Politicians and markets have historically gone together like wayward children and disciplinarians. wanes further, financial markets will be expected to exercise more restraint over politicians with the checkbook as the voting public will not likely vote for a spending cut or higher taxes. Et cetera.Ī younger person doesn’t have to be a rocket scientist to understand the implications this current trajectory has on their future.
#LAST DODO BIRD SPOTTED PLUS#
The other 50 cents will be spent on everyone and everything else – programs that directly benefit the under-65 age group plus defense and infrastructure, national parks and the National Institutes of Health, Homeland Security and environmental protection. The CBO data also forecasts that in 10 years, 50 cents of every federal dollar spent (excluding interest on debt) will go to senior citizens, primarily in the form of Social Security and Medicare, even though they will comprise only 20% of the population. The resulting frustration is one reason more aggressive proposals are developing for the government to borrow and spend more.ĭemographics: The Congressional Budget Office (CBO) data shows our society continues to age as the percentage of the population who are 65 and older steadily climbs.
The Fed’s efforts have directly benefited investors and borrowers, but not nearly as much for all others. The Fed’s attempts to goose the economy by inflating asset prices is not a bug but a feature of its low interest rate strategy. The Fed’s Hammer: Since 2007, economic growth has slowed dramatically. A populist message is resonating with both the left and the right. People are looking to the government for added help. Non-economic measures of advancement such as the recent drop in life expectancy signals a much rougher life for a significant segment of society. Household income and wealth have become much more unevenly distributed due to a variety of hurdles to upward mobility, including healthcare, education and technology. Not Your Parents’ Standard of Living: It’s been harder for members of the newer generations to be better off than previous ones. Let’s first explore why the shift is happening. This discussion is about what I think is happening and will happen, not what I think should happen. The big question for investors is what this shift might do to the markets. The political landscape has shifted to a populist stance, increasing the probability that the sea of red ink will get deeper, with less pushback from the rarely spotted fiscal conservative. Except for more taxes on the “rich,” the absence of higher taxes shouldn’t be an impediment to increased spending on additional programs. Enthusiastically, spend and borrow more – a lot more.
Raising taxes is not a priority either.ī. No serious efforts to rein in debt by addressing the primary driver: mandatory entitlement spending. Then continue to spend and run up the federal debt to increasingly higher record levels. Entering the 2020 presidential election, the candidates’ positions regarding deficit spending seem to be coalescing around one of two options:Ī.
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