A mistake in Chapter 19?

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Wiltster's picture
Wiltster
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Joined: Oct 3 2008
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A mistake in Chapter 19?

While I really enjoy, and applaud the work Chris has done on "The Crash Course", I wonder if I've noticed a flaw in the thinking as he discusses the inability of Baby Boomers in the U.S. to fund their retirements.  Briefly, Chris states that, given that there are fewer people behind Boomers (in the U.S.), there will be fewer buyers for the assets from which Boomers obtain their net worth.  When sellers exceed buyers, prices must fall, all things equal.  However, this would only be true if the stocks, bonds, and real estate owned by Boomers _had_ to be purchased by U.S. citizens, or more accurately, people living here.  This appears to be untrue.  In other words, given that he population of the earth is increasing (as Chris accurately illustrates) and given that much of the world is advancing to a level of "comfort" that would allow them to purchase the same "stuff" as aging Boomers want to unload, there are _plenty_ of buyers.  Now, they might not be in the U.S., but they exist.

One might argue that a resident of Dubai won't want to buy a patio home located in Arizona, and that might be true.  Stocks and bonds, however, seem more fungible than that.  (Even real estate, if one thinks outside the proverbial box, might be bought and sold via a different type of market than we currently expect or understand.)  I don't know how (or even if) the point I attempt here to make changes the analysis, but I wanted to mention it, as it just occurred to me as I watched Chapter 19 for the second time.  Am I missing something?  By the way, this is fascinating stuff!

Paul O's picture
Paul O
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RE: A mistake in Chapter 19?

I considered this "generation deficit" issue before seeing Chris' course.  Some thoughts:

 1.  Given the increased demands Baby Boomers will make in respect to entitlements, younger generations might demand more compensation in the form of Baby Boomer assets.  Wealth will be transferred to the younger generations.

2.  The problem might be reduced if the US "imports" enough younger workers to make up for the "generation deficit".  But this would require a radical shift in immigration policy. 

3.  At some point, younger workers will gain sufficient power in government, and lay sufficient guilt on their parents, to reduce entitlements 

4.   Assets will continue to be transferred through inheritance

Personally, I don't think the "generation deficit" in respect to the sale/disposal of assets will really be that big of an issue....with or without the involvement of foreign buyers.  In the end, the old geezers are going to bitch and moan, but they won't be able to put up much of a fight, and they'll have to pay for their care.  The problem will be resolved naturally, although perhaps not peacably. 

oldmanspammy's picture
oldmanspammy
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How Many Sell?

It seems a more fundamental question is whether people sell their assets as they get older. Most of the people I know in this situation hold on to the assets, live off the income from their assets, and pass the assets on to their children.

jcherry_99's picture
jcherry_99
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Joined: Dec 14 2008
Posts: 3
Re: How Many Sell?

I think the context of the question has been ignored.  Martenson is really saying that with population increases and government wrongheadedness the dollar is going to become worth less and more and more resources are needed to support an entitlement that is not sustainable.  Simply inviting more people into the pool does not solve the problem.

His point moreover, is that there are fewer and fewer resources to use so that we can draw money from a labor pool that is diminished in size compared to the entitlements owed.  It is a downward spiral.  The only solution I can see is that we have to collectively pull together and we have to cooperate with the resources that we have.

Americans are being forced into that reality right now.  More and more people are reporting that they have to support their parents (who have planned poorly) or support our children (who have planned poorly).  That problem is also at the tip of an iceberg so to speak.

RayTomes's picture
RayTomes
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Joined: May 20 2009
Posts: 67
Re: A mistake in Chapter 19?
Wiltster wrote:

While I really enjoy, and applaud the work Chris has done on "The Crash Course", I wonder if I've noticed a flaw in the thinking as he discusses the inability of Baby Boomers in the U.S. to fund their retirements.  Briefly, Chris states that, given that there are fewer people behind Boomers (in the U.S.), there will be fewer buyers for the assets from which Boomers obtain their net worth.  When sellers exceed buyers, prices must fall, all things equal.  However, this would only be true if the stocks, bonds, and real estate owned by Boomers _had_ to be purchased by U.S. citizens, or more accurately, people living here.  This appears to be untrue. ...

Wiltster, the baby boom was an almost worldwide phenomenon. I live in New Zealand and our age distribution has the bumps in the same places, as do Europe, Australia, Canada etc.

Vanityfox451's picture
Vanityfox451
Status: Diamond Member (Offline)
Joined: Dec 28 2008
Posts: 1636
Re: A mistake in Chapter 19?

Hello Wiltster,

welcome to CM.com!

I highly recommend that you go back into the sites history and uncover 'The Martenson Report's'. There are two facilities at your disposal. One is to a box on the top right of every page here, where you can write in whatever subject you wish to find, but, as a link to the originator of the site and his complete writing history, you won't go far wrong by either finding one of Chris Martenson's posts or clicking on this :-

  cmartenson

...after clicking on the link above, you'll find two words, 'View' and 'track'. Click 'Track', scroll down to the bottom of the 'most recent' list and, at the bottom of that page you'll find a row of numbers taking you back to the infancy of the site, where the depth and consistency of the author will shine through. Below is one of those early reports that I believe holds water on the subject of this thread in answering your question... :-

http://www.peakprosperity.com/martensonreport/united-states-insolvent

...any and all questions have answers here if you fish. Feel free to also send me a private PM - Vanityfox451 ...

Best,

Paul

 

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