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| peter zeihan talks about low capital costs going away because boomers are retiring and becoming more conservative with their investments. that is in addition to the fed trying to tame inflation.
https://www.apriori.com/resources/video/prepare-for-rising-capital-c...
Peter Zeihan: 70% of global private capital is generated by people between ages 55 and 65. Their kids have moved out, their house has been paid down, they’re at the height of their earnings, and they’re preparing for retirement. The money that they save, that’s what drives the system. Well, the largest generation ever globally were the boomers. Half of them have already retired, so half of their assets financially have already been moved into conservative investments like T-bills in cash, because if there is a currency crisis or a market crash, they have no chance to rebuild their nest egg, there’s no more income. So they have to do that.
Normally, that doesn’t matter, but the next generation down, Gen X is the second smallest one we’ve ever had. I’m part of this generation, and there are not enough of us to fill all of those capital generating shoes, so capital costs are going up. They’ve already tripled, they’re going to triple again as the rest of the boomers leave the system, and it will remain like that until another very large generation moves up into their late 50s. That will be the millennials. But that won’t happen until 2035. So we know between now and 2035 capital costs are going to go up on average each and every year, regardless of what happens to demand or the business cycle, that’s just wired into the system at this point. And once you wrap your mind around that, you realize that today is the cheapest capital we will have access to for 12 years. | |
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Say goodbye
