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U.S. bank lending slumps by most on record in final weeks of March

finance.yahoo.com

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Re: U.S. bank lending slumps by most on record in final weeks of March

#11

Post by SkipperCat »

kneebonian wrote: post #2

The days of cheap capital are over, and not because of the Fed. The largest generation, boomers, are now retiring. Up until now they've been pumping money into the economy and the investing with their 401k and things like that. Now that trend is reversing as they retire they are taking money out of the 401k, out of their life savings, at the same time their purchasing power is decreasing. The end result is a lot less…

But where will that money go? It's not going to get put into the caskets of deceased boomers. It will be inherited by Gen-X and Millennials who will do something with that money.

Once that money has been dumped into the economy, it's going to slush around for a long time. Maybe there will be some massive capital destruction event but I can't think of anything potentially imminent.

Re: U.S. bank lending slumps by most on record in final weeks of March

#12

Post by [deleted] »

bpicolo wrote: post #5
htag wrote: post #4

Earlier quoted context omitted.

I don't dispute the economic importance of boomers retiring. However, millennials are the largest generation. https://www.pewresearch.org/fact-tank/2020/04/28/millennials...

Key word living though, right? This is because folk have, well, died? I don't fully understand how the millenial population can go up between 2019 and 2033 on that chart.

[deleted]

Re: U.S. bank lending slumps by most on record in final weeks of March

#13

Post by throwaway6734 »

n00bskoolbus wrote: post #6
analyst74 wrote: post #3

Earlier quoted context omitted.

Coincidentally, I just saw two separate job ads on the subway looking for caregivers. Maybe the next booming sector would be taking care of retired boomers.

Lets just hope it's done by the government and not by private corps gouging people who just need care.

The government will be gouging the young to pay for it.

From the generation that brought you Ronald Reagan, boomers will have no trouble bankrupting the youth to pay for their entitlements

Re: U.S. bank lending slumps by most on record in final weeks of March

#14

Post by kneebonian »

SkipperCat wrote: post #11
kneebonian wrote: post #2

The days of cheap capital are over, and not because of the Fed. The largest generation, boomers, are now retiring. Up until now they've been pumping money into the economy and the investing with their 401k and things like that. Now that trend is reversing as they retire they are taking money out of the 401k, out of their life savings, at the same time their purchasing power is decreasing. The end result is a lot less…

But where will that money go? It's not going to get put into the caskets of deceased boomers. It will be inherited by Gen-X and Millennials who will do something with that money. Once that money has been dumped into the economy, it's going to slush around for a long time. Maybe there will be some massive capital destruction event but I can't think of anything potentially imminent.

The problem is that when you put a dollar in savings or a dollar in the stock market you are actually "creating" an extra dollar from an economic standpoint.

If I put a dollar in the bank the bank can then use that dollar to loan to someone else, but I still have "my" dollar. So where there was 1 dollar there are now 2. Once we start pulling money out of investment vehicles we aren't only removing that money but also the backing the loans that depended on that money had.

Thus the boomers pulling out for retirement result are the capital destruction event.

Re: U.S. bank lending slumps by most on record in final weeks of March

#15

Post by s1artibartfast »

n00bskoolbus wrote: post #6
analyst74 wrote: post #3

Earlier quoted context omitted.

Coincidentally, I just saw two separate job ads on the subway looking for caregivers. Maybe the next booming sector would be taking care of retired boomers.

Lets just hope it's done by the government and not by private corps gouging people who just need care.

I think that's a pretty unrealistic hope. I don't think the government is going to spin up up millions of workers to be in home caregivers and start building government funded nursing homes. That's not to mention the budget implications is such care.

Some states are looking at or implementing new mandatory Insurance programs nursing home care, but these are far too late for Boomers to pay into them in a meaningful way

Re: U.S. bank lending slumps by most on record in final weeks of March

#16

Post by bpicolo »

kgermino wrote: post #7
bpicolo wrote: post #5

Earlier quoted context omitted.

Key word living though, right? This is because folk have, well, died? I don't fully understand how the millenial population can go up between 2019 and 2033 on that chart.

FTA: "The Millennial generation continues to grow as young immigrants expand its ranks"

Ah, that makes sense.

Re: U.S. bank lending slumps by most on record in final weeks of March

#17

Post by anonporridge »

analyst74 wrote: post #3
kneebonian wrote: post #2

The days of cheap capital are over, and not because of the Fed. The largest generation, boomers, are now retiring. Up until now they've been pumping money into the economy and the investing with their 401k and things like that. Now that trend is reversing as they retire they are taking money out of the 401k, out of their life savings, at the same time their purchasing power is decreasing. The end result is a lot less…

Coincidentally, I just saw two separate job ads on the subway looking for caregivers. Maybe the next booming sector would be taking care of retired boomers.

Retiree wealth mining is the next great gold rush!

One interesting scheme I recently came across is an assisted living home that doesn't take regular payments. Instead, they have their residents sign over their entire net worth at the event of their death, leaving nothing for their inheritors. The tradeoff is that they get to stay for as long as they live. Of course, this scheme has some obvious perverse incentives for the operators of the home.

Re: U.S. bank lending slumps by most on record in final weeks of March

#18

Post by nightski »

kneebonian wrote: post #14
SkipperCat wrote: post #11

Earlier quoted context omitted.

But where will that money go? It's not going to get put into the caskets of deceased boomers. It will be inherited by Gen-X and Millennials who will do something with that money. Once that money has been dumped into the economy, it's going to slush around for a long time. Maybe there will be some massive capital destruction event but I can't think of anything potentially imminent.

The problem is that when you put a dollar in savings or a dollar in the stock market you are actually "creating" an extra dollar from an economic standpoint. If I put a dollar in the bank the bank can then use that dollar to loan to someone else, but I still have "my" dollar. So where there was 1 dollar there are now 2. Once we start pulling money out of investment vehicles we aren't only removing that money but also…

Not with the stock market. When you put a dollar in the stock market someone else is taking a dollar out. For every buyer there is a seller and vice versa.

Re: U.S. bank lending slumps by most on record in final weeks of March

#19

Post by bitshiftfaced »

kneebonian wrote: post #14
SkipperCat wrote: post #11

Earlier quoted context omitted.

But where will that money go? It's not going to get put into the caskets of deceased boomers. It will be inherited by Gen-X and Millennials who will do something with that money. Once that money has been dumped into the economy, it's going to slush around for a long time. Maybe there will be some massive capital destruction event but I can't think of anything potentially imminent.

The problem is that when you put a dollar in savings or a dollar in the stock market you are actually "creating" an extra dollar from an economic standpoint. If I put a dollar in the bank the bank can then use that dollar to loan to someone else, but I still have "my" dollar. So where there was 1 dollar there are now 2. Once we start pulling money out of investment vehicles we aren't only removing that money but also…

Seems like a temporary problem. Boomers convert savings into spending. One man's spending is another man's income. That person now has money to spend or save, and then we're back to where we started.

Re: U.S. bank lending slumps by most on record in final weeks of March

#20

Post by User23 »

SkipperCat wrote: post #11
kneebonian wrote: post #2

The days of cheap capital are over, and not because of the Fed. The largest generation, boomers, are now retiring. Up until now they've been pumping money into the economy and the investing with their 401k and things like that. Now that trend is reversing as they retire they are taking money out of the 401k, out of their life savings, at the same time their purchasing power is decreasing. The end result is a lot less…

But where will that money go? It's not going to get put into the caskets of deceased boomers. It will be inherited by Gen-X and Millennials who will do something with that money. Once that money has been dumped into the economy, it's going to slush around for a long time. Maybe there will be some massive capital destruction event but I can't think of anything potentially imminent.

> It will be inherited by Gen-X and Millennials who will do something with that money.

The boomer ethos is “have the check for the funeral bounce” so that spending will be shifted forward.

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