Update - Does FED blink or do the baby boomers get sacrificed?
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Let’s get into it.
A couple of months ago I asked if the FED would blink as their actions create Negative Real ‘Safe Asset’ Returns
At the bottom of this article I looked at the Real YoY change in the Vanguard Retirement Fund - every time this had dipped negative the FED had stepped in with some kind of easing.
On the eve of the - likely - first 50bp Fed Fund hike in my career, the situation for retirement assets continues to deteriorate.
The Real YoY change in the Vanguard Retirement Fund is now at -12.76% - this is approaching GFC territory.
This opens some interesting thought exercises:
The largest loser from this move is the Baby Boomers who are retiring
One of the largest reasons for this deterioration in asset prices is a FED that is reacting to the politisation of the financial system and inflation
The politicians see that inflation will cost votes, undermining their main objective of staying in power
The baby boomers are the largest voting cohort
This creates some particularly interesting game theory for the politicians and the eventual question of:
Who gets sacrificed?
A little impatience will spoil great plans
Chinese Proverb
Is culture/ideology war about to become a demographic war - seems likely to me
Do Russia/China smell a win?
Good Luck