Economist and former central banker David McWilliams speaks with unusual candor about the economic reality confronting today’s younger generations. He paints a stark picture of a world where upward mobility, once a defining feature of many Western societies, has become elusive. In his words, the system operating in the United States is fundamentally distorted—tilted in favor of those already possessing wealth, while ordinary people, particularly those just beginning their working lives, face an uphill struggle to achieve financial independence.

During his appearance on the podcast “That One Time with Adam Metwally” on Tuesday, McWilliams did not hesitate to assert that the structure of the modern economy is “rigged against the average person.” This imbalance, he argued, weighs most heavily on individuals who enter adulthood without the advantages of inherited assets or sufficient time to accumulate them. The issue is not simply about opportunity, but also about the erosion of the social mechanisms that once allowed hard work and prudence to translate into prosperity.

McWilliams was particularly critical of Generation X and the baby boomer cohort, accusing them of committing what he described as a “societal crime” against younger groups—specifically Gen Z and millennials. In his view, these older generations have disrupted a once-reliable link between accessible housing and social mobility. Where affordable property once functioned as the cornerstone of personal wealth creation, soaring prices and restrictive markets have dismantled that path. As a consequence, younger generations are now compelled to embrace greater financial risk rather than relying on the job stability and attainable housing that provided security to their parents and grandparents.

Nevertheless, McWilliams is not entirely pessimistic. He emphasizes that while the system may seem unfair, it follows discernible rules—and those who take the time to learn and apply them can still prosper. The most pervasive misconception, he asserted, is the belief that money itself is something tangible and real. “The biggest myth,” he explained, “is that money is real. It’s entirely imaginary.” What truly matters, in his estimation, are measurable factors such as interest rates, income, and personal discipline. Those who comprehend and manage these elements effectively, he suggested, can move steadily and discreetly ahead of the crowd.

From this perspective, McWilliams distilled five guiding principles—rules he believes can help individuals navigate a system that appears unfavorable, yet remains conquerable.

**1. Learn how to invest and make income your obsession**
McWilliams’s first rule focuses on mastery of investment, the art and discipline of making money work intelligently. He urges aspiring investors, particularly those just beginning their financial journey, to acquire genuine competence in choosing investments that generate stable, recurring income rather than chasing speculative stories or hype. “You’ve got to find a stock that has not just a good story, but a really strong income because income is the key,” he explained. In other words, cash flow—not surface excitement—determines long-run value.

He cautioned listeners against holding idle cash that fails to produce growth. Money, he insisted, is only useful when it becomes a tool for generating more wealth in the future. Accordingly, he advises young investors to identify and understand a single economic sector deeply, rather than scattering attention across multiple fields. “Forget all the rest of the noise,” he said. “Understand one sector, become very good at that.” This disciplined focus, he suggested, creates not only financial competence but also inner clarity, shielding investors from emotional panic and distraction.

**2. Understand interest rates, the most important force in finance**
In McWilliams’s framework, few concepts are as vital—or as misunderstood—as interest rates. He describes them vividly as “the price of money,” emphasizing that ignorance of how they operate is often the surest route to financial hardship. “If you don’t understand interest rates, you’ll end up getting crushed,” he warned, underscoring how they quietly shape virtually every financial decision, from mortgages to credit-card debt to business expansion.

He highlighted a grim but consistent reality: “Poor people pay higher interest rates than rich people.” The implication is that inequality compounds itself, as those with fewer resources face disproportionately expensive borrowing costs. This, McWilliams explained, deepens systemic disadvantage—“the poorer you are, the higher the rate of interest, the more you get screwed.”

He urged young people to grasp that even small adjustments in interest rates can reverberate across the economy, dramatically altering asset prices, investment returns, and patterns of wealth accumulation. “Once you conceptualize that the cost of money is the crucial foundational cost in society,” he said, “then I think lots of things make sense.” As of October 2025, the U.S. federal funds rate sits between 4% and 4.25%, a level that increases borrowing costs for households and businesses alike. Though not extreme by historical measures, this rate remains high compared with the near-zero environment established in 2020 as part of post-pandemic recovery efforts. Even political leaders, including former President Trump, have openly pressed the Federal Reserve to bring these rates down, while analysts from major institutions like Bank of America and JPMorgan foresee possible reductions following the upcoming Fed meeting on October 28–29.

**3. Know when you’re lucky**
A third principle McWilliams emphasizes is the importance of humility in success. “One of the greatest mistakes you can make in finance is falling in love with your own success,” he cautioned. He argues that luck often exerts far greater influence on financial outcomes than most people care to admit. “Sometimes you’re just in the right place at the right time with the right strategy—and it’s luck.”

Recognizing luck’s role keeps arrogance in check. Overconfidence, McWilliams warned, can cloud judgment and lead to reckless risk-taking. “Confidence is something that is incredibly destructive because confidence probably results in us underappreciating risk and in some way getting rid of our cautionary nature,” he explained. Excessive self-assurance, he observed, blinds people to the possibility of failure. “The more confident you are, the less likely you can discount the possibility of failure.” Accepting the role of randomness fosters balance—granting credit to effort without denying fortune’s occasional hand.

**4. Know when you’re unlucky and when it’s your fault**
Just as he advises humility in success, McWilliams counsels accountability in failure. He warned against the common human tendency to dismiss mistakes as misfortune. “What we tend to do in life is the stupid decisions we make we discount as being unlucky,” he said pointedly. “But the question is—why did you do it?” In other words, luck may explain some events, but poor judgment explains many more.

He differentiates between bad outcomes caused by external randomness and those caused by human error. “You have a certain amount of randomness in the world, and that is one of the whole points of investing—to understand that there is randomness and you cannot forecast everything,” he said. However, he emphasized that acknowledging uncertainty does not absolve individuals of responsibility. “In many, many cases, it’s us who make the bad decisions.” By distinguishing between true misfortune and preventable mistakes, investors can refine their discipline and improve their strategic resilience over time.

**5. Go deep, not wide**
McWilliams’s final rule calls for concentrated focus in an age dominated by noise and constant distraction. “Decide you’re going to actually focus your mind on one sector,” he advised. “Spend the time to chill out, relax, and understand one sector and become very good at that—and forget all the rest of the noise.” In his philosophy, mastery requires patience and specialization, not frantic diversification. Attempting to chase every trend or opportunity only leads to superficial understanding and anxiety.

He warned that spreading one’s efforts too thin can breed confusion and poor judgment. In contrast, true concentration allows for deeper insight and greater confidence. For McWilliams, this depth-oriented mindset is not only intellectually satisfying but psychologically stabilizing. “It’s a very nice psychological place to be,” he said, suggesting that calm comprehension reduces the emotional turbulence that often sabotages investors in volatile markets.

Ultimately, McWilliams’s message is both chastening and empowering. While he acknowledges that modern economic systems place real barriers in front of ordinary people, he insists that clear thinking, education, and disciplined focus can still provide a path to prosperity. The rules may be complex and the terrain uneven, but those who learn to navigate it with awareness and self-control can indeed get ahead.

Sourse: https://www.businessinsider.com/ex-central-banker-shares-5-investing-rules-help-genz-build-wealth-2025-10