The Baby Boom Tsunami That May Drown The Economy

Submitted by Stock Board Asset Management

In our most recent article Millennials: A Menacing Metamorphosis To The Status Quo breaks down an interview hosted by Gordon T. Long and Charles Hugh Smith. The interview discusses the massive generational shift occurring in the United States as the Millennial generation sets to stitch their beliefs and ideas in the American fabric. But there is an issue. The status quo i.e. the baby boomers are not ready to give up the reigns forcing a generational clash, and as described by Gordon T. Long and Charles Hugh Smith will continue for the next eight years. Such a clash will lead to economic and social consequences. In terms of crisis, Strauss–Howe generational theory provides an excellent blue print of this generational clash called the ‘Fourth Turning’, where the old older is dismantled giving way to the new order.

To continue the theme of generational shifts, we have come across an interesting presentation hosted by Mike Maloney of called ‘The Baby Boom Tsunami That Is Set To Drown The Economy’. His analysis rhymes with Gordon T. Long and Charles Hugh Smith of a colossal change in demographics that is currently underway in the United States. Maloney outlines how the baby boomer generation is becoming a ‘max social burden’ on an economic basis and in his own language “mandates a stock market crash”. His thesis is simple and it’s all about the structural issues of an aging population becoming less productive and demanding more withdraws from the system.

Like a Tsunami, Maloney outlines in a series of graphs, the rise of the baby boomer generation in the 1950’s, 1960’s, and 1970’s. As the baby boomer generation morphs into the working and max spending period of life this has contributed to the massive stock market and real estate bubbles of the 1990’s and 2000’s. But times are changing as the baby boomers are now transitioning into max savers and ultimately max social burdens in the years of 2020-2030. During this time period, the working age and max spenders in society will have difficulties in supporting the aging population.

In 7 slides, Maloney highlights an actual wave of the baby boomers vibrating throughout time from ‘child’ to ‘max social burden’.

Bonus: Japan seems to be ahead of the curve when it comes to an aging demographics. If Maloney is right about the US could we be turning Japanese? Most importantly, will the SPX500 mimic an early 1990’s Nikkei225 stock index?