Guest Post: The Brewing Generational Conflict

Tyler Durden's picture

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Financial promises made under different conditions and assumptions are null and void, period.

Essayist Eric A. touched on a key theme of the next decade in his two-part series A Brief History of Cycles and Time, Part 1 and Part 2: the political, social and financial dominance of the Baby Boom generation, and the eventual erosion of that dominance.

The promises made to the 76 million baby Boomers cannot be met. It's really very simple: promises made when the economy was growing by 4% a year and the next generation was roughly double the size of the generation entering retirement cannot be fulfilled in an economy growing 1.5% a year (and only growing at all as the result of massive expansions of public and private debt) in which the generation after the cohort entering retirement is significantly smaller.

Just look at this chart: demographics is destiny, and the so-called Silent Generation (roughly those born 1925 - 1942) currently drawing Social Security and Medicare benefits is somewhere between half and 2/3 the size of the Baby Boom.

Meanwhile, Generation X that follows the Baby Boom is almost half the size of the enormous cohort currently entering retirement. Sorry folks, the numbers don't add up, no matter how you finesse them: a smaller working population in a low-to-zero growth economy burdened with fast-rising debt cannot fund the pay-as-you-go retirement of 76 million citizens, fully 25% of the entire U.S. population.

(Recall that Social Security, Medicare and all other entitlements are pay-as-you-go. There is no trust fund; the current benefits are paid in full by taxes paid by current workers/taxpayers or by Federal borrowing via the sale of Treasury bonds.)

(The numbers and dates of generations are inexact; the Silent Generation, for example, is assumed to have missed serving in World War II but my father was born in 1926, joined the U.S. Navy in 1944 and was on a LST preparing for the invasion of Japan in early 1945, so this is not true of all Silents. The Baby Boom is typically defined as those born between 1946 and 1964, but many of those born in 1959-64 do not feel they belong to the "earlier" Baby Boom, and so some people divide the Baby Boom into two cohorts, or start Generation X in 1961. The lack of precision does not change the basic demographics.)

Everyone takes the present trend, takes out a ruler and pencil and projects it into the future, as if current trends will continue in a straight line. But they never do; the world is dynamic and trends change and reverse.

I have been surprised by the deep emotions that arise out of our cultural Id when generational characterizations and conflicts are openly discussed. Perhaps this is why these issues and feelings are rarely aired in the mainstream media.

In the free-form blogosphere, these officially inconvenient (i.e. suppressed) emotions are expressed, and these few honest expressions garner large audiences and a great many highly charged comments.

My position on the entitlements promised to the Baby Boomers has been clear since 2005 (Boomers, Prepare to Fall on Your Swords June 2005): demographics, the changing job market and the destructive consequence of financializing the U.S. economy render the entitlements promised (Social Security and Medicare) unpayable.

The current 115 million full-time workers cannot sustainably support the 110 million people currently drawing Social Security and Medicare/Medicaid--and the number of retirees entering these entitlement program will rise by millions in the decade ahead.

This worker-beneficiary ratio (already 1-to-1) will only become more unsustainable as Baby Boomers retire and the forces of The End of Work erode full-time jobs The End of (Paying) Work (January 21, 2009).

The Promises That Cannot Be Kept (July 6, 2011)

That Which is Unsustainable Will Go Away: Medicare (May 16, 2012)

The generation in power has the biggest stake in retaining the status quo. Anything that threatens the status quo threatens their power and all that has been promised to them by the status quo.

As a result, any real reform that reduces entitlements to a sustainable level is politically dead on arrival (DOA). Reform is thus as impossible as paying the promised entitlements.

Though he is often presented as belonging to a new generation, President Obama (born 1961) is a Baby Boomer in age, outlook and politics, accepting the fantasy that 25% of the nation can draw hefty, open-ended benefits from Medicare indefinitely.

The solution is to work backwards from what the current generation of workers can afford to pay, not to work forwards from promises made when things were different. The pool of money that can be skimmed from the productive economy via taxes to pay for national defense, the care of veterans, education, welfare in all its forms, corporate and individual, all the myriad departments of government and Social Security pensions and Medicare is not unlimited. Difficult choices will have to be made, and what was promised decades ago is not the key consideration: what is foremost is the sustainability of the nation as an ongoing concern, which means focusing on the generations coming of age and those shouldering the tax burden going forward.

It is a truism of the entitlement mindset that the greater the entitlements promised and offered, the greater the resentments and self-absorption of the beneficiaries. I have often written about the state of permanent adolescence the Savior State/entitlement mindset engenders:

Our Many Layers of Entitlement (September 29, 2011)

The State, Dependency, Addiction and Reciprocity (September 28, 2010)

Opting Out and the Culture of Entitlement (March 29, 2010)

Entitlements, Taxes, Inequality and Three-Way Class Warfare (September 20, 2010)

Tyranny of the Majority, Corporate Welfare and Complicity (April 9, 2010)

Entitlements and the Federal Deficit (February 5, 2011)

We desperately need an adult discussion focused on reality rather than resentment. The solution will require dismantling open-ended, everyone-deserves-everything Medicare, which will bankrupt the nation itself. The solution is currently "impossible": The "Impossible" Healthcare Solution: Go Back to Cash (July 29, 2009)

As for pay-as-you-go Social Security, it will have to be means-tested: those drawing thousands of dollars a month in other pensions will have to let go of "what wuz promised" so other Boomers who have only Social Security can receive their full benefit. What exactly is so difficult about that?

I am a Baby Boomer, born 1953, and I hope our generation musters the courage to face reality and the need for re-assessment and adjustment and yes, the word that is tossed around in endless lip-service but avoided in the real world, sacrifice. Anything less will be a generational failure of monumental proportions.

I refuse to burden our children and grandchildren with mountains of debt so I can get the full measure of "what I wuz promised." Financial promises made under different conditions and assumptions are null and void, period. Reality trumps "what wuz promised" every time.

What nobody dares say is that if the 76 million Boomers press their claims to the point the nation is bankrupted, then the next generations (X and Y) will have to wrest political power from the retirees, not for their own sake but for the sake of the nation and for the generations behind them.

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TrumpXVI's picture

Adult discussion?


The last time I heard an adult discussion I was talking to myself.

jbvtme's picture

boomers, x, y...fuck that we're going post industrial.  get used to it, bitchez

AlaricBalth's picture


Posted this awhile ago yet it seems apropos to this ZH article.

The next ten to twenty years will be defined by an enormous continuing demographic shift. As the first wave of the baby boom generation has finally hit the age of 65, most of the 77 million of us will now start to become net takers instead of net contributors. For the next 19 years, 10,000 boomers will be achieving retirement age each day. It going to take 2 workers to support each retiree. Corporate America planned for this long ago by phasing out the old traditional retirement plans and replacing them with 401K's and IRA's. Now state and local governments are facing insolvency due to under-funded pensions and poor planning. The current debates in Congress concerning deficits and debt ceilings are a short term smoke screen which does not address the true demographic problems they know exist but refuse to acknowledge. The amount of unfunded liabilities which are promised to the boomers is a staggering number. The estimates range from a low of $53 Trillion to a high of $202 Trillion over the next 20 years.  Lets see the Federal Reserve print that up!

Collectively, we boomers were lucky. We were the most healthy, educated and privileged generation ever born. Our youth was spent virtually worry free. Our college educations were inexpensive, gas was cheap, jobs were plentiful and our futures were bright. We were the "Hippies" of the late 1960's and early 70's. Love was free and drugs were cheap (or was it the other way around). Then the 1980's rolled around and we became "Yuppies". We began to believe that success was our birthright. We bought our BMW's and wore our V-neck sweaters. We turned conspicuous consumption into an art form. Hell, even Newsweek Magazine gave us our own year (1984). We were so busy clamoring to the top of the corporate ladder we forgot to develop any job or management skills which would lay a foundation for future generations to flourish.

Then as we aged, we hit our peak spending and borrowing years in the 1990's.  We went a bit middle age crazy. We splurged on second homes and McMansions. We thought fuel would be relatively cheap forever and bought gas guzzling SUV's. We also padded our financial statements and maxed out our credit cards trying to "keep up with the Jones's". Some of our brethren became bank CEO's and leading politicians, whose unethical and irresponsible behavior has been a reflection of our entire generation. We didn't want the party to end and they just tried to prolong it for us. We wanted it all and never learned nor cared for moderation.

And now in the Autumn of our lives it looks like we are going to get it all (of course in devalued dollars). We will leave those coming up behind us with nothing but debt, austerity and a lower standard of living. We will be reigning in our spending and hoping to save so we can offset future inflation. The malls, our cathedrals of consumption, will be ghosts towns compared to what they were, with "30%-70% off" signs decorating their stores windows. We will be net sellers of equities and mutual funds soon, not net buyers. Therefore, trade accordingly. It was fun while it lasted but now the piper must be paid. You know the old saying; the longer the party the bigger the hangover. Well, this hangover may last 25-30 years until the last of my generation are dead, either through natural causes, death panels or intergenerational warfare.


McMolotov's picture

This is — how you say? — too much truthiness. I need a drink.

old naughty's picture

Oh, not to worry. It will be quick.

The dominance is over much sooner than 20-30 years.

No money no talk !



A new cycle already begins. War, baby boom...SHTF !

NoDebt's picture

It's over when enough of the boomers have passed away to lose their grip on the nation's political machine.  And not a day sooner.

Bad timing for me (1968).  Oh well, shit happens.

Fukushima Sam's picture

Humans are a selfish lot, but the Boomers really take the cake.

torak's picture

Screw the "entitlement".  I just want my goddamn money back.  Give me the money that I've paid into the system, right now, and I'd happily forego any "entitlement payments".  Now -- How the fuck is that selfish?

What?  The government's already spent all the money I paid into the system on foreign wars and bank bailouts?  Well, that's sort of selfish? 

Humans are a selfish lot, but the government and their corporate buddies really take the cake.

Dark_Horse's picture

The entitlement funding will run out during the boomer retirement.

Then, GenX will START their retirement with nothing more than what they can carry.


Uncle Remus's picture

Who the fuck you think's been paying for it? Involuntarily I might add.

A Nanny Moose's picture

Queue Amnesty.....can, kicked.

Joe Sixpack's picture

This demographic trend is the reason that both rebulicrats and demipublicans are allowing illegals in- to increase the paying side of the equation. Unfortunately, they did not realize the equation is multi-dimensional, and forgot about the job creation part of it.

Spastica Rex's picture


I anticipate dying from either exposure, thirst, hunger, or treatable disease, or maybe some combination thereof.

I was born in 1966. 

Might as well have been been born a century earlier.

torak's picture

Advice:  Move to a third-world country.  You'll be better off.

FYI, I've taken my own advice.

Kobe Beef's picture

Or, go ahead with amnesty and 1965-style immigration, and let the Thrid World come here.


MrBoompi's picture

I doubt we are going to be allowed to be takers. We paid for the previous and current retirees benefits, and now that the economy has tanked, unemployment is so goddamn high, and interest rates are so fucking low what are we supposed to do? I'm sure the government will renege. The rich, who control the government, won't pay more so it will just be a big "fuck you you're on you're own suckers" to everyone who thought your payroll deductions would help you in the future.

RafterManFMJ's picture

I'm playing mozart to my little patch of potatoes, 'cause if they don't come through for me, I starve to death this winter.  Grow, grow like the wind my little Yukon Golds...

Freddie's picture

For God's sake do not play his Requeim to them.   Even though bits were finished by his student Sussmayr, because Mozart had died, it is incredibly beautiful.  The potatoes will like Mozart's Piano Concerto No. 17 in G Major K 453.   Potatoes like Mozart in major keys.

Poor Mozart - he never got an EBT/SNAP card or Obamacare.   Died much too young. 

RafterManFMJ's picture

Why the fuck is gardening so complicated?!

ElvisDog's picture

Yeah, but Mozart had a lot of fun during his short life. He lived the life of a rock star.

Renfield's picture

Being crazy helped. Have you ever read his letters? A weird combination of sophistication and immaturity, manic ramblings, begging for money sometimes, complete with the odd smutty doodle and exaggerated outburst.

I read them through one summer when I was 17. 'Twas a pretty good summer project.

Gottliebus Theophilus Amadeus Mozartus was not a wise man, nor exactly popular. He cleared drawing rooms, to put it mildly. Some theorise that it was syphilus, others manic-depression. If it hadn't been for the Masons I wonder how he would have made it even as long as did in Vienna. His letters are heaps of fun to read today (tho' I'd recommend an abridged excerpts version).

I guess it was sort of a rock-star life, but contrary to the few exceptions we're forever hearing about, I think it would be more fun to read about than to live. :-) Kinda more of a "Sid & Nancy" sort of lifestyle, than Bono. (Well, if Nancy had been a rather dull, undereducated, housewifely sort, who turned out to be shrewd with money when she wasn't sharing it with a husband.)

Maybe life's just more fun for the insane than it is for the sane, and the best fun if you're a genius to boot, money be damned.

1C3-N1N3's picture


sophistication and immaturity, manic ramblings, begging for money sometimes, complete with the odd smutty doodle and exaggerated outburst

That is every musician, ever.

CHS sports a Les Paul in his blog photo. Surely he had his moments like that as a youngster at some point.

Stoploss's picture

"What nobody dares say is that if the 76 million Boomers press their claims to the point the nation is bankrupted, then the next generations (X and Y) will have to wrest political power from the retirees, not for their own sake but for the sake of the nation and for the generations behind them."

You can bet your ass on that.............

It will be by force unfortunately.

Freddie's picture

Oh great.  The ****ing idiototic Baby Boomer/Woodstock/TV Generation retards or the even dumber iPhone/Facebook Generation, many who voted O-Muslim.  


Vooter's picture

"It will be by force unfortunately."

Uh, yeah...from BOTH sides. Puh-leeze...

Omen IV's picture

a complete crock of shit!

this guy with his loaded words - "adult discussion" - "entitlements" are all out of the playbook of his handler P Peterson - he gets paid for nonsense - just like the estimated deficit was one trillion in the romney BS election now its 300 billion - all BS all the time

10,000 go over the line every day, by the next general presidential election 12 million boomers will see that government Medicare program is well done first hand and will probably for the first time in their life appreciate government CAN do things right and VOTE accordingly and stop the Peterson machine and the various phony echo chamber providers

funding for useless war and the associated wasting implements has been the problem since WWII - Eisenhower - who knew best - said the MIC was the problem never mentioned SS and knew the demographics

this is about a permanent change in priorities - Austerity is documented empirically - it doesnt work in practice  - or in theory see: R & R phony study

the boomers can listen and those after them,  about what Peterson says they "deserve" or they can "just say NO" and create the new order.

with discretionary cash flow declining from wages for savings, interest rates with no significant income and inflation continuing unabated -  even republicans get the message, which is why national approval - all ages - is over 75% for the SS & Medicare programs

 retirement systems are all over world including china - the USA is regarded as a C program - as is:

 stop the promotion - go sell stocks in a boiler room if you need money -


Freddie's picture

LOL!  Too true.  F Baby Boomers.  We never heard the end of just how important they are. How important Woodstock was even though every band at Woodstock sucked except The Who.

The most corrupt generation but the young fuxx (Gen X,Y, Z, DD) helped elect the O-muslim so they deserve what they are gonna get too. 

Hope & Change - go die oldsters.  The TV Generation.  LOL!  Well O-TV and o-Hollywood f**ked you. 

What do you think of that?!  Look at you now.

AlaricBalth's picture

I must disagree Freddie. Jimi Hendrix was awesome.
Wish I had seen him live. If you ask most baby boomers they will say they were at Woodstock, so I guess attendance must have been over 50 million.

Citxmech's picture

WTF?   Richie Havens, Ravi Shankar, Canned Heat, Mountain, Grateful Dead, Creedence Clearwater Revival, Janis Joplin, Sly & the Family Stone, Jefferson Airplane, Johnny Winter, Blood, Sweat & Tears, Crosby, Stills, Nash & Young, and Jimi Hendrix all suck?   

Get off the crack-pipe Frddie. 

jwoop66's picture

Its amazing how cheesy and aweful a movie can look twenty years later.   That was horrible.   


Also,  why did pacino kill Kyle Bass like that?

Chuck Walla's picture

As an aging boomer, I wish to thank you all for adopting me. Thanks for the allowance, too.


venturen's picture

Is that like an adult phone line?

Steaming_Wookie_Doo's picture

"I refuse to burden our children and grandchildren with mountains of debt so I can get the full measure of "what I wuz promised.""

Hah, this guy's the only one. This is going to be UGLY, one way or another. Either via hyperinflation, soviet style shortages, but all "solutions" point to oligarchs silently killing as many old folks as possible.

random shots's picture

If we make it to D-Day, the government will just borrower the shortfall.  IF being the imperative word. 

Cognitive Dissonance's picture

"The current 115 million full-time workers cannot sustainably support the 110 million people currently drawing Social Security and Medicare/Medicaid--and the number of retirees entering these entitlement programs will rise by millions in the decade ahead."

No soup for you......25 years.

Freddie's picture

It is worse than that. The Dems and RINOs like Rubio/MCCain want to give endless benefits to illegals.   Go look at the data becuase over 70% of immigrants get some form of govt welfare.  The majority stay on it for LIFE. 

Stuck on Zero's picture

Wait!  Aren't the workers of today three to ten times more productive than the workers of forty years ago?  Factories and farms are automated.  We have too many workers. 

On the other hand ... government has swelled like a giant cancer to absorb everyone's productivity making us all poorer.


RafterManFMJ's picture

Aren't the workers of today three to ten times more productive than the workers of forty years ago?


Damn right they are! But sadly, we fired 9 of the 10 since one man CAN in fact do it all. Then we fired him and moved the factory to China. 

Stuck on Zero's picture

So true.  And then the government hired them all at outrageous expense to control and regulate the others.


malek's picture

Whaddaya mean, fired 9 out of 10?
We can now produce ten times as much with the same number of workers!

We're now only looking, together with Krugman, to find the buyers for that 10x of stuff...

fonzannoon's picture

Just print the money....75 trillion or whatever the unfunded liabilities are....and give it to the boomers. promises are promises. Then, because it's only fair, print another 75 trillion and give it to me and my generation. But that's where it ends. everyone behind me has get back to basics. Otherwise we run the risk of being currency manipulators, and we can't have that.

Beam Me Up Scotty's picture

No, just print the 75 trillion for our generation.  Why waste another 75 trillion for anyone else?  LOL.  I assume you are a 40 something like me Fonz.  If not, you can go without too.  =P

fonzannoon's picture

LOL i'm 36. the key takeaway from this article as I see it, is, when tshtf, make sure to blame your neighbor and your somewhat rich Uncle etc. 

It's important that we act like a bunch of brainless savages who can only manage to not blame and attack each other daily, with the help of the police state.

greyghost's picture

well said fonz......just another writer spewing hate and fear amongst the citizens. someone is posting about "just printing the money". would that be in federal reserve notes or "UNITED STATES NOTES"? now that means everything.

McMolotov's picture

"We're the middle children of history, man. No purpose or place. We have no Great War. No Great Depression. Our Great War's a spiritual war. Our Great Depression is our lives." —Chuck Palahniuk

It's less than comforting to read that quote and realize ol' Chuck was wrong. Not because everything is turning out peachy, but because we'll likely experience the mother of all wars while we're in the middle of the Greatest Depression.

Totentänzerlied's picture

What alternative do you propose? Not blaming the people who quite happily went along with the debt money fiesta for uh, their entire lives and who continue to greedily defend it like spoiled children... in addition to the debt money, welfare, and warfare pimps?

Sorry, not doin' it. These people fucked up, big time, and a tort is a tort. The fact that everyone did it collectively does not absolve anyone of guilt.

Renfield's picture

Agreed. One thing that the Boomers, X, Y, and Millennial have in common is a tendency to avoid harsh truths.

"Don't blame the Boomers" because it just "divides" people is more lipsticking of the piggy. There was never any real Great Satan, and the criminals who now control our governments and corporates with an iron fist could never have made it that far without years of peasantry supporting and enabling them. The same peasantry that supports and enables those same criminals to this day. Yes there are always heaps of exceptions but, speaking GENERALLY, the fact is that Boomers ARE to blame. Other generations are too, in their own different ways, but this topic is Boomers and yes, it IS their fault, just as much and arguably more than other generations.

I would not want to be a Boomer today. Other generations knew to store up their youthful labour so as to enjoy a couple decades of retirement; they did not. They were never taught this but were told from the time they were young that for them, it wouldn't be necessary. Freddie is right about the evil effect of Hollywood/corporate/TV propaganda. They were fooled into believing that they did not have to 'grow up'; they were raised with 'when you wish upon a star' and all that Disney crap; and a huge majority of them believed it. To the point that now they are the generation that is staring straight into the abyss: no years of youthful labour left, AND no stored-up wealth. The abyss of utter government dependency.

Yes, they will certainly try to "press their claims". It is all they know to do and frankly all there is left for them, the first of those who are at the brink of the abyss now. Old age + no resources + dependency on a criminal, insolvent government.

I don't envy them, and I don't think of them as lucky. I believe they will be shown to be a singularly unfortunate generation, a tragedy to serve as an example to history, like that last 'decadent' generation of Romans. The lie that brought them down is the lie that they didn't have to grow up.

I'll be supporting my parents, and I'm prepared to do that as best I can, but as far as I can tell, any Boomers who have not made it a priority to develop some kind of family support network are in very grave trouble. The degree to which they brought it upon themselves can only make it feel worse. I think 'blame' is going to be the least of their worries and I hope they do have relationships to make up for the lack of financial planning.

Vooter's picture

I think if you just generalize a LITTLE more your post will be perfect!

psychobilly's picture

"Yes, they will certainly try to 'press their claims'."

Good luck to them "pressing their claims" against a bunch of ghosts and shadows. 

People who have been awake have had years to prepare for the 76 million outstretched hands.