The Coming Retirement Crisis

Featuring Raoul Pal

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.

Published on
9 May, 2018
Topic
Macro, Pension System, Retirement Crisis
Duration
49 minutes
Rating
87

Comments

  • CH

    Christopher H.

    17 11 2018 21:30

    0       0

    This squares perfectly with what Mark Cuban says about the future being deflationary.

  • KN

    Kelly N.

    4 11 2018 11:18

    0       0

    How can I short the Boomers?

  • PK

    Patrik K.

    4 10 2018 13:44

    1       0

    Just watched this for the second time. So much valuable information!

  • SU

    Shakeel U.

    13 9 2018 20:27

    0       0

    Great 10/10, many thanks Raoul

  • JS

    James S.

    31 8 2018 23:36

    1       0

    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 8 2018 01:03

    0       0

    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 8 2018 07:58

    1       0

    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.

  • BS

    Bill S.

    24 8 2018 21:03

    1       0

    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 8 2018 03:41

    2       0

    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 8 2018 21:13

    0       0

    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 7 2018 13:13

    0       0

    Great stuff! Very good analytical work and it is a good frame to apply to different local markets.

  • SW

    Scott W.

    20 7 2018 21:18

    10       0

    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. Well..my 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 etc..now 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 shows..you'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 culprit..no 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!

  • TL

    Tom L.

    15 7 2018 21:34

    1       0

    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.

  • DR

    David R.

    9 7 2018 20:08

    2       3

    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.

  • HJ

    Harry J.

    9 7 2018 00:00

    0       0

    Great job R.
    Hope your wrong but fear your right!
    Keep up the good work.
    H

  • DG

    David G.

    5 7 2018 00:51

    1       0

    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 7 2018 17:42

    1       0

    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 7 2018 02:06

    0       0

    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 6 2018 13:31

    2       0

    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

  • BL

    Barclay L.

    25 6 2018 00:27

    1       0

    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 6 2018 05:39

    2       0

    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 6 2018 09:42

    0       0

    Amazing. Thanks Raoul.

  • GO

    Glenn O.

    14 6 2018 23:56

    1       0

    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 6 2018 05:41

    0       0

    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 6 2018 20:52

    8       0

    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 6 2018 05:53

    5       0

    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 5 2018 08:37

    0       1

    Raoul, I would be interested to know what you think of this recent report from the BIS (Https://www.bis.org/publ/work722.htm) which seems to run counter to your prediction that an older population is deflationary.

  • ML

    M L.

    28 5 2018 22:15

    3       0

    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 5 2018 04:10

    2       0

    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 :)

  • DB

    Douglas B.

    25 5 2018 15:01

    1       0

    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.

  • RO

    Robert O.

    24 5 2018 03:13

    3       0

    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).

  • rs

    ross s.

    24 5 2018 00:40

    1       1

    I’m numb....lots to digest...amazing piece.

  • KR

    Kristian R.

    21 5 2018 07:12

    12       0

    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 ^^^

  • PV

    P V.

    21 5 2018 02:56

    0       0

    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....

  • B

    Bojo .

    18 5 2018 13:33

    0       0

    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 5 2018 06:46

    0       0

    May I share this will siblings and daughters and perhaps even a few friends.?

    This is so good!

    BB

  • CM

    C M.

    18 5 2018 03:40

    0       0

    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.

  • JO

    JOHN O.

    17 5 2018 23:24

    1       0

    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.

  • EF

    Eric F.

    17 5 2018 23:13

    0       0

    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?

  • TR

    Travis R.

    17 5 2018 18:28

    3       0

    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.

  • DY

    Dmytro Y.

    16 5 2018 04:50

    2       0

    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.

  • VM

    Vincent M.

    16 5 2018 03:27

    2       0

    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 5 2018 15:02

    3       1

    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.

  • PB

    Pieter B.

    15 5 2018 06:55

    0       0

    Absolutely brilliant work Raoul! Thank you!

  • MA

    Mikael A.

    15 5 2018 02:30

    0       3

    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.

  • TS

    Tyler S.

    14 5 2018 18:25

    2       0

    so my large scale investment in bullets and seeds might just payoff after all.. ;o(

  • PD

    Paul D.

    14 5 2018 13:53

    3       0

    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.

  • PD

    Paul D.

    14 5 2018 13:39

    6       0

    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).

  • gd

    gerald d.

    14 5 2018 05:40

    0       0

    Great stuff!

  • KS

    Kathleen S.

    14 5 2018 00:45

    3       0

    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 --https://www.zerohedge.com/news/2018-05-12/audible-gasp-was-heard-when-chicago-fed-unveiled-its-solution-pension-problem.

  • DS

    David S.

    13 5 2018 21:43

    2       0

    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 5 2018 21:36

    7       0

    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

  • AJ

    Aaron J.

    13 5 2018 19:41

    1       0

    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.)

  • VP

    Vincent P.

    13 5 2018 17:46

    4       0

    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 5 2018 16:56

    4       0

    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

  • VS

    Vasil S.

    13 5 2018 11:42

    1       0

    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?

  • LC

    Liliana C.

    13 5 2018 05:42

    1       0

    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!

  • GO

    Gary O.

    12 5 2018 23:47

    2       1

    All the sheep are in trouble. You are right Raul, people need to do "something" now!

  • DH

    Daniel H.

    12 5 2018 21:33

    2       0

    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 5 2018 18:14

    3       0

    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 5 2018 16:24

    7       0

    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 5 2018 14:01

    7       0

    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 5 2018 13:59

    6       0

    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 5 2018 12:50

    5       0

    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 5 2018 10:52

    6       1

    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 5 2018 04:54

    2       0

    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.

  • EL

    Edward L.

    11 5 2018 16:36

    1       0

    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 5 2018 14:55

    0       0

    Absolutely really, I will! Thanks so much for putting this together in such polished form.

  • RI

    R I.

    11 5 2018 13:06

    6       2

    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) https://www.bis.org/publ/work656.pdf (2) https://www.frbsf.org/economic-research/publications/economic-letter/2011/august/boomer-retirement-us-equity-markets/ (3) https://www.bis.org/publ/work485.pdf

  • BP

    Besar P.

    11 5 2018 12:02

    3       0

    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.

  • CR

    Chris R.

    11 5 2018 10:20

    5       0

    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.

  • AB

    Alain B.

    11 5 2018 05:42

    16       1

    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.

  • AD

    Anthony D.

    11 5 2018 04:49

    1       0

    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.

  • MJ

    Manish J.

    11 5 2018 03:56

    1       0

    Price of RV subscription, deflating indeed ;)

  • PD

    Pat D.

    11 5 2018 00:54

    2       0

    One man's opinion can turn out to be a paradigm shift for another. Great insights!

  • MD

    Mario D.

    10 5 2018 22:37

    6       0

    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.

  • SR

    Steve R.

    10 5 2018 21:31

    5       0

    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?

  • VS

    Victor S.

    10 5 2018 20:43

    0       2

    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.

  • Sv

    Sid v.

    10 5 2018 18:48

    1       0

    wow. We always get real meat from Raol. Worth the price of admission.

  • DV

    Dimitri V.

    10 5 2018 18:35

    3       0

    Always very insightful, love these long-form think pieces

  • GP

    Gero P.

    10 5 2018 18:27

    2       0

    Beautiful video. Thank you

  • WE

    William E.

    10 5 2018 17:19

    2       0

    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 5 2018 17:19

    2       0

    Great episode Raoul. Thought provoking.

  • EH

    Edwin H.

    10 5 2018 17:18

    4       0

    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 5 2018 17:14

    4       1

    Great video. I don't agree with everything. But I don't need to. Thanks for your sharing your insights on this platform.

  • GM

    Greg M.

    10 5 2018 15:11

    1       2

    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 5 2018 14:02

    0       0

    Sorry for mutliple entries — is there a reason comments on the iPhone app are restricted to lower numbers of characters?

  • JH

    Jesse H.

    10 5 2018 14:01

    0       0

    ...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 5 2018 13:59

    0       0

    ...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 5 2018 13:56

    0       0

    ...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

  • SD

    S D.

    10 5 2018 13:56

    3       0

    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.

  • JH

    Jesse H.

    10 5 2018 13:54

    1       0

    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 5 2018 13:01

    3       0

    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 5 2018 12:57

    2       0

    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 5 2018 12:39

    2       0

    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 5 2018 12:14

    1       0

    Amazing! loved it!

  • DP

    David P.

    10 5 2018 11:22

    2       0

    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 5 2018 11:05

    4       0

    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 5 2018 10:48

    1       0

    May I kindly ask you to tell your viewers how the GMI composite indicator was constructed? Thank you.

  • dj

    daniel j.

    10 5 2018 07:36

    1       0

    He makes an interesting point, QE will replace the pension funds as the garranteed buyer of the stock market, to a certain degree.

  • SS

    Steve S.

    10 5 2018 06:17

    7       0

    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.

  • SS

    Swagotom S.

    10 5 2018 05:42

    0       3

    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 5 2018 05:39

    4       0

    Raoul - congrats, great presentation.

  • BP

    Besar P.

    10 5 2018 03:58

    2       0

    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.

  • MM

    Marko M.

    10 5 2018 02:49

    3       4

    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.

  • DY

    Donny Y.

    10 5 2018 01:51

    1       0

    Fantastic piece! Great work! Fascinating analysis and insights!

  • CM

    Carl M.

    10 5 2018 01:39

    0       0

    ..some confusion on my part.
    are the baby boomers re-entering the workforce or are they opting out?

  • TC

    Tim C.

    10 5 2018 00:26

    4       4

    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.

  • PC

    Philip C.

    10 5 2018 00:06

    2       0

    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.

  • F

    Floyd .

    9 5 2018 23:06

    2       2

    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?

  • JJ

    Justin J.

    9 5 2018 22:11

    3       0

    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

  • FG

    FundamentalAnalysis G.

    9 5 2018 22:07

    3       0

    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.

  • FG

    FundamentalAnalysis G.

    9 5 2018 22:07

    0       0

    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.

  • jm

    james m.

    9 5 2018 21:48

    1       0

    So a sharply lower participation rate should have a dramatic upward impact on wage inflation - no?

  • GC

    Gary C.

    9 5 2018 21:12

    1       0

    One universal retirement dilemma is when to start taking social security. Most recent among many discussions was a golf buddy pondering a delayed vs a present starting time to take his SS monthly check. His tentative plan was to delay receiving his SS, so he would benefit from a larger later onset payment. My anxiety about that choice was if he spends down his stock assets and is thereby now dependent on SS, which he admitted he knew did not really have funds to back up their promises, he risks a decreased/gov/fed assets payments due to government insolvency, and he has no backup personal assets left. Raoul’s comments agree with John Hussman’s that the stock assets will be dramatically reduced over the next 10 years, so one may be best off converting their present stock assets into what that person feels will retain value over time to spend or invest later, and spend what SS payments are available while they are available.

  • TB

    Tom B.

    9 5 2018 21:07

    6       0

    Great piece and thought provoking. My only counter, and clearly this is very out of vogue right now with current governments, is the potential for immigration to ease the pressure from developed market demographics. Or possibly we do see a tilt towards EMs going forward.

  • BB

    Brian B.

    9 5 2018 20:20

    9       2

    Raoul, good lord mate, buy your father a new car. And it looks as if I'm the only equity bull/bond bear here. Duly noted!

  • TL

    Tianyun L.

    9 5 2018 19:56

    4       2

    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.

  • BK

    Brian K.

    9 5 2018 19:34

    4       0

    Just increase socials security payouts via central bank bond purchases.

  • SI

    Sundar I.

    9 5 2018 19:14

    4       0

    Excellent piece of work you guys. Really really loved it
    Once again makinge feel that spending that 180 was the best decision I have ever taken.

  • LQ

    Leslie Q.

    9 5 2018 18:28

    2       0

    Brilliant piece from Raoul and the rest of the team at Real Vision, I really enjoyed the thought provoking and insightful outlook on what the baby boomer crisis is going to affect all of us, not just in the US but the world at large. Somehow it brought me thinking up about the current demographics and searched from this website:

    www.populationpyramid.net

    There are many measures being implemented, or starting to look at being implemented, due to the very reasons you have shared in the video. If anything, it has helped spur me into action into thinking about the retirement years, although I am in my 30s. Thank you once again, looking forward to more fantastic segments like these.

  • MC

    Minum C.

    9 5 2018 17:46

    2       0

    This is a very useful framework and very thick with information. Deserves to be watched again. I didn't realize the gap between the average net worth statement and median net worth statement was so large. It was really good to have this part quantified. This has the potential to create an even more chaotic social environment should the Federal Reserve decide it needs to support the stock market via more quantitative easing. For me, if there's one certainty in all of this, it's that the Federal Reserve will not be referring to its next asset purchase program as quantitative easing. Markets will associate that with failure, so another name needs to be conjured up.

  • RA

    Robert A.

    9 5 2018 16:58

    1       0

    Excellent piece Raoul and a pithy succint synthesis of much of your earlier work as well as important bits from the 4 years and hundreds of RV interviews in the RV archieves. We RV’ers simply must get the word out—$180 for a years’s worth of RV presentations in addition to access to RV archives containing hundreds of prior top notch presentations from elite financial thinkers is THE bargain of the decade!

    I did pick up one “inconsistent” bit Raoul. So....boomers to lose 1/2 of their Equity allocation in the next recession...but, if the Fed expands their balance sheet and buys Equities in addition to Bonds (ala the SNB and Japan) the drop may not happen.....which means the market can’t/won’t clear (perhaps transferring the “market clearing mechanism to Real Estate?). If the Equities do drop by 50% (or perhaps less before the Calvary arrives) it will be the buying opportunity of the Millenials of their life, IMO.

    It’s all about the “End Game” now.... some or all of the following?

    Debt Jubilee
    Currency Devaluation
    Banning of cash and implementation of new Orwellian Blockchain Digital currency

  • SS

    Sam S.

    9 5 2018 16:51

    6       0

    Hyperinflation, comes from the loss in confidence and mistrust of government. That is, the system breaking down. Money has to go somewhere. Please more discussion on the ideas of positioning, early to the party before everyone figures it out. This presentation is so thought provoking. Doing something now may save us from the future with little downside if somehow this doesn't materialize full scale. First Class work!

  • PM

    Plan M.

    9 5 2018 15:56

    1       0

    Very well done. Raoul raised this very issue in a Macro Insider piece last summer and Patrick Cox with his inverted demographic pyramid piece that adds to this discussion both in support of the bulging senior population challange and potential investment plays born of the bulging senior population challange - Biotechs Meet Anti-Aging Challenge - July 6,2017. https://www.realvision.com/rv/channel/realvision/videos/7f5b099ddff94b45abe66c267a2838be

    I was pleased to hear Raoul introduce cryptographic currencies to the mix. Since a discussion of future stores of value if limited to only traditional asset classes would be woefully inadequate. Thought provoking piece of work.

  • MS

    Martin S.

    9 5 2018 15:52

    1       0

    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.

  • EL

    Emanuel L.

    9 5 2018 15:51

    2       0

    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.

  • DB

    David B.

    9 5 2018 15:47

    2       0

    Awesome, Raoul! Are the charts available? Those were terrific!

  • SB

    S. B.

    9 5 2018 15:43

    4       0

    Great video, but I think inflation can and will be generated by printing and buying up the excessive debt. Combined with public spending programs or handouts (helicopter money), they will generate the inflation needed to remove the debt burden. Demographics may dictate disinflation pressures, but eventually, the government can always create inflation if they really want to.

  • dj

    daniel j.

    9 5 2018 15:20

    0       0

    This guy knows his stuff

  • KC

    Kevin C.

    9 5 2018 15:14

    1       0

    Much less expensive to retire outside US. For example, Mexico

  • GS

    Gordon S.

    9 5 2018 15:11

    1       0

    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
    https://static1.squarespace.com/static/5581f17ee4b01f59c2b1513a/t/561dc4a8e4b06f8695aa6a57/1444791464370/Artemis+Capital+Q12012_Volatility+at+World%27s+End.pdf

    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.”

    https://www.zerohedge.com/news/2018-01-24/ken-rogoff-warns-china-will-be-center-next-global-financial-crisis

  • YB

    Yvan B.

    9 5 2018 15:09

    10       0

    Dear Raoul,

    Thanks for the great piece. Quick question, have you had a look at demographics per state? For instance, Connecticut real GDP growth has been negative in the past two years (2016 and 2017) and wage inflation has been decelerating and is almost flat YoY (0.2% in 2017 if we use total comp data from BEA). On the other hand, Washington state has been booming (5.7% wage inflation and 4.3% real GDP growth).

    With the current tax regimes (for both corporate and personal taxes) that differ for every state, do you think we are going to see significant internal migration within states for both Millennials and Baby Boomers in the next decade, strengthening the divergence between US states? The new 'digital' generation can choose to work from wherever they want in the US, and the rational choice would be to migrate to states where real assets (i.e. housing) are cheap. Second, in states experiencing negative population growth where taxes are relatively too elevated for both businesses and individuals, what are the impacts on the 'super' underfunded pension funds? (for instance, Connecticut has one US most underfunded pension funds).

    Thank you for your time.

    Best
    Y

  • JL

    Johnny L.

    9 5 2018 15:03

    2       0

    Brilliant and thoughtful piece. I hope this makes it to main stream media outlets in and out of fin news.
    If all of WS actually thought things out like RVT does the markets would likely look a lot different today.

  • ZY

    ZHENG Y.

    9 5 2018 15:00

    3       0

    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.

  • SS

    Sam S.

    9 5 2018 14:47

    2       0

    In 2009, I watched and heard Obama talk about SS & Medicare. He said the pension and retirement condition is so bad that "old people just need to die". I about fell off my chair. I'm not a fan of Obama nor this legacy. Baby Boomers spend their money on medical & healthcare, daily living such as rent/mortgages, and taxation. A retirement lawyer I play tennis with explained that when those in retirement can't afford the things they need, many get sick and or just die. Talk about extraction of the Baby Boomer wealth, those things they need are exactly what has skyrocketed in cost and price. Mr. Pal-----absolutely another of your outstanding reports and future visions!! Haven't seen Grant in a while? RV is a gift from heaven! Thank You!

  • GM

    Gregor M.

    9 5 2018 14:35

    4       0

    Haven't heard anyone make this much sense in a while now. So definitely a job well done.
    A couple of questions though; What of the 'recent' trend of European Central Banks buying US equities e.g. Swiss?
    What of European pension and sovereign wealth funds who are heavily invested in US equities e.g. Norway?
    So I guess my question is, do you think these large entities entering the US equity market this late in the cycle may prolong the next recession just long enough for the early investors in the "pyramid scheme" to get out? By all accounts this has picked up pace lately...I've even heard anecdotes of pension funds in EM getting deregulated so as to be able to invest in US equities due to the low yield environment in Europe.

  • CH

    Carl-Magnus H.

    9 5 2018 14:30

    2       0

    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.

  • PU

    Peter U.

    9 5 2018 14:28

    14       0

    Agree with most of what Raoul brings up. However, Central Banks can prolong the event for a long long long time. For example, who would have guessed pre 2007 that embarking on global QE and buying / supporting the fixed income market {buying mortgages (by FED) and corporates (by ECB) and equities (by JCB)} would be "acceptable" to the prudent investor or to the person with average intelligence? Why is there still so much "confidence" in fiat currencies when we print and purchase securities without any accountability or challenge on the merits? If we (global populace) are unwilling to challenge the current monetary policy narrative, then whatever we will be told by Governments/central bankers in the future will be "acceptable" to continue the current untenable situation. Conclusion: this can go on much longer than we can imagine. Lemmings, all of us!

  • SW

    Scott W.

    9 5 2018 14:25

    30       0

    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?

  • JR

    Joe R.

    9 5 2018 14:25

    1       0

    Excellent overview of the both issues and the opportunities!

  • Nv

    Nick v.

    9 5 2018 14:17

    1       0

    I wonder if wage inflation explodes as the labor force shrinks...

  • JM

    James M.

    9 5 2018 13:43

    4       0

    Another excellent video from RP. Pensioners directly or indirectly have been selling vol for 10 years to keep their head above water and chasing yield. Looks to me like the attempted Japanification of the Western economies. Maybe that was made possible by the subservience and discipline of the Japanese people? I don't think the French, British or the North Americans can or will take that kind of pain. I think in line with the reckless corporate corruption and excessive military spending in the USA in particular however also present in all the western economies will take its tole now. I can see the USA Empire falling in a a similar fashion to the Soviet Union in 1991. I think the next rescission in the USA will be greater than the collapse in 1929 and will take decades to recede. This could lead to all out global conflict depending how the USA populous responds to this catastrophe. Going on how they reacted to 2008 to 2016 it doesn't look good to me. Can the FED paper over this coming millennial event? I guess as RP stated they just BUY everything whilst pretending as they have for decades we have free markets. I don't think there much else they can do. Maybe they could try capitalism??? Nahhhhhh that will never work !!!!!

  • CL

    Charles L.

    9 5 2018 13:19

    2       0

    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!

  • BO

    Bob O.

    9 5 2018 13:04

    8       0

    I have tried to warn people about this issue for the last few years. I talked to family and friends and even raised the issue once on stage at a conference. I was told by my boss not to raise it again and he sits on the board of a large superannuation fund…..WTF! I don’t work there anymore (my choice) and neither does my superannuation. Good work Raoul, the ‘Cassandras’ on this issue will be proven right

  • BT

    Brian T.

    9 5 2018 12:41

    1       0

    Great job Raoul!

  • LD

    Larry D.

    9 5 2018 12:19

    1       0

    Fantastic Video!!!

  • DP

    David P.

    9 5 2018 12:18

    2       0

    Interesting, and quite scary as well.

  • JB

    Jason B.

    9 5 2018 12:16

    3       0

    Raoul......Amazing......A great mind and team at work......Thanks RV...

  • SP

    Sat P.

    9 5 2018 11:59

    1       0

    That was fantastic, so much useful information. One example, I didn't know that Europeans had much less exposure to stocks than Americans. The most worrying/interesting factor will be how Governments deal with a stock market crash. Also great to hear that in future new businesses will be the way to generate real growth. Finally someone states the obvious in a Financial News channel! Can't wait for the next special

  • JS

    John S.

    9 5 2018 11:50

    1       0

    Excellent - thanks Raoul

  • MJ

    Max J.

    9 5 2018 11:40

    24       0

    Raoul, that was a brilliant presentation, real world and hard hitting. You told the truth and answered my questions as they arose. Your reason for starting RealVision is fully vindicated today. Well done and thank you.

  • GF

    George F.

    9 5 2018 11:39

    3       0

    Pension crisis websites:
    https://burypensions.wordpress.com/
    http://stump.marypat.org/
    PensionTsunami.com

  • PE

    Per E.

    9 5 2018 11:35

    3       0

    Very good presentation indeed. I don’t get the choice of ending with cryptos which is a part many will remember more.. Fact focused all the way but then ending on a highly subjective speculation (which might still happen).

  • SP

    Simon P.

    9 5 2018 10:47

    8       3

    One thing peope can do when hard times come is to grown there own food. It's really interesting how majority of people just don't know how to do it. Here in the UK there are 6 big supermarket companies which literally centralised food supply. As people we can grow our own , organic , fresh food in our back garden and not be dependent on big corporations.

  • PU

    Peter U.

    9 5 2018 09:34

    5       0

    He is a star!