The Coming Retirement Crisis

Published on
May 9th, 2018
49 minutes

The Coming Retirement Crisis

The Expert View ·
Featuring Raoul Pal

Published on: May 9th, 2018 • Duration: 49 minutes

In this hard-hitting Real Vision special, Raoul Pal presents the single most important financial topic of a generation — the Baby Boomer retirement crisis. He asks the hard questions: Can you afford to retire? How will the coming crisis impact your life? What risks are you unknowingly taking with your retirement? Moreover, will the insufficient retirement savings of the largest generation in history cripple the economy? Raoul also explores how savvy retirees might avoid — and even profit from — the threatening crisis. In addition, Raoul also offers a glimpse of a brighter future, in which smart millennials take control of their own financial destiny and side-step the crisis.


  • DN
    Douglas N.
    19 December 2020 @ 06:28
    I retired at 62, and we lived on defined benefit pensions from the private sector, along with interest and dividends from IRAs and investment accounts until age 66 when social security kicked in. At that time SS replaced the cashflow that used to come from interest and dividends, so they are now reinvested. I am now 67. For the next 5 years I will remove nothing from savings until forced at age 72. At that time the RMD can be roughly covered by yield without selling anything, so that I don't expect to sell any assets then either. I have no plans to sell anything ever, unless the cash thrown won't sustain normal life. When death is nearer at 85 or 90 and it still looks like what we will die with is stupidly excessive we will look at additional ways of spending or gifting and so begin selling. I wonder if this is simply idiosyncratic, or a counterargument to the idea to the idea tha retirees will leave the stock market in the timeframe he suggests here.
  • MB
    Mickel B.
    2 November 2020 @ 18:03
    Great analysis! Wish I had been able to watch this 2 years ago, but better later than never. Even more appropriate now than when this was first published IMO.
  • DH
    Dale H.
    23 February 2020 @ 07:21
    Here is a problem we have in New Zealand: You decide to have a lot of cash sitting in the bank, with some gold and top Australian gold companies that are now up about 200%.. These could possibly be sold soon. So there is more money in the bank..... What to do? There is zero bank guarantee in NZ. So if we have a massive downturn- possibly with a bank going under.. All the money in the bank can be frozen, then bailed in (stated on Reserve Bank website). On top of this, the Reserve Bank is sniffing around doing ‘innocent’ surveys about - here’s some good reasons to phase out money, surely you agree? I know nothing about bonds. So Raoul an all, there’s the too high share market that could crash. The terrible interest rate investment that can get bailed in, obscene property prices for absolute rubbish. And bitcoin I know nothing about and seems too speculative if you don’t have time on your side. Any ideas?
  • IC
    IAIN C.
    20 February 2020 @ 20:57
    36:23 mins left: "life expectancy ... is in an exponential trend higher". Raoul, what you have on that graph is essentially a linear trend - including the projection. Especially when it comes to money matters, the difference between exponential growth and fast linear growth is hugely important. Sorry to be picky, but to be honest, I'm a bit shocked!
  • AU
    Aron U.
    19 February 2020 @ 12:59
    Let me get this right. If the top 1% owns 90% of equities held near-term retirees. Assuming that the top 1% won’t need to sell equities to pay for daily expenses because they hold cash and other assets, then isn’t only 10% of equities at risk of sell-off (held by the bottom 90%)?
  • ZM
    Zachary M.
    15 February 2020 @ 16:28
  • TE
    Thomas E.
    13 February 2020 @ 17:56
    Heaven forbid you have to move from a high cost/high tax state like NY, CA, or Conn. and move to a lower cost and lower tax state like Wyoming, South Dakota, or North Dakota. Did you know we still use horse and carriage? Give me a break....I don't feel bad for you if you didn't save enough for retirement and don't want to move to a state where what saving you do have goes further.
  • PS
    Peter S.
    11 February 2020 @ 15:09
    Truly amazing!!! But is the stats correct, 37 min 13 sec the median collapses between when removing the top 1% - is it infact the mean that is dropping?
  • PV
    P V.
    11 February 2020 @ 02:25
    Amazing. Loved especially the agency of stating the opportunity in crypto towards the end.
  • AH
    Andrew H.
    8 January 2020 @ 21:22
    Would really love graphs in the transcript.
  • CG
    Chris G.
    10 October 2019 @ 14:47
    Thinking about my pension makes me feel sick. If JFK were my age today he would probably say something like: „My fellow Generation X‘ers. Ask not what you can do for your country - ask what your country can do for you“
  • ea
    edwin a.
    12 September 2019 @ 11:56
    I'm newish to Real Vision, and though I have some background in Econ, I'm newish to the kind of focus on trading on RV, and so I'm not entirely sure how to frame this request. But I would love it if Real Vision would do a macro look at the generational shifts related not just to "Baby Boomer" retirement and related pension problems (which get covered a lot), also to Millennial aging into the "family building" stage of adulthood. RV has presented a fair amount about the potential for a recession, with Raoul in particular warning about the pension crisis (he's far from the only one). He and others discuss trades that suggest moving in/out of different asset classes to survive a more (or less) catastrophic downturn, with a focus on protecting wealth. Fed responses so far haven't done much, and my suspicion is that this relates to something very few commentators talk about: the velocity of money (as one RV guest, Christophe Ollari, has said about the central bank activity over the past several years, "It's not about M. It's about V"). Meanwhile, on the other side, some people see the coming Millnennial generation as a huge opportunity (in terms of home-building, etc., while Raoul is saying they simply don't have any money. But presumably they will, since Baby Boomer assets have to go somewhere in the coming years. It seems to make sense that the Fed and US gov't are going to try to respond to these huge shifts, even if they are aren't paying much attention to Millennials much right now. This may be too broad a request, but it seems like an important dimension of this "coming pension disaster" scenario that could not only provide a ray of hope in a pretty gloomy picture, but also provide some investing opportunities...
  • MW
    Marcus W.
    29 August 2019 @ 06:02
    Just watched this since Raoul posted the Youtube link on Twitter. Some amazing points here and I've given myself 24 hours to digest it. Having lived in Japan since 2002, when I came here 500ml of Coke was 150 yen. Last year it just ticked up to 160yen. It makes life easy, simply prices haven't changed, so it's easy to budget for. My point is, the FED can just print and buy 50% of the bonds like the JCB. And also buy equities to prop up the stock market. The Fed, baby boomer generation will do whatever it takes to maintain the status quo and current standard of living. You simply cannot underestimate the power of the printing press and how much it will be used. It's been effective in Japan to date and no one seems to care much. No one really cares about the stock market. Though I'm hearing people starting to complain about their US REITS falling. I suppose the big factors in the US are the Pensions also the poor savings rate and far higher private debt. In the video RP talked about the FED taking on 6 - 8T of debt onto that balance sheet but... didn't explain what that would do. I think there will be some correction in the market but perhaps there won't be. Just more printed money. Kick the can down the road until we get over this BB retirement phase. I'm certain that's the way this will be played. Simply delay it as long as possible so Boomers can enjoy their retirement years. One thing is certain zero yielding assets will do well against currencies. Gold. Silver will get dragged along as the poor mans gold. I wonder if the silver price will be controlled again by increasing margin requirements to keep the price never going over $50 like the last time. My trades currently. JPY/USD. XAG/AUD. XAU/AUD. Short SPX500 @3023. Let's see how this plays out. Amazing opportunities ahead. Still haven't worked out how to trade eurodollar
  • MW
    Marcus W.
    28 August 2019 @ 15:29
    Seems this video won't load anymore
  • MD
    Matthew D.
    8 August 2019 @ 09:50
    Looks like this is now starting to get picked up by the wider more mainstream press. The FT have just put out an article about the increasing number of US Baby Boomer retirees struggling with debt and needing to use bankruptcy protection. It's not a comfortable read.
  • BR
    Byron R.
    31 July 2019 @ 15:26
    Please include graphs in the transcript - thanks.
  • BV
    Brian V.
    3 July 2019 @ 15:16
    Where is the data/web site for the projections related to US Labor Force Participation GMI Composite? And why is that projection so much different than the other governmental projections?
  • JM
    Jonathan M.
    15 May 2019 @ 17:31
    Hands down one of the best pieces I have seen in years!
  • AC
    Andy C.
    13 April 2019 @ 15:18
    Wondering why the switch from "average" to "median" boomer net worth at about the 11:21 mark?
    • AC
      Andy C.
      14 April 2019 @ 15:47
      NM dumb question.
  • TL
    Tom L.
    15 July 2018 @ 21:34
    Incredibly scary stuff, for sure. It's hard to argue with the quantitative approach taken to outline the problem and its inevitability. What does a retired (67) person with significant assets vis-a-vis the median numbers presented do for an investment approach? I'd personally (and yes, it's personal!) like to hear some of the Real Vision experts discuss that problem.
    • GM
      Graham M.
      5 March 2019 @ 12:38
      permenant portfolio
  • AG
    Adam G.
    21 January 2019 @ 21:31
    Enjoyed the presentation, good depth. Harry Dent has been going on about demographics for years. I guess a difference between US and Japan is that Japanese debt is more internal vs the $US being the reserve currency for now. You present the thesis that the equity market will lose ~50% potentially. But then anticipate that the Fed will increase their balance sheet dramatically to replace the lost participation of the Baby Boomers. So this is in effect a put on the equity market. As you point out, should the market drop and not rebound quickly, not only will the average American be in dire straights but also all the pension funds. We've seen how the Fed (and US politicians) have reacted to the threat of collapse since 2008 with market manipulation. We've seen the Japanese do similar. In my view, it has been completely uncharted territory over the past ten years, If you were lucky you understood Greenspan/Bernache/Yellen puts. Everybody is painted into a corner but who has the ear of the decision makers? Middle America? Naw, they get tricked every time. Upper America, yeah, they provide the campaign money and in return will continue to be funded by the tax payer. My guess, yeah, equities will take a hit but the $4T+ (Fed) will kick in providing a nice opportunity for those with cash (Upper America). Sure, for face saving, some crumbs will be thrown to Middle America... maybe deals in trailer parks. Remember, Deficits Don't Matter ... Ha
  • JL
    James L.
    24 December 2018 @ 01:04
    How does one get the charts for this presentation?
  • JS
    John S.
    23 December 2018 @ 17:17
    Great content and (unfortunately) data supports every assertion Raoul makes. I get production value but could have done without the scary piano music.
  • EG
    Eduardo G.
    13 December 2018 @ 12:56
    The only reason why I gave thumbs down is because the video could have been much more concentrated and much less dramatic. Yet, I acknowledge there is very valuable insight there, so thanks Raoul for that!
    • EG
      Eduardo G.
      13 December 2018 @ 12:59
      Tokenisation of all sorts of assets is coming, yes Sir!
  • CH
    Christopher H.
    17 November 2018 @ 21:30
    This squares perfectly with what Mark Cuban says about the future being deflationary.
  • KN
    Kelly N.
    4 November 2018 @ 11:18
    How can I short the Boomers?
    • JF
      Joseph F.
      15 November 2018 @ 02:04
      Yes, Go long Kimberly Clark. NYSE: KMB.
  • PK
    Patrik K.
    4 October 2018 @ 13:44
    Just watched this for the second time. So much valuable information!
  • SU
    Shakeel U.
    13 September 2018 @ 20:27
    Great 10/10, many thanks Raoul
  • JS
    James S.
    31 August 2018 @ 23:36
    Interesting that the Trump order today addresses both ends of this issue. By decreasing RMDs and increasing potential contributions to retirement plans, perhaps the administration is trying to address the problem. Maybe they’re RV subscribers?
  • MS
    Mark S.
    31 August 2018 @ 01:03
    Great macro, Raoul! I agree that demographics are everything now. We are Japan, just ten years younger. What will be interesting to watch is how policy makers react to all that is coming down the road (and how we should respond/invest to their decisions)
  • TH
    Timo H.
    25 August 2018 @ 07:58
    I fully agree with the analysis, but have my doubts about the recommendations. I have very hard time allocating any capital in bonds of governments, who are accumulating debt ever faster without any hope of improving the income structure. We're now in the top of an economic boom, and still, we're getting into more debt. In the downturn, it is highly possible, that people will understand, that the debt will never be repaid and the can is being kicked forward using a printing press. Combine that doubt with a deflationary environment, and we're actually quite close to hyperinflation. In stocks, you may lose 50-70% of your wealth in a down turn, but with bonds, you may lose it all, should the general narrative change towards "deficits DO matter" and capital gets suddenly allocated to real assets instead of imaginary financial assets.
  • WS
    William S.
    24 August 2018 @ 21:03
    Raoul Want to really reach the masses, distribute beyond RV. Whatever channel possible. If even 50% of these comments reach reality it will still be a societal mess and more populists like the current White House disaster throughout the world will take over and then....well the Millennials et al will be in a pickle. Great suggestion about entrepreneurial activity. It's what all economies are built on. Don't rely on the big box companies to survive the consumer downturn. Great piece..nicely done.
  • KS
    Kathleen S.
    16 August 2018 @ 03:41
    Raoul -- every thing and I mean everything you are saying is true -- I am Noah building an ARC and nobody wants to talk about what is coming, but just because you dont say it, doesn't mean it isnt happening. Scary stuff, but real and smart people need to open their eyes and try to protect themselves ---- doesn't make you less human to try to protect your self from what is coming. I am a high school math teacher and it is very simple to see, gold and silver are insurance against a corrupt fiat banking system. It is all nothing but a very fancy ponzi scheme -- save your self and get out of the fiat matrix -- gold, silver and bitcoin.
  • JS
    James S.
    4 August 2018 @ 21:13
    The unprecedented level of buybacks gets mentioned, what (if any) impact do you think is the increasing level of passive investing contributing to the near record bull run and historically high P/E?
  • AI
    Anatoly I.
    28 July 2018 @ 13:13
    Great stuff! Very good analytical work and it is a good frame to apply to different local markets.
  • SW
    Scott W.
    20 July 2018 @ 21:18
    Confession: I watched a lot of the free youtube snipets, listened to a lot of podcasts before I bought the subscription. I AM exactly who Mr. Pal speaks of. I've got about 10yrs left..but would love to cash out now, pay the penalties and buy a small property and house in the Midwest. I mean just enough to be comfy and be paid in full. Problem is, I'd need to go right back into the workforce..and giving up a job in this environment, at this age, when I'm doing well and in demand? That's tough..especially with a family and all the baggage (mort, car, college) and only partial HS education. Before anyone has an inkling to judge, this 'bum' is one of a few overseeing North American Operations for a multi-billion dollar company, and I started here pushing a mail cart and offering supplies and coffee. I work hard, and was given a shot to prove myself at one time...something everyone should have access to. That's just so you understand where I'm coming from. I figure the direction we're headed, get as used to being as cheap as possible as fast as possible. I hope we can all remember that the expansion since the days of steam power has been an incredible thing..but unfortunately, greed trumped it. Greed, and people not understanding what debt leads to, cui bono, and how booms/busts work..but more interested in status and Mr/Mrs Jones. Ignorance is bliss, until the alarm clock hits. The list of 'wish I would've understood this' is long and keeps growing as this has consumed my free time. But it's my job to now check things off this list, try to survive and learn as much going forward as possible because, quite frankly, nothing else matters to me in this inflated social-media 'gush over everything/nothing' society. Nothing. family of course, and golf.. And, if the off chance that Mr Pal or Milton happen to read this.. you've got a person here willing to work for you for free, in whatever capacity you can use me and any free time I have. My hope is to help others understand...not panic, but understand what we're up against. I'm an hour outside NYC, mobile, and am free at least twice a week...and dead serious. I'd like to sincerely thank the entire RV team for doing what you do. Please understand, I'm not one that has known 'finance'...all I 'knew' up until 7 years ago, was that someone gave me a plastic card early in life and I could buy shit with it. That was the worst thing ever without any financial knowledge and a void of common sense. Since that time, it's been pay as you go until 7 years ago when I started to read about The Fed.. I completely reversed spending, consolidated debt every cent is watched like a RV vid! I'm guessing many, many others are along for this ride, and that's the effect NO ONE will ever mention on standard 'think this' tv've lost the trust of the biggest driver of demand, and it ain't coming back anytime soon. Couple that with those that CAN'T spend anymore for one reason or another..and there's you need for other jawboning, charts, theories.. the consumption nation is no more. Many variables, but it's declining for sure. I waited a long while to get the sub, because I didn't want to spend money on another 'sub service'. I admit I've given some cash to a couple while trying to learn about markets/trading..but this isn't even that category. In fact, I look at this as my college for finance. Direct from my pc. I look at it as an investment in myself. Nothing could be better spent. Cheers!
  • DR
    David R.
    9 July 2018 @ 20:08
    Only showed one side of the coin. Conclusions based on broad generalizations. Used a glut of chart overlays to reach many debatable conclusions. Once again the best part was their usage of music and quick edits to create a heightened sense of drama. The retirement dilemma is obviously a real problem for most...but I disagree with much of the reasoning and most of the conclusions.
    • TL
      Tom L.
      15 July 2018 @ 21:34
      I'd enjoy seeing the basis of these comments.
    • DS
      David S.
      20 July 2018 @ 09:48
      David R, please share with us the other side of the coin?
  • HJ
    Harry J.
    9 July 2018 @ 00:00
    Great job R. Hope your wrong but fear your right! Keep up the good work. H
  • PG
    P G.
    5 July 2018 @ 00:51
    One thing I don't understand, the concern over here is that all the baby boomers are stopping to investing and starting to pull out from the market. We have to remember that there is a TON of people from the new generation that are beginning to invest, in my opinion, that should set off the difference.
  • CP
    Cole P.
    4 July 2018 @ 17:42
    Pretty awesome and I have thought about many of these things late at night. I feel there is one reaction to every crises and that is innovation. Cryptocurrencies were born out of the 2008 crises and last year they began to show their potential. When the business cycle wipes out older financial instruments and theorized ways to make gains (or false promises like pensions) focus will shift to the new great thing. The new economy built on truth rather than trust, which is why blockchain is big. The pendulum is swinging hard the opposite direction after decades of false narratives from bankers and politicians. They've lied about wars, political deals and protected those that should be in jail for theft. The new world will give way to de globalization, more local start ups and decentralized currencies will lead the way in the new economy. I'm long alcohol, cigarettes, weed, guns and fast food after we find a bottom when the correction comes.
  • PT
    Paul T.
    2 July 2018 @ 02:06
    Thank you for this enlightening article, helped me understand how inflation and the spending drives the US infact the world economy. You say crypto could be a safe heaven for the future but those currencies are overvalued and have less utility towards, except a few. If demographics drive the economy and cryptos are limited in supply and expensive to mine, don’t you think it’s deflationary and inelastic?
  • wp
    william p.
    28 June 2018 @ 13:31
    Great article Raoul. I hope you will tackle the second biggest problem in the equation, which is the health sector, especially in consideration of the demographic picture you have so clearly explained (aging population, more healthcare costs for society). Also it would be nice to dig into the conflict of generations deriving from a completely diverging set of needs and interests. Thanks William
  • DB
    Douglas B.
    25 May 2018 @ 15:01
    What I feel Raoul is leaving out of the equation is that as sovereign debt grows, people lose faith in Government. With this, people do not want to hold debt of a state they feel is at risk of default or collapse. The EU is a ticking time bomb with the US being the least stinky turd in the toilet bowl. With decreased faith in bond markets, investors will have no choice but to invest in equities which could increase valuations significantly more than they are today.
    • SB
      Salvatore B.
      26 June 2018 @ 13:51
      Agreed, and that will likely be fuel for the crypto fire as well.
  • BL
    Barclay L.
    25 June 2018 @ 00:27
    Well done. Certainly the unfortunate setup of a lifetime. Only thing not covered is possibility of a central bank-led global reset ...a new Breton Woods...debt jubilee, etc. maybe not possible but with all the chips on the table, central bankers may try. Part 2 for Raoul in the future perhaps.
  • NR
    Nelson R.
    22 June 2018 @ 05:39
    Great video Raoul, glad to hear you are changing your attitude towards the crypto space. As a millennial working and investing in the crypto space, I think the backdrop of where other asset valuations are at the moment is important. A basket of cryptocurrencies in many ways should be thought of as a basket of high risk options.
  • JV
    Jens V.
    15 June 2018 @ 09:42
    Amazing. Thanks Raoul.
  • GO
    Glenn O.
    14 June 2018 @ 23:56
    Raoul I have been talking about the future retirement problem for several years. I agree with you that everyone has been pushed into the equity market as it is the only place where people think that they can get a return that they need. People are rushing into passive managed funds, the FANG stocks have unreasonable PE ratios. This will end very badly. I hope your next program is in the cost of medical coverage. People living longer, means people needing more expensive medical procedures like artificial knees and hips. More bypass surgery. When you add this to the unfounded retirement system it spells trouble with a capital T. Great article and well presented. I do net see cryptos as the possible solution but that is what makes a market. Thanks Glenn
  • DO
    Daryl O.
    9 June 2018 @ 05:41
    Bravo Raoul. A fantastic piece. If it prompts more people to seriously consider the issues you raise then hopefully it can help minimise any negative recessionary impacts to whatever degree. This has really helped coalesce my thoughts so again - many thanks.
  • MR
    Mark R.
    6 June 2018 @ 20:52
    This take on demographics is worthwhile, however, there are a lot of moving parts and my take is that it is a good template, but timing is impossible and correlations are often hidden in a broader correlation - like participation rate. Reminds me of Harry Dent's "The Roaring 2000's... " that was published in 2000. In that book he shows a correlation between population demographics and the SP500 index. I read it and passed it on to a friend. He was enamored with it and stayed in the stock market stubbornly watching 2 million go to 200k. We were both very novice investors, but I was more easily frightened and got out before I suffered as bad a loss as he did, although I got hurt badly as well. There is no panacea and this video should stay on RV where there are more seasoned investors. I have a subscription to someone who has been saying similar stuff for the last 10 years and has been wrong. I sometimes wonder why I stay, but I do. After 20 years of following the stock market and purchasing subscriptions along the way, I still feel like it is in general a game of chance in which you can get an edge, but must never enter in the realm of belief.
  • TE
    Tim E.
    3 June 2018 @ 05:53
    What about the rest of the world, outside Japan, USA and Europe, where the other 6 billion in the world live? Surely there is some cause for optimism there? Vietnam, Indonesia, Nigeria, The Philippines, India, Pakistan, Bangladesh...there are plenty of 100mn+ population economies, where the demographic dividend is still working in their favour.
  • Sp
    Scott p.
    29 May 2018 @ 08:37
    Raoul, I would be interested to know what you think of this recent report from the BIS (Https:// which seems to run counter to your prediction that an older population is deflationary.
    • WS
      William S.
      30 May 2018 @ 22:09
      I'm obviously not Raoul but...1) The CB's and BIS are sworn inflationists. The debts (as an aggregate) cannot be paid without cascading defaults in deflationary environments 2) This is why they print and QE 3) This is the real contentious point that only time will tell - if the CBs don't QE we get a deflationary crash that makes the Great Depression look like nothing more than a blip. But if the CBs really go into helicopter money mode to stem the deflationary tide, they truly risk the total collapse of confidence in the underlying currency. This is clearly beyond inflationary - it's hyperinflationary. 4) From what I see the world is exists dead in the middle of two enormous tectonic plates ripping at each other, one plate is that of enormous deflation, the other is a plate of hyperinflation and confetti money (worthless, see Weimar/Zimbabwe). In real terms I believe Raoul is 100% correct. Consumption, standard of living etc face enormous headwinds. REAL economic standards of living are set to drop off. My question is; do we see a Japanese style deflation in perpetuity for the next ~30 years or does confidence in this mess erode to the point that currencies just start blowing up and hyperinflation decimates real socio-economic stability. Again, I think Raoul's macro perspective is spot on but there is the distinct possibility (in my view) that his bleak outlook will actually prove to be understated as things unravel in ways most people just can't fathom (like hyperinflation).
  • PV
    P V.
    21 May 2018 @ 02:56
    Fantastic as usual... 100% agreed "demography is destiny". Only one issue: the ever increasing stock of debt. At some point policy makers are going to have to do something about it. Especially if the size of central banks' balance sheets is going to balloon as Raoul, in my view correctly, anticipates. They will need to debase the currency, by hook or by crook and therefore reduce the debt/GDP ratio. What then? The only scenario that would satisfy both conditions of deflationary scenario driven by demographic and the growing stock of debt is stagflation....
    • MY
      Michael Y.
      30 May 2018 @ 03:59
      Is this how ICOs re-write our credit/debt market?
  • RO
    Robert O.
    24 May 2018 @ 03:13
    It would seem that the buyers of the next crash will be the people who currently have the assets, the 1%. So what is left of the middle class who own the market through their pension plans and investments will see a 40% to 50% drop in the value of their holdings. If the middle class sells into this market crash then the 1% will get another buying opportunity like in 2009. If the Fed comes back in to support the markets then we repeat the wealth transfer from the middle class to the 1%. My belief is that society can function without the 1% and the very poor but cannot survive without a middle class. At some point the implosion of the middle class into a financial black hole will result in a series of vital services that become unavailable. The transition will likely occur over a short period of time; too short for government actions to address this short of martial law. I believe that Eisenhower's military industrial complex has morphed into a Tech (FANGS)/Financial (Big Banks) Fascism partnership with both major political parties. So how do you get the politicians to vote for term limits and limited government, while breaking up the big Tech stocks and big banks? Raoul may be worried that we will follow the path of Japan, I'm more worried that we will follow the path of Venezuela (a country with great natural resources but poor leadership and citizens willing to believe the Big Lie - Socialism).
    • MP
      Mark P.
      28 May 2018 @ 23:37
      Seems plausible, but it occurs to me the idea of a large middle class, like retirement, is relatively new. Maybe we get a small middle class a smaller ruling class and a giant poverty level cohort. And populism is just a word, 'meet the new boss, same as the old boss.'
  • GL
    G L.
    28 May 2018 @ 22:15
    Excellent piece as usual from Raoul! Also, amusing @ 15:28min: "some things have seen deflation, such as the price of Real Vision..."
  • CH
    Connor H.
    26 May 2018 @ 04:10
    You should put this on You Tube so my Aunt and Uncle can watch it. They are retiring boomers and can't afford a subscription to RealVision, even with the deflated price :)
  • rs
    ross s.
    24 May 2018 @ 00:40
    I’m numb....lots to digest...amazing piece.
  • KR
    Kristian R.
    21 May 2018 @ 07:12
    The charts. A download link with all the beautiful charts used in many of RV's segments would be amazing. Much like the "Download Transcript" button above ^^^
  • BB
    Bojo B.
    18 May 2018 @ 13:33
    Excellent presentation, more stuff like this! We live in a dictatorship of instant gratification and positive thinking. It seems we will just be going from one ''solution'' to another ''victory''... all up to the final disaster. After a certain point, things start unfolding on their own.
  • WB
    William B.
    18 May 2018 @ 06:46
    May I share this will siblings and daughters and perhaps even a few friends.? This is so good! BB
  • CM
    C M.
    18 May 2018 @ 03:40
    I agree on the comments about fast food vs grocery. You can buy fresh vegatibles and fruit at reasonable prices at the grocery, as well as basic starches like rice and potatoes, much cheaper than eating at a fast food restaurant. Agree on the car market. US manufacturers are betting on China. The big question mark is the millennial generation and how they impact spending. But the distortion in wealth will impact middle class spending in retirement.
    • CM
      C M.
      18 May 2018 @ 03:41
      Agree with listener comments on fast food, not Raoul's.
  • EF
    Eric F.
    17 May 2018 @ 23:13
    I would like some clarity here re crypto. Initially Raoul boldly stated bitcoin could be worth a million per coin. Then he moved his position to sell and it being virtually worthless. From this presentation I gather he now sees a future / place for it?
    • JO
      JOHN O.
      17 May 2018 @ 23:26
      He said it could be worth a million, or zero. I suspect his crystal ball is as cloudy as mine is.
    • IS
      Ian S.
      18 May 2018 @ 03:33
      Time preference is key. The answer is both.
  • TR
    Travis R.
    17 May 2018 @ 18:28
    Outstanding thesis and presentation. However the narrative that it is less expensive to eat fast food then buy groceries and cook at home is rampant and false. In the real world it is far cheaper to shop at Costco then eat out.
    • JO
      JOHN O.
      17 May 2018 @ 23:28
      Agreed. Even at Wegman's a family can buy real food and eat cheaper than fast food. And think of how much cheaper their medical bills will be!
  • JO
    JOHN O.
    17 May 2018 @ 23:24
    Excellent presentation. Even the mass-affluent, the next 10 - 20% need to be worried. Although anyone that is thinking that getting out of equities at age 60 and living on their bonds or worse, going 60/40 and trying a 4% withdrawal is aching for trouble. One way I see avoiding sequence of returns risk is to segment your retirement years and invest each segment based on the time horizons until you will need to harvest each segment of capital and put it into an safe, income generating account or vehicle - and never be taking your income from an account that is exposed to equities. If I am 60 today and will not need a segment of my capital until I am 85 (Mom & Dad are still going strong in the early 90's), I can afford to take substantial equity risk with that 25-year segment (although I might want to rethink my target rates of return given Raoul's view of the next 10 to 15 years). If I hit my target for that segment early, I de-risk and move to something safer.
  • DY
    Dmytro Y.
    16 May 2018 @ 04:50
    Great video, thanks, enjoyed it very much. Playing devil advocate and provoking thought process: - baby boomers time horizon is now another 15-25 years of life and investment. Long enough to survive the fall in valuations and get recovered to New Highs; - government/CB are likely to soften the correction by purchasing the equities or a new stimulus (?); - BB get more cognizant to loss of purchase power by any fiat currency and advantage of equities vs bonds (W.Buffet and Ken Fisher are Big advocates to US public about that !) - BB may NOT sell as much equities as Raoul thinks (?) or may repurchase it; - loss of 70 mln BB to retirement is significant but 2000-2018 US population added 43 mln people AND median age of 38 so people coming to peak earnings and age of more investment and wealth building; - US and other companies are doing more and more business in countries like India and China where 70 mln is just one big city :) Rise in consumption in India was largely advertised by Raoul. Perhaps retirement of 70 mln over next 5-10 years is NOT going to be a such a big blow to equities and property markets after all. Though Raoul's point are well noted and respected. Good ground for thinking.
    • DY
      Dmytro Y.
      16 May 2018 @ 04:51
      The above thinking is just from market perspective and for top 5-10% of wealthier people. The poor will struggle but this is the ever darker case for retirees in China, India, Argentina, Russia...
  • VM
    Vincent M.
    16 May 2018 @ 03:27
    One items that many see to pass over is that concentration of wealth shown in your charts (retirement assets vs median retirement assets ) I’ll call it the 1% factor is that the top savers will be less likely to sell their assets. This difference is huge. Does it project that their will be less selling as the rich just hold on for income? Or do we see more taxes to protect social order. Lastly does immigration offset these to some degree thus making the US less dire than the Japan scenario.? Thoughts welcome.
  • TM
    The-First-James M.
    15 May 2018 @ 15:02
    Raoul, I would love to see you and Chris MacIntosh of CapitalistExploits discuss and debate this issue together on Realvision. Chris sees many of the same risks as you do, but believes the outcome will be inflationary as a by-product of ongoing currency debasement by Central Banks to try to stave off the inevitable, combined with the rise of the strongmen (like Trump) who will adopt a more insular approach at a Government level where we may eventually see a partial rolling back of the Globalisation experiment of the post-WW2 Era. Tariffs are an example of this, and these are going to be anything but deflationary for the production costs of manufactured goods. We also have a bill being debated in the Russian Parliament proposing to cut off supplies of enriched Uranium to the US Nuclear Power Industry. Again, the outcome of this kind of policy is not going to be deflationary. Chris recently put together a Bitcoin Update presentation for members of his "CapitalistExploits Insider" service, and I would recommend you ask him for a copy of it to view when you guys next talk privately. One idea I have mulled over (as a younger Gen-Xer) regarding the Millennial Generation and Cryptocurrencies is, the one thing the advent of this asset class is doing to the Millennials is making them question the nature of just what is money/currency. Based on observational evidence on Social Media, more of them are waking up to the scam of the post-Bretton Woods World of debt-based fiat currencies. When the Central Banks step in to 'save us' from asset price deflation in the teeth of the Boomer retirement crisis, I suspect many millennials will rightfully see this as behaviour that will continue to elevate the prices of housing and other assets beyond their reach, and may then see ownership of Cryptocurrency as a means of pushing back against the Central Banks as an act of rebellion. This really is hypothetical, but I wonder if this could then trigger the secular inflationary pulse in the real economy that has been absent from the system so far - particularly as a growing number of businesses will now accept cryptocurrency in exchange for their goods/services. Just a thought... One observation I will make is that I have read Neil Howe's "The Fourth Turning". I have not studied it anywhere near as closely as I'm sure you have, but Neil did make the point that in order to resolve the crisis in the most constructive possible manner, the Baby Boom generation would increasingly need to pull together with the Millennials and sacrifice whatever wealth they could afford towards the resolution. Right now, given the current political class and central bankers, I don't see this happening - particularly given the recent howls of protest in the UK during the last general election when Theresa May proposed making the Boomer generation contribute towards the costs of their elderly care. They did not like it one bit, and it almost (ironically) resulted in the election of Comrade Corbyn. I therefore think the resolution of this crisis is not going to be at all pleasant and I can only hope we don't see trade wars erupting into hot wars in due course.
  • PD
    Paul D.
    14 May 2018 @ 13:39
    I would posit life expectancy is going up at an arithmetic rate, not an exponential rate. Also as regards the participation rate, if one has retired do you fall out of the BLS calculations? If that is the case (I am not sure if it is), then the chances are they could have a positive effect on the participation rate (denominator declines, numerator remains steady as those that stay in the labor force are there to work).
    • PD
      Paul D.
      15 May 2018 @ 07:31
      I have just taken a look at participation rate methodology and it looks like you are correct Raoul. I would be interested to get your opinion of the UK participation rate though - that has actually be rising steadily since the that an immigration thing??
    • PD
      Paul D.
      15 May 2018 @ 07:50
      I have just taken a look at participation rate methodology and it looks like you are correct Raoul. I would be interested to get your opinion of the UK participation rate though - that has actually be rising steadily since the that an immigration thing??
  • PB
    Pieter B.
    15 May 2018 @ 06:55
    Absolutely brilliant work Raoul! Thank you!
  • MA
    Mikael A.
    15 May 2018 @ 02:30
    Retirees coming back to work should be a positive not a negative right? If the future trend is that people work longer the economy should expand not shrink.
  • AB
    Alain B.
    11 May 2018 @ 05:42
    To follow up this insightful presentation and as a subscriber approaching retirement, I would like to suggest that RV produces a series focusing on actionable financial strategies and instruments for a retirement portfolio.
    • EL
      Edward L.
      11 May 2018 @ 16:33
      second the motion
    • JS
      Joseph S.
      14 May 2018 @ 22:54
      I agree.
  • AJ
    Aaron J.
    13 May 2018 @ 19:41
    Fascinating piece which confirms my own guess about deflation being the most likely outcome in the grim scenario outlined by Raoul. But as others have pointed out, there is the niggling question of the exploding US fiscal problem and how this will be funded - and what effect this will have on interest rates around the world. The other question is that if the US reverts to expanding their balance sheet, does this mean that the income inequalities in the system will not finally mean revert, which will keep the post-Boomer generations stuck in a kind of financial limbo? (assuming that low interest rates entrench income inequality by increasing corporate profit share at the expense of labour profit share.)
    • CM
      Chris M.
      14 May 2018 @ 22:32
      I believe that would depend on the timing of QE INF. IDK. Kinda hard to say what the Fed will do, but I have my idea laid out below...
  • TS
    Tyler S.
    14 May 2018 @ 18:25
    so my large scale investment in bullets and seeds might just payoff after all.. ;o(
    • CM
      Chris M.
      14 May 2018 @ 22:28
      Rounds of any size will most likely be a good form of currency at some point. Seeds however, (I) just wash and dry out for winter storage. One you purchase your fruit/veg, harvest the seeds and never have to buy anymore. Only genetically engineered seeds cannot be harvested from the fruit veg😉. But yeah. Coming soon to an American city near you..
  • PD
    Paul D.
    14 May 2018 @ 13:53
    I love realvision, but I have to say I find a lot of the charts you are using rather troubling Raoul. Fed vs BOJ balance sheet - was the BOJ policy response/Abenomics Third Arrow due to demographics, or due to other factors - it is rather tenuous to draw a definitive conclusion from the BOJ experience. Also, on the personal consumption chart, you appear to be using a 10yr on 10yr change chart, but only going back to 2002!....what does it look like if you take it back to 1980, or 1960?? I am guessing the correlation doesn't hold up. I am fully into the baby boomer/pension crisis narrative - pension funds in Europe have been forced out in terms of both duration and credit quality which is going to end in tears and the same is likely to happen in the US (Michael Green's talk about baby boomer mandatory 401k liquidiation a year ago was very illuminating). However, I it feels a little like we are trying to flesh out a well known argument here with some slight dubious charts.
  • MD
    Mario D.
    10 May 2018 @ 22:37
    Great video as always, Raoul! The one question I have is related to your thinking around this idea of the opportunities in the "real economy" as I find this to be somewhat inconsistent with the rest of the presentation. I get the declining AuM expectation part and maybe starting a company is a good way for (future ex-) finance people to make a living without formal training as doctors, engineers, etc. But on the macro picture: If this projected drop in consumption, spending, etc. becomes reality, then just why do you think this creates a lot of business opportunities? Seems to me that small businesses will feel it just as much, or even more when the big guys need to respond to a deflationary consumer mind-set.
    • CD
      Chris D.
      14 May 2018 @ 10:37
      Mario Draghi, is that you? ;-)
  • gd
    gerald d.
    14 May 2018 @ 05:40
    Great stuff!
  • KS
    Kathleen S.
    14 May 2018 @ 00:45
    If you are interested in what will happen when pension funds start to go bust I suggest you go to this article from zerohedge -- so this is how politicians plan on solving their mismanagement of pensions funds --
  • DS
    David S.
    13 May 2018 @ 21:43
    Retirement is a great idea, but a new idea. The average Joe in the 19 Century and before worked until he could no longer work, or died. Retirement for the average Joe/Jane in the 21 Century may be the same because governments always spend the money. The 20 Century may be the anomaly especially with the coming of the robots. DLS
  • DS
    David S.
    13 May 2018 @ 21:36
    Raoul is on point. I would prefer, however, that the pension portion of Social Security not be called an entitlement. The employee and employer both paid into the system - all those baby boomers. It was Congress who borrowed all the money and cannot pay it back. To my knowledge Congress has its own pension fund and does not pay into Social Security for the same reason they have their own health care system, In addition Congress mandated pension reserves for everyone else, but funds all the Federal pensions out of the current revenues. Who was watching the hen house? DLS
  • CH
    Carl-Magnus H.
    9 May 2018 @ 14:30
    Thanks, very good analysis. I´m living in Sweden and the retirement issue is on the agenda here also. The retirements age is formally 65 but will for sure increase over time. Also many seniors persons also are fit and healthy so they will live for long time. This will sharp increase cost for healthcare and medicine for the society.
    • MS
      Matt S.
      13 May 2018 @ 21:08
      Unless that is, they keep picking up hand-grenades they keep finding lying in the streets.
  • CL
    Charles L.
    9 May 2018 @ 13:19
    Brilliant and concerning. I'd be concerned about what would happen to currencies with labour force dropping and pensions failing. I wouldn't want to put all eggs into crypto nor startups. What the hell happens to cash?? Great music btw!
    • SP
      Sat P.
      9 May 2018 @ 13:25
      Agreed, the music was brilliant in addition to the high quality of the information, very complimentary
    • MS
      Matt S.
      13 May 2018 @ 20:54
      but very poorly edited-in - quite clumsy I felt.
  • VP
    Vincent P.
    13 May 2018 @ 17:46
    As an early retired baby boomer myself and fortunately financially secure, it's difficult to witness friends and relatives of our generation notably struggling with the aspect of retirement. It it also true of the extreme difference in the financial and lifestyle behavior of millennials as well. So all in all, a terrific presentation and in my view right on point!!
  • CM
    Chris M.
    13 May 2018 @ 16:56
    Wow! Well that was/is quite a lot to digest and mull. I have been a long proponent of equites being far too overvalued. Now that the FED is normalizing, raising rates, and there is euphoria around markets, it’s time to look at this demographic phenomenon pretty seriously. I never realized that the labor participation rate was so closely correlated to the boomers leaving the work force. I see it now. Credit crunch is going to exacerbate the ability of money velocity to increase in any way form or fashion. Especially since defaults in almost all forms of lending are beginning to increase. This is tenuous at best, but yet we still see credit service tickers posting spectacular earnings. Where is this skewed? There is another situation arising that concerns me in regard to increasing national debt. This is my thought, (could be batshit crazy here but my thought regardless) the FED shrinks it’s balance sheet to spark a recession, underestimates the consequences of that action and sends the US into a 1930-40s depression, then (as you point out) begins to print til there ain’t no more paper left, causing a massive imbalance in the financial market, and then, after the next cycle ends the whole house of cards crashes on top of my sons generation. He’s 4. It appears to me that we, (I) can take advantage of this using inverse tickers, or optionable equities in targeted areas such as, REITS, lending, auto makers, etc. The long play that I liked (and technically sound) was the gentleman that presented his trade idea on symbol ‘HCP’. That would be my long play that I like a lot, and fits very nicely into this summation of the coming shift in a massive generations impact on the financial sector. Thank you Raoul, I cannot tell you how thrilled I am to be here and watching these presentations. Great work man Chris
  • RI
    R I.
    11 May 2018 @ 13:06
    The rising tide of retiring boomers will certainly come to pass. However, it will likely be an inflationary outcome (not deflationary as Raoul hypothesized). Deflation was the product of the improving age dependency ratio over the last 40 years as boomers were of working age, but that ratio is reversing as retirements increase which will result in secular inflation. Consequently, as boomers sell their financial assets to fund their retirements (as Raoul points out), higher interest rates and falling valuations of financial assets (i.e. the selling of both bonds and stocks) will cause real assets to become relatively more attractive (such as gold as Raoul mentions). Last but not least, the monetization of debts in the form of debt jubilees, currency debasement and/or similar desperate measures by central banks will be (hyper)inflationary. Among the various evidence available, the aforesaid is corroborated in the following working papers: (1) (2) (3)
    • BP
      Brandon P.
      11 May 2018 @ 18:47
      I am thinking along similar lines. So long as governments (central banks) have the ability to print fiat, they will do so in order to avoid deflation. It seems that all modern economists study one issue: how to prevent the Great Depression from happening again. This leads me to believe hyperinflation is baked in, not from economics/demographics, but from a currency debasement and access to printing view. It seems our nasty contortion of a market could see hyperinflation lead us into the ultimately deflationary outlook Raoul expressed here. Real Vision - inflation v. deflation is the question of our era. Would love to see Raoul (deflation) debate someone who holds a view of inflation. Great work, much appreciated! Commodities, crypto, and cash seem like the only assets worth allocating to in this environment.
    • DV
      Daniel V.
      12 May 2018 @ 03:15
      A second on the Deflation verse Inflation debate!
    • MS
      Michael S.
      13 May 2018 @ 14:53
      I thought he said he was on board with the "REflation" probability? That's what has to happen anyway -- a default by whatever means, inflation or putting a bid in for gold, and this demographic cliff will probably force that move.
  • VS
    Vasil S.
    13 May 2018 @ 11:42
    After referencing the Baby Boomers will be unable to 'buy the dip' (as all their wealth would have disappeared in the next crash) Raoul then says "the gen X's and Millenials, they can't afford to buy that dip"! What does he mean by that?
  • BP
    Besar P.
    10 May 2018 @ 03:58
    Pretty good insight. But what if we have a situation like Australia with no recession since 1991. We would be waiting for more than 27 years for a recession. Thats someone’s entire investment horizon spent sitting on the sidelines. Maybe we’ll have the return to the mean with S&P 500 yielding over 3.5% in dividends, not via a crash decline but as a gradual and slow decline as baby boomers start moving from accumulation to withdrawal phase. Also in the future we could have universal income show up and that might change the whole secular deflation narrative. The interview points are excellent though and very realistic.
    • RP
      Ron P.
      10 May 2018 @ 06:14
      Australia is living on borrowed time with its property bubble and has been for a loooong time. Just wait till that pops and the chickens come home to roost.
    • sB
      sylvain B.
      10 May 2018 @ 09:18
      Australia had been lucky to get the chinese next doors
    • AC
      Andrew C.
      13 May 2018 @ 10:56
      Supply and demand; Australia has a large inward migration, keeping up demand. Supply (housing in particular) is restricted with government inaction on new developments or any changes which may upset the Australian Boomers (with most of their assets tied up in housing). Australia still has a long way to go before the chickens arrive to roost, in my humble opinion. Not saying it's good, it just "is"!
  • LC
    Liliana C.
    13 May 2018 @ 05:42
    Thought provoking indeed! As we all know all too well, Capital moves around the world quickly and the US stock market is represented by a large number of multinational companies. Why wouldn’t the growing number of wealthy emerging market individuals buy the equities of the selling baby boomers especially if they go on sale? I do see the problem facing the developed world, but I also see lots of consumers in very populous countries like India, and China and further out as China ages, possibly Africa? Lots of moving parts in the puzzle! Thank you Raoul!
  • Nv
    Nick v.
    9 May 2018 @ 14:17
    I wonder if wage inflation explodes as the labor force shrinks...
    • RP
      Raoul P. | Founder
      9 May 2018 @ 14:19
      It didnt in Japan. retirees can complete for jobs at low wages as they have some pension. Also demand in the overall economy slows and that slows wage growth
    • TH
      Tim H.
      13 May 2018 @ 03:39
      When the plague wiped out a third of the population of Europe in the the 14th century, the result was massive inflation. Why? Sure the number of people leaving the workforce by virtue of falling over dead resulted in a massive loss of demand, but it also resulted in massive loss of productive labor. Those who survived (the reduced working population) found that they had great bargaining power for wages because, guess what, those surviving wealthy elites still wanted stuff and needed labor to create it. In addition to those tripled wage rates causing serious inflation, the increase in wages also resulted in a massive redistribution of wealth and was arguably the genesis of the middle class in Europe. By the way, unlike the case of the plague where those leaving the workforce (dead) had zero demand, retired baby boomers will have a reduced but still material amount of demand, especially for health care. Sprinkle in a good dose of currency debasement in our current world, and inflation could be off to the races.
  • SW
    Scott W.
    9 May 2018 @ 14:25
    Great piece, loved it, why I love RV. Question(s): IF the majority of equities are held by the 1%/10% is there still the pressure to sell as the richest of the boomers retire? IF the majority of the boomers hold negligible equity positions (~20k?) - does their collective retirement have the impact? Won't the 1% boomers want to hold equities going forward, perhaps to hedge against longer life expectation, low interest rates and expected fed monetization - and therefore not sell in the manner depicted? Another way to state it, maybe the ownership distribution is such that those of the boomer cohort who NEED to sell don't have the equities to sell (by and large); those of that cohort who have the equities, don't need to sell them. All relative of course and a function of said distribution, but perhaps it warrants some clarification?
    • RP
      Raoul P. | Founder
      9 May 2018 @ 16:19
      Interesting point.
    • PD
      Peter D.
      9 May 2018 @ 23:14
      This is actually a great point. Try this: If the Fed starts buying equities, it does not sound like it would take much effort to buy out almost all the holdings of the Trailer Park set. (say a couple of trillion USD). Raoul: if you guys at RV have some extra time on your hands, I'd like to see you game out the limitations of Fed equities purchases. There is no doubt that this is where things are headed. The question is far can they go? Can they buy out the entire economy?
    • PP
      Patrick P.
      10 May 2018 @ 08:46
      The 1%/10% with assets will need to sell some of those assets to pay the taxes that will be imposed on them to support the poor 90%.
    • AA
      ALI A.
      12 May 2018 @ 12:16
      Very valid point, which calls into question the suggestion that equity-selling will be material at all...
    • TH
      Tim H.
      13 May 2018 @ 03:29
      As with many of the comments above on this topic, I think it better not to focus on the top 1% or the have-nots in the bottom 50%, but rather on a whole lot of baby boomers in the top 50% to 95% demographic (which I'm guessing applies to many people reading this) who absolutely are going to sell a lot of assets as they transition from age 60 to 100.
  • ZY
    ZHENG Y.
    9 May 2018 @ 15:00
    is the ending music too "intense"? anyway great to see Raoul new sharing... Btw, i am millennial in SG here, trying hard to save and invest. Raoul is quite right about the crypto thing, the risk/reward is drawing our attention.
    • TH
      Tim H.
      13 May 2018 @ 03:21
      I agree about the music. I love real vision and have been a paying customer from the very beginning. But please, back off on music so as to never interfere with the speaker.
  • GS
    Gordon S.
    9 May 2018 @ 15:11
    Thanks RV for this excellent piece! I loved the Fed’s balance sheet charts. But given the current correlation between Fed balance sheet and stocks and the tendency of the Fed to micromanage the stock market (though Powell seems to be less in that camp?), wound’t that in theory be bullish for stocks? What if the Fed uses its balance sheet power to prevent a stock market crash (directly or indirectly), because of that some of the injected cash is inadvertently directed towards commodities (as for example is suggested by Michael Oliver in his latest interview on RV) creating inflation, crashing bonds, redirecting even more capital towards commodities and creating an inflationary spiral? One of my all time favorite reads remains Artemis Capital’s paper: Volatility at World's End: Deflation, Hyperinflation and the Alchemy of Risk suggesting that because the fed is so desperately focused on the left tail (deflation), maybe it’s the right tail (inflation) that will hit us. Maybe even through the left tail: “Our fear of deflation may damn us to hyperinflation. Even if we fall over the waterfall of deflation first at the very bottom of that abyss may be the fire.” Of the 100 million barrels of oil consumed each day, 20% flow through the Straight of Hormuz. What if that gets disrupted? One oil tanker blowing up and oil goes through the roof? Given the current geopolitical developments, being bullish on trailer parks may be too rosy. Though ethically (at least for me) far more problematic, it looks like the defense sector is having a good time. I think everyone should ponder a lot more about what will happen with this coming tsunami of trillions upon trillions in central bank liquidity. Unfortunately, I don’t know in what world these central bankers live, in thinking that they will now be able to “slowly withdraw” accommodation. The political implications are massive (the political independence of central banks has long been lost!). In a nutshell, from my understanding, in the last crisis Federal Reserve & co indirectly inflated up every asset class one can think of to not only create massive capital misallocations (financing government deficits & facilitating debt fueled share buybacks), but also created massive inequalities as most of these financial assets were and still are in the hands of the 1%. I loved Raoul’s finishing touches on entrepreneurship. There are so many challenges that need to be fixed. The world would become a much better place if some of these trillions are used that way (which to some extend there at least already). Unfortunately, under the current setting, I believe central banks will do more of the same in the next crisis. C.f. Kenneth Rogoff, Professor of Public Policy at Harvard University in Davos this winter: “But eventually, we’re going to have another deep recession or financial crisis. Not tomorrow, not soon I hope, but it’s going to happen. And if countries don’t prepare for it it’s going to be much worse than the last time because interest rates are already near zero, quantitative easing is ineffective and helicopter money is a silly idea. That’s why I think that in the future we will see the major central banks and Treasuries of the world all prepare for having much deeper negative interest rates the next time we have a financial crisis. It’s a much, much more elegant solution than anything that’s been proposed. (???!!) So I think many countries will prepare for negative interest rates and I would say within the next decade it will be in every central bank’s tool kit.”
    • TH
      Tim H.
      13 May 2018 @ 03:18
      Hail Mary, full of grace...
  • GO
    Gary O.
    12 May 2018 @ 23:47
    All the sheep are in trouble. You are right Raul, people need to do "something" now!
  • CR
    Chris R.
    11 May 2018 @ 10:20
    I would love to see a peice on “Japanification”—a review of the mechanisms at fault for the last 20-30 years of Japanese financial history, there experiences with QE, and possibly even some analysis of likely outcomes or debt jubilee.
    • CR
      Chris R.
      11 May 2018 @ 10:20 edit function and major pet peeve grammatical error. “their”
    • GS
      Gordon S.
      12 May 2018 @ 23:11
      In case you haven't seen the latest interview with Bill Fleckenstein, some of your questions are discussed there:
  • DH
    Daniel H.
    12 May 2018 @ 21:33
    I wish Raoul had added in the outlook for the dollar, with $100T of unfunded liabilities ahead. It might change some of his outlook -- stagflation for example.
  • PG
    Philippe G.
    12 May 2018 @ 18:14
    Excellent! Would love to see follow up videos and interviews! Food for thought: - How are politicians and regulators reacting given that baby boomers tend to vote and write to and call their elected representative much more than your average 20-something? - How are insurance companies, healthcare providers, consumer discretionary/staples, etc... positioning themselves? What are the investment opportunities? - Emerging cryptocurrencies and blockchain themes? How can your average investor position themselves?
  • WM
    Will M.
    12 May 2018 @ 16:24
    Superb piece. I had heard some of Raoul's thoughts on this before. I think he makes a well founded argument and many this charts were strong evidence to support the theory. I really do understand Raoul's point on bonds yet I find it so difficult to believe that a sovereign debt crisis is not almost upon us. My concern is the financial panic that will ensue in our currently unstable system if say, the ECB stops buying Euro government debt and nobody else picks up the slack due to the artificially low interest rates. I also wonder how the dollar will affect this. The potential seems almost balanced for the USD to rise strongly..... or fall significantly. I am fully aligned with Martin Armstrong's premise that a falling dollar will keep the "game" going for a few more years but that a rising dollar seems much more likely and will precipitate a financial collapse, indeed Raoul and Julian on Macro Investors have presented some great analysis on this already, especially how everything is at key junctures. Interestingly Armstrongs model suggests a much higher stock market is in the offering because nobody will want to be in government bonds. As an about to retire baby boomer I took this excellent piece very seriously. Thank you Raoul.
  • GG
    Gary G.
    12 May 2018 @ 14:01
    By the way, Raoul, this is an incredibly important “article”. I suggest that it is SO important that it should be made available to the public, i.e. non-subscribers. I always have enjoyed your discussions!
  • GG
    Gary G.
    12 May 2018 @ 13:59
    If I were anointed to be, for a day, the Fed, the Legislative Branch and the Prez, (this is U.S. centric, but equally applicable to Japan, the EU, etc, I would: 1. As the Fed, buy up ALL U.S. debt, and perhaps even the debt of the “sick” states and locals such as Illinois. 2. Forgive the debt on the basis of cleaning up Entitlement Programs such that existing commitments are honored but future commitments are drastically scaled back and LOCKED. 3. Demand a balanced budget and laws that limit deficit spending and require a 3/4 Senate and House vote to exceed revenue for more than two consecutive years and no more than three years in 10. 4. I’m inclined, but not sure, whether torRequire legislation that would tie the USD to gold/silver. Need to think through that in the context of 1-3 above. I expect a lot of “down-votes”! ;->)
  • CR
    Cristian R.
    12 May 2018 @ 12:50
    Absolutely fantastic piece. Really has put a dent in my inflation theory. It's also worth noting that the US has far better demographics than Europe or Japan (or China!). My only gripe is the comment about eating fast food being cheaper than cooking. I'm in Australia so maybe the US is different, but eating fast food is relatively expensive. Another issue is the growing health concerns regarding fast food, Coca Cola is already having to cannibalise itself due to the growing awareness that refined sugar isn't the best. How much longer do vegetable oils have? Refined grains? These foods all became staples of our diets because they have great economies of scale, not because they are healthy.
  • RD
    Ravi D.
    12 May 2018 @ 10:52
    Hi All, I don't usually comment, but RV - very good piece ! To a large extent I concur with this thesis. long-term investment hypothesis for the last several years has been the 3D scenario - debt, deflation and demographics. Barring a few spots (India, Middle East, Africa) large parts of the developed markets (and even some EMs like China) are aging and this will structurally shift consumption to lower growth trajectories. Also total stock of global debt ($220t) is roughly 3x size of global GDP (around $80t), so even debt-fuelled consumption growth is probably at its limits. Combining these two you get the mostly likely scenario is weak growth with frequent, shallow recessions and non-existent inflation, perhaps even bouts of deflation. Interest rates will soon be headed lower again and central bank QE will return with a vengeance
  • CA
    Craig A.
    12 May 2018 @ 04:54
    Raoul Pal you forgot one important aspect of the equation and that is migration. Even if migrants don't invest into equities they play their part in consumption.
  • BP
    Besar P.
    11 May 2018 @ 12:02
    One thing to note too. The central banks might not necessarily have to start buying ETFs like the BOJ; but rather companies would be buying their own shares back similiar to what is going on now.
    • NI
      Nate I.
      11 May 2018 @ 23:48
      I believe the buyback sham ends soon. Many companies in the S&P 500 now have negative tangible book values as a consequence of accumulated debt used for buybacks. If interest rates go up, stand back. Siht will hit the fan.
  • EL
    Edward L.
    11 May 2018 @ 16:36
    the dichotomous possibilities of evolution seem to demand constant revaluation and education of the subject matter. So much depends on time horizon as that may explain much of the differences between Julian and Raoul. Either way I am cautious regarding equities. I appreciate continuing programs on this matter.
  • CC
    Carlos C.
    11 May 2018 @ 14:55
    Absolutely really, I will! Thanks so much for putting this together in such polished form.
  • SD
    S D.
    10 May 2018 @ 13:56
    I agree with you that this is one of the great untold stories. Another example of how badly Western populations are being damaged by the destruction of the Fourth Estate, thanks to Zuckerberg, Brin etc. Your lonely voice on the topic is much appreciated, I urge you to make sure this piece is distributed to personal finance and business editors at the major (haha) publications. People have a right to information on this topic, and they certainly need to be reminded about it. Your conclusions are useful but a bit thin on the ground as of yet. I don't subscribe to advice to move to benefit from the currency because the entire monetary system is in flux and about the change drastically. Bit like all the Brits concerned about residency status in Europe after the Brexit vote.
    • JC
      John C.
      11 May 2018 @ 07:54
      Big Tech are the ultimate examples of the 1%. They are completely oblivious to how the rest of the country lives and the problems they face and lost in their own echo chambers. Look at Zuckerberg's wooden, nothingburger responses at the Congressional hearings. They clearly will do nothing about privacy, data breaches etc. until forced to which might not ever happen. Amazon's employees, many of whom are actually contracted out and not actual employees, are scared to miss a minute of work time and live under a fairly oppressive work culture. Look at how Whole Foods service dropped & how their employee satisfaction went down once they were put under the Amazon umbrella. Unfortunately with Bezos moving to DC and becoming even more and more tied into the political sphere it's likely to get worse before it gets better.
  • VS
    Victor S. | Contributor
    10 May 2018 @ 20:43
    Raoul -i would love to debate you ? You overweight demographics. It is important but what about govt debt? What about fiscal policy ? What about central banks giving money to people not to banks al-la Zuckerberg “Universal income “ that would cause hyperinflation? What about Mexico’s immigration into the US at high rates ? Have you any idea how worker participation is calculated ? Lots to retort your theory of demographics being the end all. Your market call is 100% correct but when is the issue not if? Thanks for the analysis however.
    • PG
      Peter G.
      10 May 2018 @ 21:27
      I hope Real Vision will have Vanguard’s Chief Economist on, as they have a fairly comprehensive rebuttal to this argument —->
    • JC
      John C.
      11 May 2018 @ 07:49
      "Universal Income' is just another massive government hand-out scheme that the (dwindling) taxpayers get stuck holding the bill for, and Zuckerberg is such a hypocrite.Facebook faced practically zero regulation, totally open free market for him and his business cronies and he now has almost monopolistic power in the market, but when he gets rich he goes full on socialist at the public level and screams for more Big Government and regulation. Oh yeah he has an entire army of bodyguards and erects walls around his various real estate compounds too - not exactly a man of the people or even one who is able to 'relate' to the average Flyover country citizen. .
  • AD
    Anthony D.
    11 May 2018 @ 04:49
    Very stimulating piece... but this inflation thing I have trouble with. I now pay a medium sized mortgage payment a month for a HD health plan, family of 4. Higher education has been running about 6% to 8% for decades. Are you suggesting my 8 and 10 year old will cost less to send to Harvard in 10 years? Lets not talk about all the tax and service inflation as well.
    • JC
      John C.
      11 May 2018 @ 07:45
      To be honest the entire education complex needs to be re-thought out and US universities might not be the best place to send your children in the future especially if it costs upwards of $200,000 per child for a 4-year college degree. That said I think Harvard or any Ivy or top private or public school will still probably be worth the cost due to the connections and how it looks on a resume.
  • mj
    miztaken j.
    11 May 2018 @ 03:56
    Price of RV subscription, deflating indeed ;)
  • PD
    Pat D.
    11 May 2018 @ 00:54
    One man's opinion can turn out to be a paradigm shift for another. Great insights!
  • SR
    Steve R.
    10 May 2018 @ 21:31
    So if, as you point out, the US will have to ultimately expand its balance sheet to prop up the pensions and retirement plans for the baby boomer generation, then arguably, the Fed will always have to support the markets going forward? It's the ultimate Fed PUT? So, markets will never truly correct, and you always 'buy the dips'? Will the markets just trade sideways for the next decade?
  • Sv
    Sid v.
    10 May 2018 @ 18:48
    wow. We always get real meat from Raol. Worth the price of admission.
  • DV
    Dimitri V.
    10 May 2018 @ 18:35
    Always very insightful, love these long-form think pieces
  • GP
    Gero P.
    10 May 2018 @ 18:27
    Beautiful video. Thank you
  • WE
    William E.
    10 May 2018 @ 17:19
    Great to hear that inflation won't meanifully rise! Given the picture you paint, a generation already under invested would be completely crushed if inflation surged for any meaningful time. Would make an already bad situation collaspe.
  • RC
    Roslyn C.
    10 May 2018 @ 17:19
    Great episode Raoul. Thought provoking.
  • EH
    Edwin H.
    10 May 2018 @ 17:18
    Now, this is a must watch if you are in the finance world. Now Raoul brings up a very scary reality. However, I see it as we will be going into Winter after an awesome Fall. Before people say Raoul has lost his mind, keep in mind, like he states this could be a very large opportunity. Spring always comes after Winter. I believe this Crisis is on the geological timetable and when it hits, it will hit hard, much like a volcano. Many have tried to predict this, Harry Dent, David Stockman, Peter Schiff, etc. It will happen, just a matter of when. Until then, one has to play the game that is in front of them. Bravo Raoul and Real Vision, talking about a topic, mainstream media does not want to.
  • TP
    Tom P.
    10 May 2018 @ 17:14
    Great video. I don't agree with everything. But I don't need to. Thanks for your sharing your insights on this platform.
  • MS
    Martin S.
    9 May 2018 @ 15:52
    Great video! The juxtaposition of the FED balance sheet with boomers retiring was especially interesting. So to paraphrase, if I understood properly, as people retire, the fed will increase its balance sheet, purchasing securities in order to keep prices up. This, in turn, makes securities artificially expensive, so that millennials can't afford to buy the dip. And we can get an idea of how that works by looking at the JCB balance sheet. This is presented as sort of a foregone conclusion ... but it doesn't have to be that way. Has anyone ever thought about what would happen if the fed didn't intervene like that? It seems like if the fed just let the market work, just let the crash happen, prices might come down enough so as millennials could afford to buy the dip. Naturally, paper wealth would be destroyed, but it might be more healthy for the economy as a whole to give the next generation a chance in that manner. Also, as Raul points out, the top 1% owns most of those assets anyway, and are certainly the people who could most afford to lose some of that wealth. I'm not sure that I would have a big issue with that. I would support a non-interventionist fed that lets market forces play out.
    • GS
      Gordon S.
      9 May 2018 @ 22:29
      Nowadays, everything is credit, i.e. each asset is someone else’s liability. The system is so leveraged, that any drawdown causes the system to crash immediately. The margin for error at a leverage ratio of say 20:1 is a lot smaller than say at 3:1. At 3:1 you can let a few entities go bankrupt before the phenomenon becomes contagious, at 20:1 it happens super fast. C.f. the 2008 crisis. Lehman Brothers went bankrupt on the 15th of September 2008, potentially throwing $600 billion “worth” of asset on the market in the near future. Everything crashed as a result and AIG hat to be rescued ONE DAY later with $85 billion (and more a while after).
    • RM
      Russell M.
      10 May 2018 @ 16:04
      I would like to see your alternative scenario of the Fed not stepping in but political pressure on them to do so would be enormous. Given the history of prior Fed Chairman responses to White House pressure as related in the Greenspan biography, and the ECB and JCB behavior of late, it appear much more likely that Raul is right, that the Fed will buy stocks and bonds to prop up the large Baby Boomer voter block equity pension investments (and keep the massive Federal debt service payments down). Frankly, I don't see how they could resist what would otherwise be a huge political and economic backlash.
  • GM
    Greg M.
    10 May 2018 @ 15:11
    Raoul - your Father isn't buying a new German car because the older ones are better. Less electronics = more authentic driving experience.
  • JH
    Jesse H.
    10 May 2018 @ 14:02
    Sorry for mutliple entries — is there a reason comments on the iPhone app are restricted to lower numbers of characters?
  • JH
    Jesse H.
    10 May 2018 @ 14:01
    ...good places to invest. If the Fed does go to 8 trillion of QE, and frighteningly beyond that, does the dollar become a relic?
  • JH
    Jesse H.
    10 May 2018 @ 13:59
    ...Ponzi scheme like situation in major developed markets with central bank interventionism and chrony capitalism, frankly. I totally agree that entrepreneurship, gold, blockchain and other niches are
  • JH
    Jesse H.
    10 May 2018 @ 13:56
    ...starting a business is the way to go. I thought similarly a coupe of years ago, becoming increasingly disillusioned with what I see as an eventual “Japanification” of US markets and effectively a P
  • JH
    Jesse H.
    10 May 2018 @ 13:54
    Raoul and RV team - thank you. I am familiar with Raoul’s thinking to date, but this video was fantastic in diving deeper into the key topics around demographics. Interesting that you conclude that st
  • CL
    Charl L.
    10 May 2018 @ 13:01
    Thought provoking piece. My biggest takeaway is that it will probably be better to start a business than trying to search for return in the markets over the next few years. Cant wait for the future business related material on RV.
  • TJ
    Terry J.
    10 May 2018 @ 12:57
    Brilliant, and totally mind blowing Raoul. I haven’t watched Bloomberg TV or CNBC for a couple of years because I get a much more succinct and honest market picture with much less noise from RVTV. However, just when I thought I had a pretty good handle on the big picture thanks largely to so many excellent and thought provoking videos from RVTV since it launched, along you come with the most frightening scenario yet! I would love to disagree with some of your forecasts, but after watching the video twice, I find it very difficult to do so. I totally agree with you on the bond market and the Fed balance sheet, but your thoughts on the other asset classes and the equity market in particular have made me really question again my thinking, which was that the X and millennial generations would eventually assume the heavy lifting in stock investment once a new business cycle had commenced following what I hoped would be a brief recession. It was interesting to hear your comments on Goldman Sachs as I was intrigued to recently learn that for the first time in their history, their employees include an incredible 25% who are technical engineers. One or two people I follow have suggested this is because they know a major currency reset is coming as the only way to counter the huge debt across both US and major developed market governments, corporates and individuals, as well as threats to the dollar’s hegemony from the birth of petroyuan etc. I’d love to see you and Grant host a round table on this subject with some of your most popular previous guests such as Kyle Bass, Jeffrey Snider and / or Lacy Hunt, as well as maybe someone RVTV has not previously interviewed like Hugo Salinas Price (apologies if you have, and I missed him). Thanks again for a totally absorbing video that I shall be watching several more times to ensure I grasp all the key issues you raised.
  • NO
    Neil O.
    10 May 2018 @ 12:39
    Raoul, this was very thought provoking and insightful. Thank you for producing the video. One question for you: if the Fed's balance sheet goes Japanese, as you suggest, could that mean companies load up on even more cheap and plentiful debt, buy back shares, de-equitising the markets further, but causing an equity market recovery for the millenials to enjoy as EPS grow strongly?
  • TR
    Todd R.
    10 May 2018 @ 12:14
    Amazing! loved it!
  • DP
    David P.
    10 May 2018 @ 11:22
    I have a few questions related to this: 1) Your point about crypto investing is interesting, as a mean for the millennials to bypass financing the boomers, but i am wondering about the future of an investment vehicle with no yield that does not finance the real economy (ie innovation and good businesses). Looks doomed long term in its current form. Could be a good alternative currency like gold though. 2) That overvaluation of the market could also mean that there is increased accountability and reliability in the financial markets (compared to the 19th century...), as well as a structural shift in the goals of a population that saves more and consumes less. The acceptable discount rate of investments would then adapt accordingly. China seems to be acting according to this motto, and maybe they are right.
  • DC
    Daniel C.
    10 May 2018 @ 11:05
    There is no question that demographics is one of those important long term forces that drive economic cycles and behaviour. The issue is it's hard to pinpoint timing around the effect it has on asset prices and the economy as it interacts with other cycles such as political, technological, cultural. Hence, the conclusion of the piece seems a bit too simplistic ie, baby boomer generation is getting to retirement age hence will need to sell assets to pay for retirement, deflation is coming as recession is long overdue, hence sell equities and buy bonds. (this is very similar to work of Harry Dent who has been predicting another great depression for the last 10 years on the basis of demographics). But who's to say bonds are also not overvalued as we also have been in a massive QE led expansion of CB balance sheets that have depressed interest rates below their natural rate. is the 10year bund at 0.5% a good investment? Also who's to say that the boomers, much like many grand parents don't continue working (ok it may not be a full time job picked up in the statistics but they are still generating an income and may not be selling financial assets to pay for their lifestyle). My issue with these thought pieces is it's very hard to take actionable investment ideas from them and at worst they risk pushing the uneducated investor away from equity markets which are shown over long horizons to outperform bonds especially in an environment where inflation re-emerges, take a look at Jeff Gundlach's recent research if you want to see the other side of the equation. I'm not saying back up the truck in equities at these valuations but I also don't think its prudent to be out of equities and in bitcoin if you want to have a retirement vehicle you can rely on in 20-50 years time...
  • HF
    Hans F.
    10 May 2018 @ 10:48
    May I kindly ask you to tell your viewers how the GMI composite indicator was constructed? Thank you.
  • SS
    S S.
    10 May 2018 @ 06:17
    Isn't one option for the retired baby boomers, to move to emerging market countries where your USD goes a lot further? e.g. Thailand, Philippines etc.
    • sB
      sylvain B.
      10 May 2018 @ 09:17
      aint sure Philippines or Thailand is the rigth choice. Costs of living (for someone that want regular life style), is getting more&more expensive. Would look at EU countries such as Portugal, Spain or Greece
  • jm
    james m.
    9 May 2018 @ 21:48
    So a sharply lower participation rate should have a dramatic upward impact on wage inflation - no?
    • PP
      Patrick P.
      10 May 2018 @ 08:20
      It has not happened that way in Japan... Inflation in Japan for the last 24 years
  • MM
    Marko M.
    10 May 2018 @ 02:49
    So you're saying that the people who don't own any assets are going to crash the market by selling all of their assets. Because they need money to retire, since they have no assets. Sense, this makes none.
    • MM
      Marko M.
      10 May 2018 @ 02:52
      P.S. Immigration is a thing, seems you forgot about that, it may have an ever so slight impact on demographics...
    • PP
      Patrick P.
      10 May 2018 @ 08:07
      It seems to me that the future for the people with assets will include very high taxes to support the have nots...
  • DJ
    D J.
    10 May 2018 @ 07:36
    He makes an interesting point, QE will replace the pension funds as the garranteed buyer of the stock market, to a certain degree.
  • SS
    Swagotom S.
    10 May 2018 @ 05:42
    The biggest solution of the demographic problem of the aging western world, I think, will be eventually tried to solve via heading to a bigger war although it sounds very bad without any doubt. But, post WWII baby-boom is an example. If "the obvious is obviously wrong", an all-out-war seems to be a possibility. Ironically, natural calamities / disasters are good for population boom. *** On a side note, I think RV should bring an interview with J L Collins - writer of " The Simple Path To Wealth".
  • JM
    John M.
    10 May 2018 @ 05:39
    Raoul - congrats, great presentation.
  • DY
    Donny Y.
    10 May 2018 @ 01:51
    Fantastic piece! Great work! Fascinating analysis and insights!
  • CM
    Carl M.
    10 May 2018 @ 01:39
    ..some confusion on my part. are the baby boomers re-entering the workforce or are they opting out?
  • TC
    Tim C.
    10 May 2018 @ 00:26
    Yet - and this is a crucial point - the world's overall population is rapidly growing - NOT shrinking. We live in a time when lawmakers can create swift and enormous changes to the flow of workers worldwide. Raoul's theses make sense only if we see the overall workforce of the US to be in a steady decline. The US is currently slowing the flow of immigration to to what we think is the optimal level. Millions of people from Asia, Africa, and the Middle East (where population growth is rapid) would be only too happy to take jobs, pay taxes, and buy up the houses of the Baby Boomers if given half the chance. The enormous force of immigration can (and will, in my opinion) cancel many of the problems stemming from the aging of the Boomer generation.
  • SS
    Socrates S.
    10 May 2018 @ 00:06
    Private sector pensioners have too little savings and have their purchasing power squeezed by falling yields and price inflation. Public sector pensioners have inflation-linked defined benefit pensions that are severely underfunded and unaffordable. This will lead to a huge clash. Public sector pensioners will say: we worked our lives in the expectation of receiving this index-linked pension, and it is part of our contract of employment, so we are entitled to it. Private sector workers will say: you have contributed little or nothing to the cost of your pension and we are now forced to pay out of our taxes for you to have a pension that is far better than what we can afford for ourselves. Any attempt to reduce public sector pensions will bring the public sector unions out on strike. Any attempt to seriously disadvantage private sector workers and pensioners will cost the government the next election. I speculate that in order to avoid this conflict, governments will nationalize private sector pensions. Occupational schemes and individual pension schemes will be taken into public ownership in exchange for a promise of pension payments from the government. This will not solve the underfunding problem, but it will at least put public and private sector pensioners on the same footing, which will make it politically attractive. Also, the nationalized pension assets can be set against liabilities on the government's balance sheet, bringing down the official government debt, while pension liabilities remain off balance sheet. This makes the government's financial status look much better, albeit artificially.
  • FB
    Floyd B.
    9 May 2018 @ 23:06
    well that was cheery,not sure I agree but think your investment recommendations under your outlook were a bit light. Trailer parks,sell all your stocks,gold and if you are young, Bitcoin?
  • TL
    Tianyun L.
    9 May 2018 @ 19:56
    The analysis is flawed for the same reason you looked at the average versus the median for pension holdings. Share ownership is skewed towards the wealthy, who don't need to wind-down as much to finance their retirement.
    • MH
      Michael H.
      9 May 2018 @ 22:24
      Given prices are set at the margin, his analysis is internally consistent with the fact that the distribution of ownership is skewed. The analysis may or may not be correct, but it isn't inconsistent.
  • LB
    Lex B.
    9 May 2018 @ 22:11
    Today is the last day of my free RV trial... after watching this, I couldn't be happier forking over my money. Thank you Raoul
  • EL
    Emanuel L.
    9 May 2018 @ 15:51
    Very clever people know that the future is not an extrapolation of the past. Well in this case it is, as time knows only one direction. That makes you so sure of your predictions, Raul, and sadly I concur. It is not clear as to the sequence of the fall, but all the dominoes will eventually fall. Asset class after asset class. That is where I want to make my point. The dominoes won't stop at the US border - no wall is big enough to contain this chain reaction. My point is that the US economy will have a japan-like crisis. The dollar as the global reserve currency being the transmission mechanism to the rest of the world. A chaos will ensue, albeit a slow one. Slow enough so people will adjust. And that is where the opportunities lie. What would I do? I would develop housing and care facilities for retirees on the mexican border. Trailer parks? Why not.
    • CM
      Christopher M.
      9 May 2018 @ 20:14
      China 2048. They are trying so hard to raise as many citizens as possible out of poverty. This will bring about a huge move to their own consumer economy. A population of 1.3Bil that's one hell of a consumer base. Also RP new favourite India (1.3Bil), then eventually the rise of billions in Africa (1.2Bil). People need to move out of home country bias, emerging markets will become the newly developed markets.
    • CM
      Christopher M.
      9 May 2018 @ 20:19
      I missed One Belt One Road (OBOR) from my reply. the list of countries touched by the new "silk road" will also increase wealth to the local population. Iran, Vietnam, Russia, Turkey, ... the list goes on.
    • EL
      Emanuel L.
      9 May 2018 @ 22:10
      Christopher: I agree on the EM developing into the worlds consumer base. The big question remains as to when that will happen. The dominance of the dollar will not end without global turmoil (just look at EM currencies right now), and china also does have a demographic decline so my guess is, it will take the EM time to get back on growth track after the next crisis, even 20+ years.
  • BS
    Buy100oz S.
    9 May 2018 @ 22:07
    Equities will simply follow the earnings/free cash flow accounting for the macro situation i.e the interest rates. Today if you can get 3% on 10yr gov bonds, there is no point in chasing a company with a p/e of 33 absolutely no growth potential paying a 3% yield. Why take equity risk for a bond like return. Assuming raoul thesis on consumption patterns is correct, then decreasing earnings is expected but it won't fall to zero. So there will be companies which will be viable to invest into, where it is your responsibility to model perhaps decreasing revenues over time (to account for consumption pattern changes) - Remember automation could help decrease costs in the process so earnings may not drop as much as expected either. Either way lots of things to consider, but entrepreneurship or even investing into small cap teams which have big ideas (are the places to be). Quite honestly anyone investing in the stock market even today should be focusing on companies that have a lot of growth potential where value isn't built into the price.
  • BS
    Buy100oz S.
    9 May 2018 @ 22:07