5 ms·

"when all the millennials get no inheritance, because the healthcare costs for their parents will basically eat everything" I wonder if this one will be even w

"when all the millennials get no inheritance, because the healthcare costs for their parents will basically eat everything" I wonder if this one will be even worse in the US. Much of the market going up and up is because index funds have become the default retirement vehicle. So every month billions flow into the market no matter what. What will happen when the largest generation stops contributing and instead starts withdrawing. If you are right and many elderly will deplete their funds entirely, the value of everyone's retirement investments will drop dramatically in the process. How much of retirement nest eggs in places with terminal demographics like China, Germany and Japan are in international stocks as well? IMO demographics are gonna fuck over millennials yet again. I hope I'll be wrong.

nerdponx 4y ago
Younger generations are offsetting this with their own retirement savings. I've seen it argued that millennials are under-saving compared to their parents, but I remember seeing some data recently that contradicted this assertion. I would not be surprised if it were less evenly-distributed across the economy than prior generations. I don't think we are going to see net outflow from the stock market, maybe just a decrease in inflow. However I do think "worker shortages" will continue to grow as older people retire from undesirable jobs and aren't replaced by younger people, pushing up wages outside of white-collar and tech jobs and thereby leading to more inflation. I think this is a good thing in the long term and a price adjustment that has been a long time coming, but it needs to be managed properly or things could get really ugly.
- ajmurmann 4y ago
  "Younger generations are offsetting this with their own retirement savings." The problem is that the generationd after the boomers are smaller, especially in countries like Germany, China and Japan which have been economic power houses.
- tristor 4y ago
  > Younger generations are offsetting this with their own retirement savings. Sounds like a Ponzi scheme, just like Social Security and pensions.
  - nerdponx 4y ago
    Does it? Is a lake with an inflow river and an outflow river a Ponzi lake?
    - glogla 4y ago
      "Social pension system is a Ponzi scheme" is argument I've heard from people with certain political leaning often enough I wondered if Reagan or Thatcher said it or something. It never made sense to me. As long as the number of people is relatively stable, there's nothing Ponzi on it. Even with the number of people changing, there are other important inputs into the equation - automation, efficiency, etc.
      - tristor 4y ago
        All of these systems rely on working people to pay the tab for retired people because of demographic shifts and inflation causing outputs to exceed inputs. At least Social Security is definitely a Ponzi that per the SSA will only be able to guarantee me 65% of what I am owed when I hit the (continually increasing) payout age. I align with neither Reagan or Thatcher, but I did pass my math classes.
        nerdponx 4y ago
        But it's not inherently a Ponzi scheme, it's just been mismanaged.
        glogla 4y ago
        Is taxes paying for education Ponzi scheme as well? If not, why is current workers paying future workers (now kids) education different from current workers paying past workers (now retirees) pensions?
luckylion 4y ago
I'm not familiar with China or Japan, but in Germany, most people don't have large amounts of savings they could withdraw from. The middle class might own the house or flat they live in, for the upper middle class that house doesn't need 100k€ to be brought to up date, but most people don't expect large inheritances. For German employees, the public pension system is their wealth, and that's not based on stocks etc, but on the next generations contribution + some tax subsidies. Millenials and Zoomers will have fun shouldering that.
kneebonian 4y ago
So I talk about him a lot but one of the things Petar Zeihan points out is that we are rushing head long towards the greatest contraction of capital that will be seen in our lifetimes, our parents lifetimes, and our children's lifetimes. Basically the boomers are retiring cashing out their 401ks causing that money to no longer to be available for investment and contracting the money supply at the same time the younger generation can't offset it, as you noted. As a result capital is going to contract and if you want a loan get it right now as fast as you can.
- ajmurmann 4y ago
  I'm definitely a Zeihan acolyte as well. His analysis usually seems very logical and entirely based in indisputable facts. I do sometimes wonder though given the significance of his predictions why I'm not hearing more arguments against his forecast.

nerdponx 4y ago

Younger generations are offsetting this with their own retirement savings. I've seen it argued that millennials are under-saving compared to their parents, but I remember seeing some data recently that contradicted this assertion. I would not be surprised if it were less evenly-distributed across the economy than prior generations. I don't think we are going to see net outflow from the stock market, maybe just a decrease in inflow. However I do think "worker shortages" will continue to grow as older people retire from undesirable jobs and aren't replaced by younger people, pushing up wages outside of white-collar and tech jobs and thereby leading to more inflation. I think this is a good thing in the long term and a price adjustment that has been a long time coming, but it needs to be managed properly or things could get really ugly.

ajmurmann 4y ago
"Younger generations are offsetting this with their own retirement savings." The problem is that the generationd after the boomers are smaller, especially in countries like Germany, China and Japan which have been economic power houses.
tristor 4y ago
> Younger generations are offsetting this with their own retirement savings. Sounds like a Ponzi scheme, just like Social Security and pensions.
- nerdponx 4y ago
  Does it? Is a lake with an inflow river and an outflow river a Ponzi lake?
  - glogla 4y ago
    "Social pension system is a Ponzi scheme" is argument I've heard from people with certain political leaning often enough I wondered if Reagan or Thatcher said it or something. It never made sense to me. As long as the number of people is relatively stable, there's nothing Ponzi on it. Even with the number of people changing, there are other important inputs into the equation - automation, efficiency, etc.
    - tristor 4y ago
      All of these systems rely on working people to pay the tab for retired people because of demographic shifts and inflation causing outputs to exceed inputs. At least Social Security is definitely a Ponzi that per the SSA will only be able to guarantee me 65% of what I am owed when I hit the (continually increasing) payout age. I align with neither Reagan or Thatcher, but I did pass my math classes.
      - nerdponx 4y ago
        But it's not inherently a Ponzi scheme, it's just been mismanaged.
      - glogla 4y ago
        Is taxes paying for education Ponzi scheme as well? If not, why is current workers paying future workers (now kids) education different from current workers paying past workers (now retirees) pensions?

luckylion 4y ago

I'm not familiar with China or Japan, but in Germany, most people don't have large amounts of savings they could withdraw from. The middle class might own the house or flat they live in, for the upper middle class that house doesn't need 100k€ to be brought to up date, but most people don't expect large inheritances. For German employees, the public pension system is their wealth, and that's not based on stocks etc, but on the next generations contribution + some tax subsidies. Millenials and Zoomers will have fun shouldering that.

kneebonian 4y ago

So I talk about him a lot but one of the things Petar Zeihan points out is that we are rushing head long towards the greatest contraction of capital that will be seen in our lifetimes, our parents lifetimes, and our children's lifetimes. Basically the boomers are retiring cashing out their 401ks causing that money to no longer to be available for investment and contracting the money supply at the same time the younger generation can't offset it, as you noted. As a result capital is going to contract and if you want a loan get it right now as fast as you can.

ajmurmann 4y ago
I'm definitely a Zeihan acolyte as well. His analysis usually seems very logical and entirely based in indisputable facts. I do sometimes wonder though given the significance of his predictions why I'm not hearing more arguments against his forecast.