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How Can Safe Asset Markets Be Fragile?

The market for U.S. Treasury securities experienced extreme stress in March 2020, when prices dropped precipitously (yields spiked) over a period of about…



The market for U.S. Treasury securities experienced extreme stress in March 2020, when prices dropped precipitously (yields spiked) over a period of about two weeks. This was highly unusual, as Treasury prices typically increase during times of stress. Using a theoretical model, we show that markets for safe assets can be fragile due to strategic interactions among investors who hold Treasury securities for their liquidity characteristics. Worried about having to sell at potentially worse prices in the future, such investors may sell preemptively, leading to self-fulfilling “market runs” that are similar to traditional bank runs in some respects.

Price Crash with Constrained Dealer Balance Sheets and Unprecedented Sales

The unusual events in Treasury markets in March 2020 have been discussed extensively in previous posts. We want to draw attention to a confluence of two elements: First, the dealer banks that provide Treasury market liquidity faced mounting challenges to their intermediation capacity. The chart below shows that dealer balance sheet space allocated to Treasury securities increased both during the run-up in Treasury prices and their subsequent crash. The recovery in Treasury prices after March 18 coincided with dealer balance sheet pressure receding as the Federal Reserve’s Treasury purchases ramped up.

Dealers Were Constrained through the Run-up and Crash of Treasury Prices

Line chart showing the market yield on U.S. Treasury securities at 10-year constant maturity (reverse scale), Federal Reserve outright holdings of Treasury notes and bonds (nominal and TIPS), and Primary Dealers’ net position and reverse repo in Treasuries (nominal and TIPS) between February 1 and May 1, 2020, in trillions of dollars.
Sources: FRED, Federal Reserve Bank of St. Louis; New York Fed Primary Dealer Survey.
Notes: The chart shows the market yield on U.S. Treasury securities at 10-year constant maturity (reverse scale), Federal Reserve outright holdings of Treasury notes and bonds (nominal and TIPS), and Primary Dealers’ net position and reverse repo in Treasury securities (nominal and TIPS).

Second, the behavior of foreign investors and mutual funds, the main sellers of Treasury securities in March 2020, was very unusual. The next chart shows the net purchases of the two groups over time and highlights that their sales in the first quarter of 2020 were unprecedented—much larger than ever before.

Unprecedented Sales that Appear Precautionary

A two-panel bar chart showing net purchases of all types of Treasuries in billions of dollars by foreign investors (left chart) and mutual funds (right chart) over time. Both sectors saw unprecedented Treasury sales in Q1 2020—much larger than ever before.
Source: Board of Governors of the Federal Reserve System, Financial Accounts of the United States, Table FU.210.
Note: The chart shows net purchases of Treasury securities (all types) for the two sectors with the largest sales in 2020:Q1. “Foreign investors” refers to the “rest of the world” sector in the original table.

Vissing-Jorgensen (2021) shows evidence that both groups’ sales of Treasury securities exceeded their actual liquidity needs. The unprecedented magnitude of the sales, and the fact that a considerable fraction of them were precautionary, makes this behavior appear very similar to a run—reminiscent of depositors rushing to withdraw funds from a bank. Consistent with this evidence, the Inter-Agency Working Group for Treasury Market Surveillance (2021) reports that “some Treasury holders appeared to react to the decline in market liquidity by selling securities for precautionary reasons lest conditions worsen further, and these sales only added to the stress on the market.”

Strategic Interaction among Treasury Investors Can Lead to Fragility

In a recent Staff Report, we study theoretically how strategic interaction among investors can make markets fragile and lead to “market runs.” We explicitly consider the possibility that different investors value safe assets such as Treasury securities for different reasons. First and foremost, safe assets are safe, meaning they are expected to pay their full par value at maturity with near total certainty. As a result, we typically observe “flight to safety” during times of stress, in which demand for safe assets increases, pushing up their price. Second, safe assets are liquid, and so some investors hold safe assets to sell them when faced with sudden liquidity needs. During times of stress, investors’ liquidity needs can increase, competing with the usual “flight to safety” and exerting downward pressure on the price of safe assets when they make a “dash for cash.”

Our model, which builds on Bernardo and Welch (2004), shows that a safe asset market is stable and well-functioning as long as the market is sufficiently deep. In this case, flight to safety and dash for cash are complementary phenomena, with investors who buy the assets for safety absorbing sales from investors who sell the assets for liquidity. However, in our model, the market can break down if trade involves dealers that are subject to balance sheet constraints. The risk of market break-down can be self-fulfilling, as it leads investors without pressing liquidity needs to sell preemptively in order to avoid the possibility of having to sell at lower prices in the future.

Individual investors may prefer selling preemptively today if they expect conditions to deteriorate sufficiently tomorrow. Aggregate sales today have a direct effect on the price today, but they also have an indirect effect on the price tomorrow, through their effects on dealer balance sheets. If this balance sheet effect is sufficiently strong, an individual investor’s incentive to sell preemptively can be higher if many other investors also sell preemptively. When others are selling today, an investor would rather sell today than wait and risk having to sell tomorrow, by which time dealers may be over-loaded with inventory, resulting in much lower prices.

Flight to Safety Can Trigger a Dash for Cash

Surprisingly, we show that flight to safety episodes can exacerbate the dash for cash when markets are fragile. Demand by flight-to-safety investors early on in a stress episode increases prices both contemporaneously and, by relaxing dealer balance sheets, in the future. If the strategic concerns of liquidity investors are sufficiently strong, then additional demand from safety-first investors today can induce liquidity investors to sell today, precisely because the market today has a relatively higher capacity to absorb sales. Then, a flight to safety actually triggers a dash for cash, amplifying existing market fragility.

How Was March 2020 Different from September 2008?

The events of March 2020 make a striking contrast to the nadir of the great financial crisis in September 2008, when Treasury markets did not suffer from dysfunction and illiquidity. Our model helps to understand the differences between these two episodes. First, our model highlights the central role of dealer balance sheet constraints that may in part be a result of post-crisis regulations. Second, the liquidity needs during the COVID-19 crisis appear to have been much larger—for example, because of the disruptions from lockdowns globally. Our model therefore suggests that in March 2020, the combination of unprecedented liquidity needs and considerably more constrained dealers tilted the Treasury market into a fragile region where investors sell strategically, and flight to safety precipitates a dash for cash.

Lessons for the Future

Fragility in our model hinges on the intertemporal considerations of strategic liquidity investors who compare prices today to prices tomorrow. In general, there is scope for policy interventions that increase prices both in the present and in the future. However, the timing of policy interventions is important, and announcements can have large effects well before the interventions are executed. We show that an asset purchase facility can have a large effect upon announcement by shifting strategic investors from the “run” equilibrium to the “hold” equilibrium, even if the facility does not become active until a future date. Similarly, policy interventions that relax dealer balance sheet constraints can be stabilizing so long as they relax balance sheet constraints in the future as well.

Finally, our model shows that markets where trading occurs in a decentralized, sequential way and where dealers play a large role in intermediating flows are inherently fragile. Changes to market structure whereby trades are pooled to reduce the role of dealers can therefore reduce the fragility of safe asset markets. Duffie (2020) argues that the growth of the Treasury market since 2008 has greatly outpaced the capacity of dealer balance sheets to absorb the additional supply and that this trend is expected to continue. The strategic mechanism in our model is therefore likely to become increasingly relevant, suggesting that—absent policy interventions—episodes such as March 2020 may become more frequent.

Thomas M. Eisenbach is a financial research advisor in Money and Payments Studies in the Federal Reserve Bank of New York’s Research and Statistics Group.

Gregory Phelan is an associate professor of economics at Williams College, currently working as a senior researcher in the U.S. Treasury’s Office of Financial Research. 

How to cite this post:
Thomas Eisenbach and Gregory Phelan, “How Can Safe Asset Markets Be Fragile?,” Federal Reserve Bank of New York Liberty Street Economics, September 8, 2022,

The views expressed in this post are those of the author(s) and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author(s).

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IVI starts technology transfer to Biological E. Limited to manufacture oral cholera vaccine for India and global markets

  Credit: IVI IVI will complete the technology transfer by 2025 Oral Cholera Vaccine to be manufactured by Biological E. Limited for India and international…




Credit: IVI

  • IVI will complete the technology transfer by 2025
  • Oral Cholera Vaccine to be manufactured by Biological E. Limited for India and international markets


March 20, 2024, SEOUL, Republic of Korea and HYDERABAD, India — The International Vaccine Institute (IVI), an international organization with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health, today announced that it has commenced a technology transfer of simplified Oral Cholera Vaccine (OCV-S) to Biological E. Limited (BE), a leading India-based Vaccines and Pharmaceutical Company.


Following the signing of a technology license agreement in November last year, IVI has begun providing the technical information, know-how, and materials to produce OCV-S at BE facilities and will continue to support necessary clinical development and regulatory approvals. IVI and BE entered this partnership during an unprecedented surge of cholera outbreaks worldwide and aim to increase the volume of low-cost cholera vaccine in India as well as the global public market.


IVI will complete the technology transfer by 2025 and the oral cholera vaccine will be manufactured for India and international markets by Biological E. Limited.


Dr. Jerome Kim, Director General of IVI, said: “In an era of heightened risk of poverty-associated infectious diseases such as cholera, the world needs a sustainable source of high-quality, affordable vaccines and committed manufacturers to supply them. We are pleased to partner with Biological E., a company with a proven history of making life-saving vaccines accessible globally, to address this supply gap and protect communities from this deadly, though preventable, disease.”


Ms. Mahima Datla, Managing Director, Biological E. Limited, said: “We are glad to be in collaboration with IVI for the manufacture of simplified Oral Cholera Vaccine. Our efforts are aimed to not only combat the disease but to also be part of a sustained legacy of innovation, collaboration, and health stewardship. Together with IVI, we are happy to be shaping a healthier and more resilient future by making this vaccine accessible globally.”


This technology transfer and licensing agreement is the sixth of its kind for IVI, transferring such technology to manufacturers in India, the Republic of Korea, Bangladesh, and South Africa. All these partnerships have led to or seek to achieve, pre-qualification (PQ) from the World Health Organization, a designation that enables global agencies such as UNICEF to procure the vaccine for the global market. BE already has 9 vaccines with WHO PQ in its portfolio, and IVI and BE will pursue WHO PQ for OCV-S as well, following national licensure in India.


Dr. Julia Lynch, Director of IVI’s Cholera Program, said: “The cholera situation is dire, and the availability and use of oral cholera vaccine is an essential part of a multifaceted approach to cholera control and prevention, especially as outbreaks increase and the global vaccine supply remains strained. With more manufacturers like BE entering the market, the future supply situation looks strong. IVI remains committed to ensuring the availability of the oral cholera vaccine and to developing new and improved vaccines that are equally safe, effective, and affordable and made around the world, for the world.”


OCV-S is a simplified formulation of OCV with the potential to lower production costs while increasing production capacity for current and aspiring OCV manufacturers. IVI’s development of OCV-S and ongoing technology transfers are part of an institutional strategy to confront cholera with 3 main goals: 1) Ensure supply of OCV 2) Improve cholera vaccines 3) Support OCV use and introduction. The Bill & Melinda Gates Foundation has been supporting IVI’s cholera program since 2000 and is funding this latest technology transfer to BE.




About the International Vaccine Institute (IVI)

The International Vaccine Institute (IVI) is a non-profit international organization established in 1997 at the initiative of the United Nations Development Programme with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health.

IVI’s current portfolio includes vaccines at all stages of pre-clinical and clinical development for infectious diseases that disproportionately affect low- and middle-income countries, such as cholera, typhoid, chikungunya, shigella, salmonella, schistosomiasis, hepatitis E, HPV, COVID-19, and more. IVI developed the world’s first low-cost oral cholera vaccine, pre-qualified by the World Health Organization (WHO), and developed a new-generation typhoid conjugate vaccine that also achieved WHO prequalification in early 2024.

IVI is headquartered in Seoul, Republic of Korea with a Europe Regional Office in Sweden, an Africa Regional Office in Rwanda, a Country Office in Austria, and a Country and Project Office in Kenya. IVI additionally co-founded the Hong Kong Jockey Club Global Health Institute in Hong Kong and hosts Collaborating Centers in Ghana, Ethiopia, and Madagascar. 39 countries and the WHO are members of IVI, and the governments of the Republic of Korea, Sweden, India, Finland, and Thailand provide state funding. For more information, please visit



About Biological E. Limited

Biological E. Limited (BE), a Hyderabad-based Pharmaceuticals & Biologics Company founded in 1953, is the first private sector biological products company in India and the first pharmaceutical company in Southern India. BE develops, manufactures and supplies vaccines and therapeutics. BE supplies its vaccines to more than 130 countries and its therapeutic products are sold in India, the USA and Europe. BE currently has 8 WHO-prequalified vaccines and 10 USFDA approved Generic Injectables in its portfolio. Recently, BE has received Emergency Use Listing (EUL) from the WHO for CORBEVAX®, the COVID-19 vaccine. Recently, DCGI has approved BE’S 14-Valent Pneumococcal Conjugate vaccine.

In recent years, BE has embarked on new initiatives for organizational expansion such as developing specialty injectable products for global markets as a means to manufacture APIs sustainably and developing novel vaccines for the global market.

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Aerie Em, Global Communications & Advocacy Manager
+82 2 881 1386 |


Biological E. Limited

K. Vijay Amruth Raj

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Apartment permits are back to recession lows. Will mortgage rates follow?

If housing leads us into a recession in the near future, that means mortgage rates have stayed too high for too long.



In Tuesday’s report, the 5-unit housing permits data hit the same levels we saw in the COVID-19 recession. Once the backlog of apartments is finished, those jobs will be at risk, which traditionally means mortgage rates would fall soon after, as they have in previous economic cycles.

However, this is happening while single-family permits are still rising as the rate of builder buy-downs and the backlog of single-family homes push single-family permits and starts higher. It is a tale of two markets — something I brought up on CNBC earlier this year to explain why this trend matters with housing starts data because the two marketplaces are heading in opposite directions.

The question is: Will the uptick in single-family permits keep mortgage rates higher than usual? As long as jobless claims stay low, the falling 5-unit apartment permit data might not lead to lower mortgage rates as it has in previous cycles.

From Census: Building Permits: Privately‐owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 1,518,000. This is 1.9 percent above the revised January rate of 1,489,000 and 2.4 percent above the February 2023 rate of 1,482,000.

When people say housing leads us in and out of a recession, it is a valid premise and that is why people carefully track housing permits. However, this housing cycle has been unique. Unfortunately, many people who have tracked this housing cycle are still stuck on 2008, believing that what happened during COVID-19 was rampant demand speculation that would lead to a massive supply of homes once home sales crashed. This would mean the builders couldn’t sell more new homes or have housing permits rise.

Housing permits, starts and new home sales were falling for a while, and in 2022, the data looked recessionary. However, new home sales were never near the 2005 peak, and the builders found a workable bottom in sales by paying down mortgage rates to boost demand. The first level of job loss recessionary data has been averted for now. Below is the chart of the building permits.

On the other hand, the apartment boom and bust has already happened. Permits are already back to the levels of the COVID-19 recession and have legs to move lower. Traditionally, when this data line gets this negative, a recession isn’t far off. But, as you can see in the chart below, there’s a big gap between the housing permit data for single-family and five units. Looking at this chart, the recession would only happen after single-family and 5-unit permits fall together, not when we have a gap like we see today.

From Census: Housing completions: Privately‐owned housing completions in February were at a seasonally adjusted annual rate of 1,729,000.

As we can see in the chart below, we had a solid month of housing completions. This was driven by 5-unit completions, which have been in the works for a while now. Also, this month’s report show a weather impact as progress in building was held up due to bad weather. However, the good news is that more supply of rental units will mean the fight against rent inflation will be positive as more supply is the best way to deal with inflation. In time, that is also good news for mortgage rates.

Housing Starts: Privately‐owned housing starts in February were at a seasonally adjusted annual rate of 1,521,000. This is 10.7 percent (±14.2 percent)* above the revised January estimate of 1,374,000 and is 5.9 percent (±10.0 percent)* above the February 2023 rate of 1,436,000.

Housing starts data beat to the upside, but the real story is that the marketplace has diverged into two different directions. The apartment boom is over and permits are heading below the COVID-19 recession, but as long as the builders can keep rates low enough to sell more new homes, single-family permits and starts can slowly move forward.

If we lose the single-family marketplace, expect the chart below to look like it always does before a recession — meaning residential construction workers lose their jobs. For now, the apartment construction workers are at the most risk once they finish the backlog of apartments under construction.

Overall, the housing starts beat to the upside. Still, the report’s internals show a marketplace with early recessionary data lines, which traditionally mean mortgage rates should go lower soon. If housing leads us into a recession in the near future, that means mortgage rates have stayed too high for too long and restrictive policy by the Fed created a recession as we have seen in previous economic cycles.

The builders have been paying down rates to keep construction workers employed, but if rates go higher, it will get more and more challenging to do this because not all builders have the capacity to buy down rates. Last year, we saw what 8% mortgage rates did to new home sales; they dropped before rates fell. So, this is something to keep track of, especially with a critical Federal Reserve meeting this week.

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Young People Aren’t Nearly Angry Enough About Government Debt

Young People Aren’t Nearly Angry Enough About Government Debt

Authored by The American Institute for Economic Research,

Young people sometimes…



Young People Aren't Nearly Angry Enough About Government Debt

Authored by The American Institute for Economic Research,

Young people sometimes seem to wake up in the morning in search of something to be outraged about. We are among the wealthiest and most educated humans in history. But we’re increasingly convinced that we’re worse off than our parents were, that the planet is in crisis, and that it’s probably not worth having kids.

I’ll generalize here about my own cohort (people born after 1981 but before 2010), commonly referred to as Millennials and Gen Z, as that shorthand corresponds to survey and demographic data. Millennials and Gen Z have valid economic complaints, and the conditions of our young adulthood perceptibly weakened traditional bridges to economic independence. We graduated with record amounts of student debt after President Obama nationalized that lending. Housing prices doubled during our household formation years due to zoning impediments and chronic underbuilding. Young Americans say economic issues are important to us, and candidates are courting our votes by promising student debt relief and cheaper housing (which they will never be able to deliver).

Young people, in our idealism and our rational ignorance of the actual appropriations process, typically support more government intervention, more spending programs, and more of every other burden that has landed us in such untenable economic circumstances to begin with. Perhaps not coincidentally, young people who’ve spent the most years in the increasingly partisan bubble of higher education are also the most likely to favor expanded government programs as a “solution” to those complaints.

It’s Your Debt, Boomer 

What most young people don’t yet understand is that we are sacrificing our young adulthood and our financial security to pay for debts run up by Baby Boomers. Part of every Millennial and Gen-Z paycheck is payable to people the same age as the members of Congress currently milking this system and miring us further in debt.

Our government spends more than it can extract from taxpayers. Social Security, which represents 20 percent of government spending, has run an annual deficit for 15 years. Last year Social Security alone overspent by $22.1 billion. To keep sending out checks to retirees, Social Security goes begging to the Treasury Department, and the Treasury borrows from the public by issuing bonds. Bonds allow investors (who are often also taxpayers) to pay for some retirees’ benefits now, and be paid back later. But investors only volunteer to lend Social Security the money it needs to cover its bills because the (younger) taxpayers will eventually repay the debt — with interest.

In other words, both Social Security and Medicare, along with various smaller federal entitlement programs, together comprising almost half of the federal budget, have been operating for a decade on the principle of “give us the money now, and stick the next generation with the check.” We saddle future generations with debt for present-day consumption.

The second largest item in the budget after Social Security is interest on the national debt — largely on Social Security and other entitlements that have already been spent. These mandatory benefits now consume three quarters of the federal budget: even Congress is not answerable for these programs. We never had the chance for our votes to impact that spending (not that older generations were much better represented) and it’s unclear if we ever will.

Young Americans probably don’t think much about the budget deficit (each year’s overspending) or the national debt (many years’ deficits put together, plus interest) much at all. And why should we? For our entire political memory, the federal government, as well as most of our state governments, have been steadily piling “public” debt upon our individual and collective heads. That’s just how it is. We are the frogs trying to make our way in the watery world as the temperature ticks imperceptibly higher. We have been swimming in debt forever, unaware that we’re being economically boiled alive.

Millennials have somewhat modest non-mortgage debt of around $27,000 (some self-reports say twice that much), including car notes, student loans, and credit cards. But we each owe more than $100,000 as a share of the national debt. And we don’t even know it.

When Millennials finally do have babies (and we are!) that infant born in 2024 will enter the world with a newly minted Social Security Number and $78,089 credit card bill for Granddad’s heart surgery and the interest on a benefit check that was mailed when her parents were in middle school. 

Headlines and comments sections love to sneer at “snowflakes” who’ve just hit the “real world,” and can’t figure out how to make ends meet, but the kids are onto something. A full 15 percent of our earnings are confiscated to pay into retirement and healthcare programs that will be insolvent by the time we’re old enough to enjoy them. The Federal Reserve and government debt are eating the economy. The same interest rates that are pushing mortgages out of reach are driving up the cost of interest to maintain the debt going forward. As we learn to save and invest, our dollars are slowly devalued. We’re right to feel trapped.  

Sure, if we’re alive and own a smartphone, we’re among the one percent of the wealthiest humans who’ve ever lived. Older generations could argue (persuasively!) that we have no idea what “poverty” is anymore. But with the state of government spending and debt…we are likely to find out. 

Despite being richer than Rockefeller, Millennials are right to say that the previous ways of building income security have been pushed out of reach. Our earning years are subsidizing not our own economic coming-of-age, but bank bailouts, wars abroad, and retirement and medical benefits for people who navigated a less-challenging wealth-building landscape. 

Redistribution goes both ways. Boomers are expected to pass on tens of trillions in unprecedented wealth to their children (if it isn’t eaten up by medical costs, despite heavy federal subsidies) and older generations’ financial support of the younger has had palpable lifting effects. Half of college costs are paid by families, and the trope of young people moving back home is only possible if mom and dad have the spare room and groceries to make that feasible.

Government “help” during COVID-19 resulted in the worst inflation in 40 years, as the federal government spent $42,000 per citizen on “stimulus” efforts, right around a Millennial’s average salary at that time. An absurd amount of fraud was perpetrated in the stimulus to save an economy from the lockdown that nearly ruined itTrillions in earmarked goodies were rubber stamped, carelessly added to young people’s growing bill. Government lenders deliberately removed fraud controls, fearing they couldn’t hand out $800 billion in young people’s future wages away fast enough. Important lessons were taught by those programs. The importance of self-sufficiency and the dignity of hard work weren’t top of the list.

Boomer Benefits are Stagnating Hiring, Wages, and Investment for Young People

Even if our workplace engagement suffered under government distortions, Millennials continue to work more hours than other generations and invest in side hustles and self employment at higher rates. Working hard and winning higher wages almost doesn’t matter, though, when our purchasing power is eaten from the other side. Buying power has dropped 20 percent in just five years. Life is $11,400/year more expensive than it was two years ago and deficit spending is the reason why

We’re having trouble getting hired for what we’re worth, because it costs employers 30 percent more than just our wages to employ us. The federal tax code both requires and incentivizes our employers to transfer a bunch of what we earned directly to insurance companies and those same Boomer-busted federal benefits, via tax-deductible benefits and payroll taxes. And the regulatory compliance costs of ravenous bureaucratic state. The price paid by each employer to keep each employee continues to rise — but Congress says your boss has to give most of the increase to someone other than you. 

Federal spending programs that many people consider good government, including Social Security, Medicare, Medicaid, and health insurance for children (CHIP) aren’t a small amount of the federal budget. Government spends on these programs because people support and demand them, and because cutting those benefits would be a re-election death sentence. That’s why they call cutting Social Security the “third rail of politics.” If you touch those benefits, you die. Congress is held hostage by Baby Boomers who are running up the bill with no sign of slowing down. 

Young people generally support Social Security and the public health insurance programs, even though a 2021 poll by Nationwide Financial found 47 percent of Millennials agree with the statement “I will not get a dime of the Social Security benefits I have earned.”

In the same survey, Millennials were the most likely of any generation to believe that Social Security benefits should be enough to live on as a sole income, and guessed the retirement age was 52 (it’s 67 for anyone born after 1959 — and that’s likely to rise). Young people are the most likely to see government guarantees as a valid way to live — even though we seem to understand that those promises aren’t guarantees at all.

Healthcare costs tied to an aging population and wonderful-but-expensive growth in medical technologies and medications will balloon over the next few years, and so will the deficits in Boomer benefit programs. Newly developed obesity drugs alone are expected to add $13.6 billion to Medicare spending. By 2030, every single Baby Boomer will be 65, eligible for publicly funded healthcare.

The first Millennial will be eligible to claim Medicare (assuming the program exists and the qualifying age is still 65, both of which are improbable) in 2046. As it happens, that’s also the year that the Boomer benefits programs (which will then be bloated with Gen Xers) and the interest payments we’re incurring to provide those benefits now, are projected to consume 100 percent of federal tax revenue.

Government spending is being transferred to bureaucrats and then to the beneficiaries of government spending who are, in some sense, your diabetic grandma who needs a Medicare-paid dialysis treatment, but in a much more immediate sense, are the insurance companiespharma giants, and hospital corporations who wrote the healthcare legislation. Some percentage of every college graduate’s paycheck buys bullets that get fired at nothing and inflating the private investment portfolios of government contractors, with dubious, wasteful outcomes from the prison-industrial complex to the perpetual war machine.

No bank or nation in the world can lend the kind of money the American government needs to borrow to fulfill its obligations to citizens. Someone will have to bite the bullet. Even some of the co-authors of the current disaster are wrestling with the truth. 

Forget avocado toast and streaming subscriptions. We’re already sensing it, but we haven’t yet seen it. Young people are not well-informed, and often actively misled, about what’s rotten in this economic system. But we are seeing the consequences on store shelves and mortgage contracts and we can sense disaster is coming. We’re about to get stuck with the bill.

Tyler Durden Tue, 03/19/2024 - 20:20

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