Debt Saturation = Game Over

[conraddobler]

http://www.swarmusa.com/vb4/content.php/282-THE-Most-Important-Chart-of-the-CENTURY

This is a very simple chart. It takes the change in GDP and divides it by the change in Debt. What it shows is how much productivity is gained by infusing $1 of debt into our debt backed money system.

Back in the early 1960s a dollar of new debt added almost a dollar to the nation’s output of goods and services. As more debt enters the system the productivity gained by new debt diminishes. This produced a path that was following a diminishing line targeting ZERO in the year 2015. This meant that we could expect that each new dollar of debt added in the year 2015 would add NOTHING to our productivity.

Then a funny thing happened along the way. Macroeconomic DEBT SATURATION occurred causing a phase transition with our debt relationship. This is because total income can no longer support total debt. In the third quarter of 2009 each dollar of debt added produced NEGATIVE 15 cents of productivity, and at the end of 2009, each dollar of new debt now SUBTRACTS 45 cents from GDP!

This is mathematical PROOF that debt saturation has occurred. Continuing to add debt into a saturated system, where all money is debt, leads only to future defaults and to higher unemployment.

 

[jefftheshark]

http://www.swarmusa.com/vb4/content.php/282-THE-Most-Important-Chart-of-the-CENTURY

I read this earlier today on Nathan's site and then saw Denninger comment on it on the Ticker . It's very timely when you see the events of the day.

Most won't care about this, and because the game can go on for quite awhile before any concrete signs of "bad" things occurring, then it's somewhat understandable.

JTS

 

[conraddobler]

I read this earlier today on Nathan's site and then saw Denninger comment on it on the Ticker . It's very timely when you see the events of the day.

Most won't care about this, and because the game can go on for quite awhile before any concrete signs of "bad" things occurring, then it's somewhat understandable.

JTS

Yeah like the Titanic didn't sink instantly when it hit the iceberg.

The lag time between this disaster and the end is epic, which makes a lot of people feel nothing really bad will ever happen.

I wish it would of waited about 30 years to happen and I could of missed it entirely, but seems I'll be right in the sweet spot, wooooo whoooooo, lucky us.

 

[Yuma]

The one thing they don't talk about is economic swings like when Clinton was in office. The government then was projecting surpluses as far as the eye could see into the future and Bush brought that to a halt. What I am saying is these projections "assume" everything continuing as is. As history has shown, things rarely stay the same over many decades. Who's to say we won't have another industrial revolution, or green revolution, or another great financial rally? That would change these projections radically since arguably more money would go into the treasury and we "could" pay down debt.

 

[82CardsGrad]

Yeah like the Titanic didn't sink instantly when it hit the iceberg.

The lag time between this disaster and the end is epic, which makes a lot of people feel nothing really bad will ever happen.

I wish it would of waited about 30 years to happen and I could of missed it entirely, but seems I'll be right in the sweet spot, wooooo whoooooo, lucky us.

 

[jefftheshark]

The one thing they don't talk about is economic swings like when Clinton was in office. The government then was projecting surpluses as far as the eye could see into the future and Bush brought that to a halt. What I am saying is these projections "assume" everything continuing as is. As history has shown, things rarely stay the same over many decades. Who's to say we won't have another industrial revolution, or green revolution, or another great financial rally? That would change these projections radically since arguably more money would go into the treasury and we "could" pay down debt.

This is a good point, and while the future is never certain, the trend is not good. It's just like a saying here in Vegas that goes, "the race may not always go to the swiftest, but that is the way to bet". There are a lot of events that could occur that might make this problem go away, but I'd recommend that everyone prepare as if they won't - and be happily surprised if everything works out.

However, if you haven't already read it, and you'd like to read a good book about the unpredictability of the future and how totally unexpected events can drastically change the course of history, then I'd suggest Taleb's "The Black Swan".

JTS

 

[82CardsGrad]

The one thing they don't talk about is economic swings like when Clinton was in office. The government then was projecting surpluses as far as the eye could see into the future and Bush brought that to a halt. What I am saying is these projections "assume" everything continuing as is. As history has shown, things rarely stay the same over many decades. Who's to say we won't have another industrial revolution, or green revolution, or another great financial rally? That would change these projections radically since arguably more money would go into the treasury and we "could" pay down debt.

The economic good times started to slow dramatically during Clinton's last year or so in office...
Not really defending Bush here as he certainly didn't help the issue, but it's wrong to say that the "surpluses" were "halted" by Bush. That train had already derailed prior to W taking office...

 

[conraddobler]

The one thing they don't talk about is economic swings like when Clinton was in office. The government then was projecting surpluses as far as the eye could see into the future and Bush brought that to a halt. What I am saying is these projections "assume" everything continuing as is. As history has shown, things rarely stay the same over many decades. Who's to say we won't have another industrial revolution, or green revolution, or another great financial rally? That would change these projections radically since arguably more money would go into the treasury and we "could" pay down debt.

Even while that was occuring there were still actuarilly certain gigantic looming problems in SSI and Medicare.

Clinton was mostly lucky to be President during the last great productive spurt of the boomers.

I'm not trying to belittle the guy, or excuse any other President but the times were reflective of some basic cycles.

The depression came after the roaring twenties etc.

No one does know the future, tomorrow some guy might come out and say they solved fusion or an alternative fuel, doom is never certain, but you can surely see it's likelyhood is getting uncomfortably likely.

 

[Duckjake]

Even while that was occuring there were still actuarilly certain gigantic looming problems in SSI and Medicare.

Clinton was mostly lucky to be President during the last great productive spurt of the boomers.

I'm not trying to belittle the guy, or excuse any other President but the times were reflective of some basic cycles.

The depression came after the roaring twenties etc.

No one does know the future, tomorrow some guy might come out and say they solved fusion or an alternative fuel, doom is never certain, but you can surely see it's likelyhood is getting uncomfortably likely.

I don't think you can make any accurate prediction of what is going to happen in this country economically unless you do exhaustive research on the effects of the baby boom generation. Over the next 25 years or so over 30% of the current US population is going to die or retire. Huge numbers of upper middle class wage earners are going to go away.

Enormous amounts of capital will change how it is invested or be withdrawn.

It is going to be interesting times for those 15-30 right now.

 

[82CardsGrad]

I don't think you can make any accurate prediction of what is going to happen in this country economically unless you do exhaustive research on the effects of the baby boom generation. Over the next 25 years or so over 30% of the current US population is going to die or retire. Huge numbers of upper middle class wager earners are going to go away.

Enormous amounts of capital will change how it is invested or be withdrawn.

It is going to be interesting times for those 15-30 right now.

Interesting you say this Duck... here's some support perhaps for your case:

The Next Crisis — Labor Shortages?

Sorry, Boomers, it’s not your fault.

Much blame has been placed on the Boomer generation for staying in their jobs too long due to the economy and denying the rest of us the promotions that are rightly ours!

[pounding fist on desk]

But now, it seems that may just be some misguided recession aggression — and we owe them a pretty big apology.
A new study shows there may actually be labor shortages by 2018.

“If the Baby Boom generation retires from the labor force at the same rate and age as current older workers, the Baby Bust generation that follows will likely be too small to fill many of the projected new jobs,” Barry Bluestone, a professor at Northeastern University and co-author of the report, said.

"There's an enormous aging of the work force, with a very small increase in the 'prime age' work force," which is 18 to 54 or 64, Bluestone explained. "That's a tiny group because it's all part of the Baby Bust generation."

The report, "After the Recovery: Help Needed," is based on projections for population growth, based on U.S. Census data, as well as forecasts for job growth and labor-force participation from the Labor Department.

Historically, after an economy recovers from a recession, there are labor shortages. This happened after World War II and in the early 1960s. And, while this recession is considered the worst since the Great Depression, a similar pattern is expected to emerge in the next 10 years, Bluestone and co-author Mark Melnik, deputy director for research at the Boston Redevelopment Authority, report.

They clarify, however, that it may take two or three years before you'll start to see spot shortages.

And, Bluestone adds, they were conservative in their growth projections — projecting 1 percent per year, as opposed to growth of 2 percent or more in prior recoveries.
The findings suggest that 14.6 million new nonfarm jobs will be added to payrolls between 2008 and 2018 and that by the end of that span, five million could be unfilled.
Such a loss of output would cost the economy as much as $3 trillion over five years, the study suggests.

Now, I know what you're thinking — But aren't Boomers staying in the workforce longer so they make up the gaping hole in their retirement savings?
es, and the study suggests that even that may not be enough to stave off a labor shortage.

So, the study takes it a step further, suggesting that the potential for such shortages means encouraging workers 55 and older to engage in "encore careers" — in places where there will be the biggest shortages — "will be vital to meeting work-force shortages and critical social needs.”

The study lists 15 jobs that will provide the largest number of “encore career” opportunities. Not surprisingly, many of them are in health care:

· Primary, secondary and special-education teachers
· Registered nurses
· Home health aides
· Personal and home-care aides
· Nursing aides, orderlies and attendants
· Medical assistants
· Licensed practical and licensed vocational nurse
· Business-operations specialists
· General and operations managers
· Child-care workers
· Teacher assistants
· Receptionists and information clerks
· Medical and health-service managers
· Clergy
· Social and human-service assistants

"Many of these jobs will go begging unless older workers move into them and make them their encore careers," Bluestone writes in the report.

So, dear Boomers, please accept our sincerest apology. But please, if you must keep working after 55, consider being a priest or information clerk. Godspeed. The restrooms are to your left and the exit is to the right.

 

[Duckjake]

55? Most of the boomers are already over 55. Even using the realistic retirement age of 67, to take advantage of better SS benefits if they still exist, you are looking at shortages in just 10 years.

For instance I am in the Contract Bond business. The vast majority of people in upper management in this industry are baby boomers in their mid to late 50s. There are going to be huge numbers of openings by 2015-2020.

 

[conraddobler]

I don't think you can make any accurate prediction of what is going to happen in this country economically unless you do exhaustive research on the effects of the baby boom generation. Over the next 25 years or so over 30% of the current US population is going to die or retire. Huge numbers of upper middle class wage earners are going to go away.

Enormous amounts of capital will change how it is invested or be withdrawn.

It is going to be interesting times for those 15-30 right now.

Population and demographics are the entire support to our modern financial structure.

The baby boom is like a level 9 shockwave going through it, good and bad.

It's actually good for a number of things requiring growth, then as that generation ages it turns nearly all bad in terms of government numbers, debt goes through the roof, ala Japan at 200% of GDP and one of the oldest populations in the civilized world.

Individuals may fare quite well surfing the waves of this but if you're talking about government it's like the bill comming due all at once.

 

[Yuma]

Maybe I am a pollyanna, but the Gen Xers and Gen Yers operate differently than Boomers. They are more tech savy and multitasking, imho. So I see the American worker being MORE productive. Plus some of these Gen Xers and Gen Yers will be inheriting some significant jack from the Boomers. They may have more to invest per capita.

One way out of the SS and Medicare problem is to increase the tax base with YOUNG people. If the USA let in lots of younger immigrants to become citizens here, like say nurses, doctors, and other health specialists to take care of aging boomers and they all paid taxes and into SS and Medicare systems, these systems could become solvent again. I know most people are against it, but immigration could help solve our SS and Medicare entitlement mess.

 

[Gizmo Williams]

I know most people are against it, but immigration could help solve our SS and Medicare entitlement mess.

And start helping mop up some excess supply in the housing market.

 

[conraddobler]

Interesting you say this Duck... here's some support perhaps for your case:

The Next Crisis — Labor Shortages?

Sorry, Boomers, it’s not your fault.

Much blame has been placed on the Boomer generation for staying in their jobs too long due to the economy and denying the rest of us the promotions that are rightly ours!

[pounding fist on desk]

But now, it seems that may just be some misguided recession aggression — and we owe them a pretty big apology.
A new study shows there may actually be labor shortages by 2018.

“If the Baby Boom generation retires from the labor force at the same rate and age as current older workers, the Baby Bust generation that follows will likely be too small to fill many of the projected new jobs,” Barry Bluestone, a professor at Northeastern University and co-author of the report, said.

"There's an enormous aging of the work force, with a very small increase in the 'prime age' work force," which is 18 to 54 or 64, Bluestone explained. "That's a tiny group because it's all part of the Baby Bust generation."

The report, "After the Recovery: Help Needed," is based on projections for population growth, based on U.S. Census data, as well as forecasts for job growth and labor-force participation from the Labor Department.

Historically, after an economy recovers from a recession, there are labor shortages. This happened after World War II and in the early 1960s. And, while this recession is considered the worst since the Great Depression, a similar pattern is expected to emerge in the next 10 years, Bluestone and co-author Mark Melnik, deputy director for research at the Boston Redevelopment Authority, report.

They clarify, however, that it may take two or three years before you'll start to see spot shortages.

And, Bluestone adds, they were conservative in their growth projections — projecting 1 percent per year, as opposed to growth of 2 percent or more in prior recoveries.
The findings suggest that 14.6 million new nonfarm jobs will be added to payrolls between 2008 and 2018 and that by the end of that span, five million could be unfilled.
Such a loss of output would cost the economy as much as $3 trillion over five years, the study suggests.

Now, I know what you're thinking — But aren't Boomers staying in the workforce longer so they make up the gaping hole in their retirement savings?
es, and the study suggests that even that may not be enough to stave off a labor shortage.

So, the study takes it a step further, suggesting that the potential for such shortages means encouraging workers 55 and older to engage in "encore careers" — in places where there will be the biggest shortages — "will be vital to meeting work-force shortages and critical social needs.”

The study lists 15 jobs that will provide the largest number of “encore career” opportunities. Not surprisingly, many of them are in health care:

· Primary, secondary and special-education teachers
· Registered nurses
· Home health aides
· Personal and home-care aides
· Nursing aides, orderlies and attendants
· Medical assistants
· Licensed practical and licensed vocational nurse
· Business-operations specialists
· General and operations managers
· Child-care workers
· Teacher assistants
· Receptionists and information clerks
· Medical and health-service managers
· Clergy
· Social and human-service assistants

"Many of these jobs will go begging unless older workers move into them and make them their encore careers," Bluestone writes in the report.

So, dear Boomers, please accept our sincerest apology. But please, if you must keep working after 55, consider being a priest or information clerk. Godspeed. The restrooms are to your left and the exit is to the right.

I'd like to do an encore career.

Teaching would be fun but I wouldn't be able to put up with the parents or vice versa.

 

[LVG]

I'd like to do an encore career.

Teaching would be fun but I wouldn't be able to put up with the parents or vice versa.

To go off topic - parents and the administration. If you ever want to become a teacher, come talk to my wife first. She'll fill you in with the horror stories. She's taught at a Title 1 school and a Chabad, and will be making the move to a Catholic High School next school year.

 

[Yuma]

I'd like to do an encore career.

Teaching would be fun but I wouldn't be able to put up with the parents or vice versa.

All my college teachers said they enjoyed teaching at military bases or night classes. They said the students in those classes wanted to learn something, not just get a grade, and they enjoyed those classes more. FWIW.

 

[Dr. Jones]

To go off topic - parents and the administration. If you ever want to become a teacher, come talk to my wife first. She'll fill you in with the horror stories. She's taught at a Title 1 school and a Chabad, and will be making the move to a Catholic High School next school year.

I just hired a high school teacher. She is leaving her High School to be a retail sales rep selling cell phones.

She is about to get a huge pay raise. Like almost DOUBLE.

I do not envy any teacher. And I am surprised people even think about doing it. From the teachers unions, to the blatant favoritism due to seniority is insane to me. Then there is the whole peer pressure to continue your education or be swallowed up by those who do.

 

[conraddobler]

 

[Duckjake]

That was hilarious. As a business major with a grandfather who ran our family business much like Thornton Mellon ran his I never laughed so hard at something in a movie in my life.

"How about Fantasyland". Classic.