Economic Warfare

[Dayuhan]

The eventual and inevitable retirement of the boomers will certainly have an economic impact, but there are some positives to the equation as well. Retirees consume, but do not produce. By consuming they create demand for goods and services, which in turn creates employment. As boomers age they will create jobs in health care and services that have to be locally delivered, and as they retire they will cease to compete in the employment market, which adds up to more available jobs locally. As boomers retire they will create vacant positions that have to be filled; if you're young and unemployed, as so many are these days, that's not a bad thing.

Changing demographics have an impact on patterns of supply and demand. That impact has positives and negatives; it's not a blessing or a curse, just a change that we have to adapt to. This is not exactly unusual, it's happening all the time.

PS: Re precious metals, one of the odd quirks in gold markets in the last decade has been the emerging impact of demand for physical possession of gold coming from India. Seems to be a cultural thing; a tradition that when Indians get wealthy they are supposed to own and hold gold. I don't suppose that this will last forever, as it's a fundamentally irrational drive: gold in a vault doesn't earn interest and doesn't do a great deal for the owner. In the short run, though, prosperity on the subcontinent will mean greater demand for gold, even during the kind of expansion cycle that you'd expect to drive gold prices down. How much price support this will provide is anyone's guess at this point, but it is a part of the equation that isn't always considered.

PPS: The PS above is based on conversations in the Dubai gold souk; I'm not a precious metals expert by any means and I wouldn't consider that to be an authoritative comment!