proposed to alter the situation for the better. Only after those diagrams were presented to the class and discussed, were the students allowed to begin designing their actual reconfiguration. That is essentially the process I’ve gone through with the structure of the U.S. monetary system: As an architect, I’ve observed it as best I can, and what I’m doing now, with this book, is using a set of diagrams to illustrate and explain first what’s happening and, second, how we might want to more rationally and effectively manage what’s happening—assuming, that is, our goal is to prevent the continuation of collisions between people with trays full of stuff and other people with empty trays seeking to fill them up.

From this point on I will be talking directly to the Millennials. Boomers or Gen-Xers are welcome to listen in, but please keep in mind Bob Dylan’s immortal lyrics:

“Your old road is
Rapidly agin’
Please get out of the new one
If you can’t lend your hand
For the times they are a-changin’.”

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