Category Archives: Economy and Meltdown

The US Money Markets And The Price Of Gold

Submitted by Martin Sibileau from A View From The Trenches

The US Money Markets And The Price Of Gold

What do USD money markets have to do with gold? Money market funds invest in short-term highly rated securities, like US Treasury bills (sovereign risk) and commercial paper (corporate credit). But who supplies such securities to these funds? For the purpose of our discussion, participants in the futures markets, who look for secured funding. They sell their US Treasury bills, under repurchase agreements, to money market funds. These repurchase transactions, of course, take place in the so-called repo market.

The repo market supplies money market funds with the securities they invest in. Now… what do participants in the futures markets do, with the cash obtained against T-bills? They, for instance, fund the margins to obtain leverage and invest in the commodity futures markets.
In summary: There are people (and companies) who exchange their cash for units in money market funds. These funds use that cash to buy – under repurchase agreements – US Treasury bills from players in the futures markets. And the players in the futures markets use that cash to fund the margins, obtain leverage, and buy positions. What if these positions (financed with the cash provided by the money market funds) are short positions in gold (or other commodities)? Now, we can see what USD money markets have to do with gold!
Let’s propose a few potential scenarios, to understand how USD money markets and gold are connected:
If money markets have liquidity, there is abundant cash to buy US Treasury bills (i.e. the repo market is more liquid), and to finance those who short commodities in the futures markets. This is negative for the spot price of gold. If money markets lack liquidity, shorting commodities becomes more difficult. This is positive for the spot price of gold.
If the US Treasury bills become riskier, on the margin, the incentive to buy them will be lower and either money market funds will reallocate the cash towards commercial paper or they will face redemptions from fearful investors. The repo market will then lose liquidity. This is positive for the spot price of gold.
Alternatively, if the rate paid by the US Treasury increases AND the risk of these bills is NOT perceived to be higher (something possible in these rigged markets with doubtful ratings), investors will be more eager to place their cash with money market funds (falling prey to an illusion) and the liquidity of the repo market will increase. This is negative for the spot price of gold.
Why do we bring this up? To be honest, it is not the first time we do so. We have introduced the topic in our letters of July 2nd, July 30th and August 6th. We bring this up today because we want to raise awareness on some measures under consideration by the US Treasury and the Federal Reserve, that will have a direct impact on the USD money market, and hence, the repo market and the price of commodities. These policies are:

1)         Minimum Balance at Risk (MBR): Kills USD money markets = lowers liquidity in repo market = Positive for gold

This has been in the works since 2010, but is only now taking shape. On August 15th, Bloomberg had a post on this under the title “Fed’s Dudley backs money fund rules to protect US Economy”. If enforced, there will be a minimum balance, which holders of money market fund units will not be able to redeem, but after a lock period. Effectively, under distress, redemptions will be restricted. As well, there are other potential measures, like floating the funds’ Net Asset Value and capital requirements. But the MBR one is the most relevant: It will make market participants see money market funds as a risky investment.
Personally, we do not see the motive behind this move because if, as some deduce, policy makers in all honesty believe that the savings currently in these funds will be reallocated as a result to bonds or stocks (boosting asset prices), they are being naïve at best and utterly idiotic at worst. Whoever invests in money market funds does so to make an extra buck on liquidity. If he/she cannot make it, then the funds will simply remain in a chequing account. Would banks use these funds in the chequing accounts to lever up their investments? Into what? Money market funds? The recent experience in the Euro-zone (discussed further below) shows it is not the case. Banks will not lend more just because they have more deposits available.
In any case, this policy would drain liquidity from the repo market and financing positions in the futures markets (i.e. shorting gold, for instance) would be more expensive. This would be positive for the spot price of commodities.
2)         Introduction of Floating Rate Notes by the US Treasury: Positive for USD money markets = Negative for gold in the short-term, positive in the long-term

We introduced this point in on August 6th, after reading a series of articles at Floating Rate Notes are variable rate notes. If floating rate notes were issued and interest rates rose (either driven by the Fed’s policy or by the market) they would have a strong bid from money market funds, bringing liquidity to the repo market. This could continue supporting speculative shorts in the futures markets, which would be negative for spot commodity prices in the short term.
However, if these rates are seen to be sticky, the Fed would have to intervene, targeting rate caps. But to guarantee the cap on the price of a good, one has to offer unlimited supply of that good. If the Fed had to guarantee a cap on NOMINAL interest rates, it would have to offer unlimited supply of US dollars. It is now easy to see why, in the long run, issuing floating rate notes would therefore be positive for the spot price, in US dollars, of commodities.
3)         Zero interest on excess reserves: Would kill USD money markets (just like it did in the Euro zone) = lowers liquidity in repo market = Positive for gold

After the July 5th decision by the ECB, to pay nothing on its deposit facility, Euro-zone banks’ deposits at the European Central Bank plunged (see below, source: Bloomberg), by the tune of EUR484BN!!!

Did this money go to stocks? No! To bonds? No! Where did it go then? To a chequing account at the ECB. In the process, the Euro money markets died and the repo market suffered heavily. We had warned here that this measure would only make Euro banks less profitable and hence, riskier.
Because commodities are not traded in euros, this has not impacted the commodities market. But should a zero interest on excess reserves policy be implemented in the US dollar zone, the effect on the repo market would be to drain liquidity, a negative for futures markets and a positive for spot commodity prices.
In conclusion, there are currently three potential policy measures that would have a relevant impact in the commodities markets. Forewarned is forearmed.

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When Darwin Failed: "Fishing For Perfect Markets"

Perhaps the biggest affront to the natural order of things set in motion by central planners’ intervention in capital markets of all varieties, is that through sheer brute force (of a printer, of posturing, and of outright politicized pandering), several academics in a low-lit room can suppress, for a brief period of time, the Darwinian survival of the fittest. Key word here is “brief” because in the end nature always gets even, and usually with a vengeance. In the meantime, however, epic distortions in what are already indefinitely irrational markets, which however always eventually regress to a rational mean (in popular jargon a process better known as “crash”), succeed in driving out legacy traders who no longer can navigate the chaos unleashed by the authoritarian ambitions oh the kind that ultimately resulted in the collapse of the Soviet Union, and every other centrally-planned establishment, when abused on a long-enough timeline… For a vivid example of what happens “when Darwinism fails” we go to a parable from a just released letter to client by the English hedge fund Toscafund, which looks at modern day trading from the perspective of fishing in the Polynesian seas, which also does an admirable job in explaining why being lucky is almost always more important than being good (sadly, one can not sell “luck” in newsletter format for $29.95/ month).

By Savvas Savouri of Toscafund Asset Management

Fishing for perfect markets

I have spent many hours impressing upon students this sad reality. Whilst in theory forecasting using good fundamentals should be enough to deliver success, in practice financial markets are stubbornly imperfect and favour bad techniques. To make this point I go fishing for analogies.

To set a scene, I ask the audience to imagine watching a Polynesian fisherman going about his work. Having waded into the clear blue water of the South Sea’s, he confidently holds a spear above his head and takes aim. With this imagery in mind I then ask the students to reflect on his fundamental technique. Why for instance is the trajectory of his aim not in the direction of where the fish appears to be. My point to them is ‘good’ forecasting does not confuse perception with reality. We consider the three judgements the fisherman is making; one based upon simple physics, another basic maths and the other behaviour theory. Using these in isolation the fisherman will fail, combine them and he will return home with a good return from his efforts.

Our good fisherman is aware the position of the fish is distorted. He may not know the precise science that because light travels at different speeds through air and water it kinks or refracts, but is aware of this distortion all the same. The second element our fisherman contemplates is momentum. He can see the fish is in motion and is aware it will have moved by the time the spear arrives. The third simultaneous judgement our Polynesian fisherman makes is the survival instincts of the fish. If it has not already been made aware it is being stalked by the shadow cast over it, it will certainly become conscious of a threat from the ripples set in motion by the harpoon entering the water.

Despite the complications, with painstaking teaching and practice the ‘good’ fisherman will not go home empty handed. His family is sure to be well fed, and he will impart to his sons the skills he had learned from his own father a transfer of knowledge that almost certainly has gone on for generations. Across our Polynesian fishing village bad fisherman have long vanished; Darwinian logic having seen they have. The population of the village has even steadied to reflect sustainable fishing levels. We have in effect a perfect market. Reaching this point I caution that financial markets have never reached this perfect state. To illustrate what I mean I return to the ‘perfect’ fishing village where only ‘good’ fishermen are at work.

I ask the student to assume ‘bad’ fishermen hadn’t been eliminated by Darwinian evolution and congest the waters around our good fishermen. Their presence introduces not only complications to our good fisherman but a threat to their very survival. Not simply are the spears being thrown wildly around in such a random way they are a danger to our good fisherman, they are causing chaos in the waters. Where fish once moved sedately in calm waters they are now darting around in panic, and so more challenging targets for even the best of our ‘good’ fishermen. Matters are worse still for our good fishermen. Many fish have moved away from their preferred coastal water habitat into deeper, colder and more tidal waters; from one inhospitable place to another. Moreover, through their sheer weight of numbers, the bad fishermen are spearing ever more fish as the good fisherman return home empty handed. Before long fish numbers plummet and order in the fishing village has turned upside down. Whilst the families of ‘good’ fisherman go hungry, ‘bad’ fisherman boast of their successes, convinced they were good rather than lucky. I end my lecture with these words, “welcome to the imperfect world of investing, if you want perfect markets forget finance go fishing in the south seas”.

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Guest Post: Sanctions Force Iranian Retreat from Global Stage

Submitted by Dan Graeber of OilPrice

Sanctions Force Iranian Retreat from Global Stage

Domestic demand for gasoline in Iran was driving growth in the energy sector for the year. OPEC, in its latest report, said retail gasoline consumption in Iran was up more than 20 percent for the first five months of the year, though overall oil demand was relatively flat.  Inflation, meanwhile, was up from stable levels reported last year.  Iran has struggled to find a reliable consumer base given international sanctions pressure and the recent levels suggest the Islamic republic is retreating somewhat from the international energy sector.
The Organization of Petroleum Economies, in its August report, said Iranian crude oil production in part led to a decline in overall output from the Vienna-based cartel. OPEC said crude oil production for its members, not including Iraq, was reported at 28.1 million barrels per day in July, a decline of 270,000 bpd compared with the previous month.  The decline in OPEC oil production in part was led by Iran, which saw its export options curtailed by sanctions imposed by the U.S. and European governments. Tehran announced it still had a viable consumer base in China, however, which received about 12 percent of its oil needs from Iran. The Indian government, meanwhile, said it would circumvent EU sanctions by extending government-backed insurance to tankers carrying Iranian crude because of the “definite need” for oil.
Sanctions, however, have hurt the Iranian economy and its overall crude oil levels. Italian energy company Eni reported that it’s been unable to get oil out of Iran for the second straight month, however, because of insurance and banking problems. OPEC reported that the Iranian central bank posted an inflation rate of 22.9 percent this year after ending last year relatively flat. Domestically, oil demand reported a growth rate for May of 7.9 percent, or around 100,000 barrels per day. OPEC suggested any growth from Iran’s oil demand was likely the result of gasoline consumption. The Iranian Oil Ministry, however, reported that domestic gasoline consumption was down 6.1 percent during the first two weeks of Ramadan, but has since recovered modestly by 1.8 percent. Gasoline consumption in Iran was up 22 percent during the first five months of the year compared with the same period last year, OPEC said.
Growth in Iranian gasoline demand could be a sign that the country’s energy sector is retracting in response to sanctions pressure. Any external inhibitors fro Iran were in contrast to neighbouring Iraq, whose crude oil production is at least partially handicapped by domestic political disputes. On Monday, Iraqi officials said oil output reached 3.2 million bpd, taking the No. 2 spot from Iran among OPEC members.

Iranian threats to close the Strait of Hormuz in early 2012 caused an increase in oil prices. While recent spikes in crude were in response to Persian Gulf tensions, long-term trends were attributed mostly to economic stimulus initiatives in the United States and European Union.

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Bernanke's Dual Mandate Trap

By EconMatters, Aug. 18, 2012

After reporting an uptick of national unemployment rate of 8.3%, it is of little surprise that the Labor Dept. said on Friday that jobless rates rose in 44 U.S. states in July, with many states showing a monthly increase in more than three years. 


Chart Source: Calculated Risk, August 17, 2012


Unemployment Rate To Remain Sticky  

On the surface, the U.S. national unemployment rate has seemingly dropped almost a full percentage point from the high of 2011.  Nevertheless, the record rate of people dropping out of labor force, and long term unemployment has become a bigger problem than ever before, suggest the real labor market is worse than the headline unemployment rate entails.  Remember, people in the “Not in Labor Force” bracket (e.g., going back to school, discourage job finders quit looking, etc.) are not counted as “unemployed.”


Monthly job gains have averaged 150,000 this year, close to the 150,000 to 200,000 a month of new jobs Fed Chairman Bernanke said needed to reduce the unemployment.  But eventually, a significant number of people will come back in the labor force to find jobs again, coupled with the increasing  difficulty for the long-term unemployed to land a job, expect the jobless rate to remain sticky for the next few years.


Fed’s Dual Mandate Performance


Federal Reserve has a dual mandate to pursue price stability and maximum employment.  Right now, while the annual trend in prices is trending closely to the Fed’s 2% target, the headline unemployment rate is still well above the pre-recession level of around 5%.  The chart below from the CFR (Council on Foreign Relations) plots actual inflation and unemployment performance relative to the two targets (CFR uses 5.6% as Fed’s target for unemployment) since 2002.


As the chart shows, the sum of the deviations has declined since the peak in July 2009, but it is still well above zero (zero being a benchmark for fulfilling the dual mandate), which suggests that the Fed will continue to be accommodative.  In fact, given the debt crisis and recession in the Euro Zone, and the significant slow-down in China, traders’ expectation of a 3rd round of Quantitative Easing (QE3) from the Fed is probably the only thing that’s holding up the equity as well as the commodity markets.


Monetary Policy & The Labor Market 


Our observation is that the Fed seems to have a tendency to draw a straight line between the increase in stock market performance to the GDP growth and an improved employment.  That assumption might be valid pre 2008 financial crisis.  However, the deep scar from the Great Recession has left corporations running scared to “streamline” operations at an unprecedented pace that the increase in corporate profit and stock price does not necessarily translate into more investment and more hiring into the real economy any more.


Fundamentally, monetary policy by central banks has little direct impact on the labor market, which is part of the reason why almost all central banks in the world has only one explicit primary directive – price/inflation stability (although unemployment may be part of the implicit macroeconomic factors in the decision-making process.)   


More importantly, QE by the central banks is meant to loosen credit lending, which in turn should stimulate the economy.  But as Fed’s two previous QE’s have demonstrated, due to the structure of current global banking and financial system, QE has only mostly benefited banks to hoard cheap capital from the government to speculate in commodities and stocks to get better returns, rather than circulating and lending to business and consumers like banks are supposed to.


Futile Unemployment-QE Cycle 


Signs of inflation manifesting are in the “non-core” items (i.e. Food and Energy) not on Fed’s “watch list.”  With the employment situation unlikely to improve significantly in the medium term, Fed could fall into the ‘unemployment-QE’ cycle feeling compelled to “do more” at the expense of inflation (it is essentially a bet on how much QE before rampant inflation), thus the greater good of the nation’s economy.


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America's Demographic Cliff: The Real Issue In The Coming, And All Future Presidential Elections

In four months the debate over America’s Fiscal cliff will come to a crescendo, and if Goldman is correct (and in this case it likely is), it will probably be resolved in some sort of compromise, but not before the market swoons in a replica of the August 2011 pre- and post-debt ceiling fiasco: after all politicians only act when they (and their more influential, read richer, voters and lobbyists) see one or two 0’s in their 401(k)s get chopped off. But while the Fiscal cliff is unlikely to be a key point of contention far past December, another cliff is only starting to be appreciated, let alone priced in: America’s Demographic cliff, which in a decade or two will put Japan’s ongoing demographic crunch to shame, and with barely 2 US workers for every retired person in 2035, we can see why both presidential candidates are doing their darnedest to skirt around the key issue that is at stake not only now, be every day hence.

Sadly, the market which due to central-planner meddling, has long lost its discounting capabilities, and is now merely a reactive mechanism, will ignore this biggest threat to the US financial system until it is far too late. After all it is the unsustainability of America’s $100+ trillion in underfunded welfare liabilities that is the biggest danger to preserving the American way of life, and will be the sticking point in the presidential election in 80 days. However, don’t expect either candidate to have a resolution to the demographic catastrophe into which America is headed for one simple reason. There is none. 

The problem in a nutshell: the first wave of Baby Boomers, born between the years of 1946 and 1964, officially reached retirement age in 2011. There are a whole lot of Baby Boomers – just under 76 million, to be exact – that will depend on new money flowing into the system to help keep the entitlements coming. According to the latest Social Security and Medicare Board of Trustees 2012 Annual Reports Social Security now pays out more than it takes in, and is expected to do so for the next 75 years. 

And while the market, and its “discounting” may now be largely irrelevant, those who care to be educated about the facts behind America’s Demographic Cliff, here is ConvergEx and “Talkin’ ’bout your generation

According to the Census Bureau’s Current Population Survey, about 40.2 million people – 13% of the entire US population – are 65 years or older and eligible to receive government entitlements such as Medicare and Social Security. At current levels, spending on these entitlements make up about 8.7% of GDP – about $1.3 trillion. While this may sound sustainable over the short term, in coming years the amount of entitlement outlays necessary to keep up with retiring Baby Boomers is going to send spending through the roof. By 2030, for example, a full 19.3% of the population will be claiming SSI and Medicare benefits, based on the Census Bureau’s population projections (the CB uses an adjustment factor for the age cohorts based on mortality rates, foreign-born immigration, and life expectancy). For simplicity’s sake, here’s a decade-by-decade look at where the aging population – and expenditures – will be in the years to come, courtesy of the Census Bureau and the Congressional Budget Office (CBO):

  • In 1900, 4.1% of the US population was 65+. By 1950, this number had almost doubled to 8.1%. As the chart following the text shows, the Baby Boomers (now ages 48-66) represent the most significant population wave in US history. According to the CBO, the population aged 65 and over will increase by 87% over the next 25 years as Baby Boomers enter retirement, compared to an increase of only 12% in those aged 20-64.
  • This year, 13% of the US population is 65+ and entitlement spending accounts for 8.7% of GDP. And that number only includes SSI and Medicare, not Medicaid and future Obamacare subsidies which add to these outlays.
  • In 10 years (2022): 16.1% of the population will be 65+, entitlement spending estimated at 9.6% ($1.5 trillion, based on 2011 US GDP)
  • 2037 (25 years on): 20 % of the US population will be 65+, entitlement spending estimated at 12.2% of GDP ($2.0 trillion)
  • Not surprisingly, there will be far more women than men in the 65+ population. Women currently live about five years longer than their male peers, on average. Accordingly, the Census Bureau estimates that in 2030, there will be about 8 million more women than men that are 65 and older by 2030: 27.8 million versus 35.7 million.

It’s a pretty tough picture, to say the least; as the population ages, we’re looking at more and more money dedicated to retirement benefits with a smaller workforce to fund the spending. We’re not the only ones, either: Japan is in worse shape than the US, with 23.1% of the population already over 65. In 2050, government statistics forecast that number to be 39.6%. Europe’s in the same boat: 17.4% of the population in EU countries was 65+ in 2010, and it’s expected to be about 30% by 2060. The developed world, essentially, is facing a demographic “Fiscal cliff” with no clear-cut strategies for how to fund the liabilities inherent in an entirely predictably aging population

Are there any social positives that might mitigate this plethora of indisputable financial concerns?  The math is the math, as quants are fond of saying, so I don’t expect that there are overwhelming offsets to the problem of an aging population.  But there are some notable “Positives” which don’t get the attention they deserve because they offer such a lightweight counterbalance to the challenges I outlined above.  Still, here are a few thoughts:

  1. Stronger voter turnout/greater engagement in the political process. The 65+ age group has beaten out every other age cohort in voter turnout in every Presidential and Congressional election since 1980. In the latest presidential election, 68.1% of those aged 65+ went to the polls, versus and average of 51.2% for the rest of the voting-age population. The reason for this differential is straightforward: it easier for retired persons to vote given fewer time restrictions, allowing the higher turnout rate. But given an average turnout of 58.2% overall in 2008 for Obama’s election, compared to an average of 70-80% in other developed countries (Japan, Germany, Canada, Spain), the growing 65+ population will certainly help the U.S. come closer to its developed country peers on this metric.

    The stronger turnout of these voters, and their sheer numbers, are also likely to have an important impact on US political races in the years to come. They’re going to be the biggest voting bloc in American history, if patterns hold: 68% of them is almost 52 million, larger than the entire Black/African American voter population, for example. And like other older generations, according to a study by the Pew Research Center done in late 2011, Boomers have become slightly more conservative as they’ve aged, and slightly more of them (45% vs. 51%) intend to vote for Governor Romney in the upcoming election. However, given that one of their main concerns is the maintenance of entitlement spending, it seems unlikely that Boomers will continue to support a party that recommends reducing the deficit by cutting entitlements. All candidates, then, and especially the GOP, will need to take a hard look at the wants and needs of the Boomers. The 2012 Presidential election – and many others afterwards – will quite literally depend on their votes. 

  2. Lower crime rates. The younger population is by far the more crime-prone age cohort, according to the Department of Justice and the FBI Uniform Crime report. The DOJ publishes an annual report on arrests by age, the first occurring in 1980 and the latest in 2009. Over these years, the number of total arrests has increased by 30.9% for the entire population; for the 65+ population, it’s gone up 0.3%. Moreover, the Baby Boomer generation (in 2009, ages 45-53) accounted for only about 7% of all crimes. What were their most “Popular” crimes? Drunkeness and DUI. Violent crimes are almost exclusively the MO of the 18-29 cohort, who account for almost half (44%) of all arrests. It’s not too far of a stretch, then, to think that as our population ages, we can expect less and less violent crime across the country – though you may want to be careful on the roads.
  3. Lower resource consumption. The older population tends to cut down on resource consumption after retirement, particularly in the case of gasoline. Once they no longer need to commute to work and move into smaller, more affordable houses, the amount of fuel needed for transportation and heating/cooling should drop, perhaps significantly.

    Take motor gasoline usage as a benchmark. Just under 60 million Baby Boomers consider themselves a part of the labor force, according to BLS data. 85% of all Americans drive to work, according to a late 2010 Gallup poll, with an average commute of 30 miles round-trip – about 45 minutes – and an average of 20mpg (courtesy of the Bureau of Transportation Statistics). Using these estimates, we can calculate that the average Baby Boomer commuter uses about 33 gallons of gas each month; assuming that 85% of them drive every day, that’s about 1.7 billion gallons of gas being used per month.  As they retire, there are actually fewer new entrants into the workforce to replace them, meaning fewer drivers and less fuel consumption.

  4. Growing domestic service economy. An older population becomes more and more dependent on services as they age, particularly in the realms of healthcare and transportation. More and more people will be needed to fill the void in these service areas as the Boomers retire. Luckily for the US workforce, these are jobs that can’t be outsourced: healthcare especially depends on on-site care and personal service.

    In fact, as the population has begun to age, the US has already seen some steady growth in service-related positions. The BLS’s Occupational Employment data logs the number of occupations across the US in major industry sectors as well as almost 800 detailed occupations. According to the survey, the US has seen a -3.3% drop in job growth overall. Healthcare and “Personal Care”, however, have grown 13% and 11% each since that year. Occupations such as physician’s assistants, pharmacy technicians, and home health aides are in high demand, and will most likely continue to be so as the population ages and begins to rely more heavily on these services.

  5. Declining unemployment and increased labor force participation for this segment of the workforce. One of the most unique aspects of today’s aging population is their continued presence in the workforce. According to the BLS, 23.4% of Americans age 65+ were in the labor force as of June 2012, making up a full 4.5% of the total civilian labor force. They also had a below-average unemployment rate of 6.9%. If this trend continues, we’re likely to see more productivity from the upper end of the age spectrum in years to come as Boomers delay retirement in favor of working.

    On the flip side, as more of the aging population retires and leaves the workforce, more job opportunities will open up for those who are currently unemployed. The youngest members of the workforce, ages 18-24, will be the biggest beneficiaries of this shift, as they typically seek the same kind of jobs that the older population currently occupies. When these positions are vacated by the older group, then, and refilled by the younger groups, we may see a decline in youth unemployment rates.

    The older workforce also opens an interesting opportunity for some employers. The younger half of the Baby Boomer generation is tech-savvy, experienced, and definitely needs the money. This set of skills won’t go unnoticed in the labor market.

Unfortunately, these societal “benefits” are only a thin silver lining on a very, very dark cloud. Social Security and Medicare spending are projected to grow exponentially as healthcare costs explode and the biggest population wave in the history of the US starts to enter retirement. The Congressional Budget Office expects spending to increase by 150% over the next 25 years, which is hardly sustainable with barely 2 workers for every retired person in 2035… there’s a storm a comin’

Sources here:

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