This Economic Disaster Will Strike (100% Guaranteed)

The Only Question Is When…

Today we address a problem with no solution… unless you are a Yale economist, who argues euthanasia is the only logical choice.

What I’m talking about here is aging.

Old people. Geezers. Dotards. Old fogies.

You get the picture.

Oldsters are a financial burden. That’s not subjective commentary. Just a financial reality because with age comes all sorts of social costs tied to medical care and housing for people who, very often, find mobility to be as challenging as an infant morphing into mobile toddler.

Forget dust to dust. The real challenge is diapers to diapers.

The issue here is that death is in a bear market. The Reaper, though certainly still swinging his scythe, isn’t ferrying nearly as many people across the River Styx on a per-capita basis as he once did. And that has big implications on global governments… which ultimately land on me and you and our financial lives… which is really where I’m going with this dispatch.

A Yale economist, Yusuke Narita, caused a bit of kerfuffle this week addressing this conundrum in his motherland—Japan.

The island nation notoriously struggles with a pensioner problem because it’s home to the oldest population in the world. More than 29% of Japanese are over 65. Doesn’t help that Japan, notoriously as well, sports among the very lowest birthrates in the world.

Narita’s solution to this mathematical challenge: Mass seppuku, ritualistic suicide like we’ve all seen in the movies, where a Japanese person disembowels themselves in what is considered an honorable death.

“I feel like the only solution is pretty clear,” Narita said.

I won’t go so far as to suggest a Jim Jones Kool-Aid moment in America, where the aging population is large, but not as troubling as in much of the rest of the Western world. That said, Uncle Sam cannot escape the fact that he faces a potentially debilitating financial situation as the rest of this decade unfolds.

In short, we got us a head-scratcher as a nation.

The basic math is pretty simple: An ever-increasing army of old people puts ever-increasing demands on the social welfare system they rely on to keep themselves out of poverty in a country where costs are out of freakin’ control.

(Side note proof: I am writing this dispatch from a Starbucks in Lower Manhattan, where I’m working this week. I just ordered an iced latte, sausage/egg biscuit, and a croissant and the cost, pre-tip, was $17.50! Insane. I can get the same in Prague for under $8, and I had something similar in Paris over Christmas for about $10.)

Problem is that as all these Americans transition into reliance on government paychecks, the number of workers supporting each retiree with payroll taxes is declining.

Ergo: Not enough tax revenue to match retiree obligations Uncle Sam is on the hook for.

It’s like those homeowners in the early 2000s who were using adjustable-rate mortgages to buy homes on speculation, gambling that interest rates would remain low. And when rates defied expectations and rose, those same homeowners suddenly realized they didn’t have enough paycheck to cover the monthly costs.

Crisis ensued.

We have a similar crisis brewing with this aging population problem.

Government is going to end up taking on increasingly larger quantities of debt to manage this crisis. There really are limited options.

Politicians can cut Social Security/Medicare spending, but that can’t happen immediately. Government would have to phase that in over a decade or more, given that it can’t just, cold turkey, change the rules that a generation of Americans have been playing by as they rapidly reach retirement age.

Equally important, Congress would face immense backlash from the electorate for pulling the rug out from under the American working class, which, because America is so damn expensive and real wages haven’t advanced since the 1970s, has barely been able to save two nickels for retirement.

Or Congress could radically hike taxes on the wealthy and business. But that would be problematic for the economy and the stock market, because such vast wealth would need to be redistributed. Plus, the business lobby owns Congress in the same way that Chinese emperors owned concubines. The concubines are not in position to rebel.

I’ve been writing for more than a decade now about the reckoning to come.

Economists like to talk about “black swans,” big, negative events that appear out of nowhere and have a major impact.

This aging crisis is a “white swan” disaster in that we can see this swan. We can watch it circling. We know it’s here. We know it’s going to land.

What we don’t know is when.

All we can do is look up and see this swan and think to ourselves, “Yep. When that sucker crash lands into the landscape, it’s gonna create a big ol’ mess.”

Yusuke Narita thinks old people should just commit mass suicide.

I think people should just buy a metaphorical umbrella to protect against the onslaught. That metaphorical umbrella: gold, silver, and bitcoin.

It’s a clichéd recommendation at this point. But there’s a reason why clichés exist—they work.

And when it comes to the problems government face with aging populations and the debt they’re going to need to take on to manage this challenge, the clichés of gold, silver, and bitcoin will serve the situation well.

Better than spiked Kool-Aid, for sure.