The Baby Boomer Mirage is Fading Fast

FUTURE TRENDS – THE BABY BOOMER MIRAGE IS
FADING FAST
Page 1 of 42
The U.S. Baby Boomer mirage has been kept the importers of “stuff” into the United States with
positive trade deficits happy, as shown in the two tables below,. That is coming to an end. China,
Europe, Japan, and Mexico have benefitted greatly from Joe Sixpack and Mary Spend-a-Lots
propensity for foreign “stuff”. They like the Japanese and German automobiles. They also like
foreign electronics, among other things that Americans used to manufacture. Figure 28, “U.S.
Gross Public Debt”, shows what the global economy has done for Uncle Sammy - $20 Trillion
and rising fast. Of course, many are just as bad or in worst shape than Uncle Sammy, but the
American “Elites” bought into the liberal socialist agenda of a “New World Order” with the ultimate
goal of lowering Americans citizens to the worldwide lowest common denominator.
Imports/ Exports/ Trade Deficits of the United States in 2014 ($Millions)
Country Exports Imports Trade Deficit
China 123,676 446,754 343,078
European Union 276,142 418,754 142,059
Germany 49,363 123,260 73,897
Japan 66,827 134,004 67,117
Mexico 240,249 294,074 53,825
Canada 312,421 347,798 35,377
Saudi Arabia 18,705 47,041 28,336
Ireland 7,806 33,956 26,150
Italy 16,968 42,115 25,147
South Korea 44,471 69,518 25,047
India 21,608 45,244 23,636
Malaysia 13,068 30,420 17,352
France 31,301 46,874 15,573
Thailand 11,810 27,123 15,313
Taiwan 26,670 40,581 13,911
Switzerland 22,176 31,191 9,015
Israel 15,083 22,962 7,879
United Kingdom 53,823 54,392 569

FADING FAST
Page 2 of 42
U.S. Balance of Trade in 2015 ($Billions)
Product Imports Exports
Difference
+/-
Electronic equipment $332.9 $169.8 -$163.1
Machines, engines, pumps $329.3 $205.8 -$123.5
Vehicles $283.8 $127.1 -$146.7
Fuel $201.2 $106.1 -$95.1
Pharmaceuticals $86.1 $47.3 -$38.8
Medical, technical equipment $78.3 $83.4 +$5.1
Furniture, lighting, signs $61.2 $11.5 -$49.7
Gems, precious metals $60.2 $58.7 -$1.5
Organic chemicals $52.1 $38.8 -$13.3
Plastics $50.2 $60.3 +$10.1
Aircraft/Spacecraft $35.3 $131.1 +$95.8
Total of all trade $2.309 Trillion $1.51 Trillion -$799

FADING FAST
Page 3 of 42
The main thing the U.S. “working class” lost sight of as they got on the liberal bandwagon for the
global economy and elected U.S. Presidents who accommodated the agenda is that their higher
paying manufacturing jobs were disappearing right and left. What was “filling in the income gaps”
was a combination of low paying service jobs in combination with the welfare state and the
promise of Federal cradle to grave care of the masses in exchange for freedom.
Obama promised change. Figure 29, “U.S. Labor Participation Rate”, and Figure 28, U.S. Gross
Public Debt”, show the kind of change that results from his promises, and more “after taste” is still
on the way. How you like it Joe and Mary? Well the “Last of Mohicans” didn’t like it. The
arithmetic majority of demoralized dependents still want it. However, now we have a
businessman for President, and not a paid-for politician/rainmaker. The businessman knows that
manufacturing is what built the post-world war II dominance.
If Uncle Sammy is to achieve any semblance of future greatness, manufacturing is what must
return to Suburbialand. Nevertheless, the damage caused by the last President and his inept
Congress is irreparable. Trump will try to repair the damage and just the effort, even if he doesn’t
bring America back to Post WII glory, may save what’s worth saving – freedom to succeed or fail
without the divine right of the King hanging over you. The divine right of the bureaucracy is just as
bad. Freedom and the possibilities (not the guarantees) it brings was the American dream since
post Declaration of Independence, and it was the American way until FDR decided to save the
poor working class. Thereafter, the slow buildup of the welfare state began and so did the
increasing dependent class.
Post WWII Uncle Sammy could afford a little socialism. Heck, we didn’t have any competition.
Figure 32, “U.S. Car Production” and Figure 33, “U.S. Steel Production” shows what happens
when you retire early from the world rat race. Manufacturing jobs started disappearing in the early
1980s. The post WWII buildup transformed into the “Baby Boomer Mirage”. Figure 22, “U.S.
Manufacturing Employees”, clearly shows the transition. The Vietnam War put a tear in Uncle
Sammy’s iron coat. The Arabs new found oil power in the 1970s put another tear in his coat.
Finally, it was “the computer age” care of Bill Gates and his growing “silicon valley” bunch that
became the new economic engine of America – with the help of McDonald’s and Wal-Mart. This
engine only drove the “siliconers” and the Waltons to extraordinary wealth. It didn’t help the
Middle Class.
The new services economy doesn’t work that well, does it Joe and Mary? The way it has worked
since 1979 is the illusion of middle class wealth that was real Post War II was kept alive by
increasing amounts of debt. You see, it was no longer about production; it was about
consumption. It was no longer about saving, it was about spending. And the Gates, and Buffets,
and Waltons took advantage of this trend. It’s the American way, why not?
Foreign countries with their Post WWII rebuilt economies were more than willing to keep Joe and
Mary spending money they didn’t have. Buy it on sale and finance it. We’ll loan you, just keep

FADING FAST
Page 4 of 42
buying. Figure 23, “Gross Federal Debt as Percentage of Gross Domestic Product”, shows that is
exactly what happened. It started in 1979 with the oldest Baby Boomers 36 and the youngest 19
(The Fourth Turning definition of Baby Boomers 1943-1960). That’s about where you Millennials
(1982-2002) are right now.
First it was automobiles and then it was houses that became the Baby Boomer “soup-du-jour”.
Figure 7, “Three-Month Treasury Bill”; Figure 8, “Bank Prime Loan Rate”; Figure 9, “Four-Year
Auto Loan rate”; and Figure 10, “30-Year Mortgage Rate”, show the interest rates were kept low
and lower to keep Joe and Mary indulged and in debt. If it was new, it was part of the Boomer
lifestyle. If it was a few years old, it was thrown in the landfill. In the meantime, Uncle Sammy had
wars to fight. Also, we made all these promises so we needed more bureaucrats. You all have a
good time now while we solve all these problems for you! That’s all you have to say if you are a
politician.
By 2000, the game was over, but George W. was a fun loving Boomer growing up and he learned
from his Dad that secrecy and manipulation were the name of the game. He had a former gold-
bug turned Keynesian by marriage, Alan Greenspan, to keep the mirage in focus, at least until he
was out of the house. So it bubble blowing time. The first bubble, the “housing bubble”, was a
result of the X-Generation trying to duplicate the Baby Boomer Mirage. Too many bad loans and
not enough collateral, X-Generation, so try something else. Figure 34, “U.S. Home Ownership
Rate” shows that bubble burst, and the home ownership rate will continue to decline.
How about oil and gas? By 2006, we were running low on both. The first bubble almost did Uncle
Sammy in. But the powers that be said it was all solved, and now it is time for change, Obama
style. The change was going to complete the transformation to a socialist state. It almost worked.
The catalyst for change and even more mummification of Joe and Mary’s brains was the shale oil
and gas craze. This certainly keeps the Wall Street bunch happy and overpaid. It also keeps the
DOE bureaucracy employed by spinning yarns of a new age.
The catalyst, of course, was even more money and even lower interest rates, almost zero. But
we are going to raise them as the economy heals! Another key was to get an even bigger bunch
of clowns in the Federal Reserve. Figure 1, “M1 Money Supply” and Figure 3, “M2 Money
Supply”, show the attempt to revive the junkie with the last injection of monetary heroin; and
Figure 2, “M1 Velocity of Money”, and Figure 4, “M2 Velocity of Money”, show the result.
From Federal Reserve Bank of St. Louis website:
Money Velocity
The velocity of money is the frequency at which one unit of currency is used to purchase
domestically- produced goods and services within a given time period. In other words, it is the
number of times one dollar is spent to buy goods and services per unit of time. If the velocity of
money is increasing, then more transactions are occurring between individuals in an economy.

FADING FAST
Page 5 of 42
The frequency of currency exchange can be used to determine the velocity of a given component
of the money supply, providing some insight into whether consumers and businesses are saving
or spending their money. There are several components of the money supply: M1, M2, and MZM
(M3 is no longer tracked by the Federal Reserve); these components are arranged on a spectrum
of narrowest to broadest. Consider M1, the narrowest component. M1 is the money supply of
currency in circulation (notes and coins, traveler’s checks [non-bank issuers], demand deposits,
and checkable deposits). A decreasing velocity of M1 might indicate fewer short- term
consumption transactions are taking place. We can think of shorter- term transactions as
consumption we might make on an everyday basis.
The broader M2 component includes M1 in addition to saving deposits, certificates of deposit
(less than $100,000), and money market deposits for individuals. Comparing the velocities of M1
and M2 provides some insight into how quickly the economy is spending and how quickly it is
saving.
MZM (money with zero maturity) is the broadest component and consists of the supply of
financial assets redeemable at par on demand: notes and coins in circulation, traveler’s checks
(non-bank issuers), demand deposits, other checkable deposits, savings deposits, and all money
market funds. The velocity of MZM helps determine how often financial assets are switching
hands within the economy.
You can lead a horse to water, but you can’t make him drink, except for the Oil and Gas
wildcatter. They’ll drink anything you give them as long as you let them drill, drill, drill! However,
don’t expect to get your initial investment back.
The MZM velocity of money, which is the broadest money supply component, shows it was all
over for Uncle Sammy a long time ago. See Figure 6, “MZM Velocity of Money”, which shows the
Post WWII engine stalled a long time ago. This Baby Boomer Mirage ran on pure debt thereafter.
The latest bubble is about go “boom”, not “pop”. This boom will be heard around the world, and it
will end the “Age of Growth” once and for all. Trump is at least going to get the U.S. prepared for
the transition from the “Age of Growth” to the “Age of Survival”, even though he and his followers
think the U.S. will return to glory days.
A look at the serious nature of this latest bubble is in order to understand the possible aftermath.
The gas for blowing up the bubble was provided by more debt, a lot more debt and low interest
for that debt. It’s the Baby Boomers going away present for future generations.
Figure 13, “U.S. Public Debt”, shows the increase since 2008. Figure 14, “Gross Domestic
Product”, increased, but not like in the past. What did increase bigtime was debt as a percentage
of GDP. Figure 16, “Federal Debt Held By Federal Reserve Banks As A Percentage Of Gross
Domestic Product; Figure 18, “Federal Debt Held By The Public As A Percentage Of Gross
Domestic Product”; Figure 20, “Federal Debt Held By Foreign And International Investors As A

FADING FAST
Page 6 of 42
Percentage Of Gross Domestic Product”, show that all the large holders of debt increased their
share of the U.S. economy. Figure 21 shows that the Federal Reserve has blown the last bubble.
When it blows up, the shale oil-gas industry goes with it.
Figure 30, “U.S. Employed Persons”, shows the period 2008 to 2016 increased employment, but
Figure 31, “U.S” Manufacturing Payrolls” shows manufacturing jobs were about the same as
2007. The jobs created were low paying, part-time service jobs, if you even believe the
unemployment data. That’s not what “Made America Great” during the Post WWII period.
Figure 11, “Wilshire 5000 Index”. Shows what else is going down the drain. Whether it is the
DOW, Nasdaq, S&P500, or the more inclusive Wilshire 5000, they are all way over valued. When
they go, the money that is driving this oil-gas craze goes also. Then “Making America Great
Again” is going to have to take on a more realistic tone.
However, Trump needs to continue the following to “Save America”:
• Significantly reduce the bureaucracy. (20% reduction is not enough.)
• Leave the United Nations (This organization is nothing but another Uncle Sam money
drain and a platform for Globalists)
• Start chipping away at the welfare system (We can’t afford it. Domestic jobs must be
created concurrently.)
• Raise the retirement age. (Even the old people who can walk and talk will have to work.)
• Reestablish a real border against illegal immigration. (People will need to work again at
whatever is available.)
• Demolish business inhibiting legislation. (If ever innovation was needed, it will be after the
crisis begins.)
• Stop subsidizing losers. (It will survive if it is the lowest cost alternative.)
• Open up exploration of oil and gas (But don’t subsidize it any way. Increased price will
reduce demand naturally.)
• Lower taxes across the board. (That coordinates with demolishing the bureaucracy.)
• Renegotiate the debt with foreign holders. (If not, than default on the debt. The future is
going to be about a lower standard of living for Joe and Mary anyway.)
The U.S. is going to have to be self-sufficient in the future. Whatever is still the U.S. will have to
produce what it consumes, and no more than that. I have said the following in one of my posts
before the election:
At least Trump tells the partial truth. We can't save Europe, we can't save Japan, we can't save
South Korea, and we shouldn't even try to save Saudi Arabia. We will be lucky to save
ourselves.
To save ourselves, we need to start manufacturing our own “stuff”. Five countries benefit from
our “conspicuous consumption” habit. From “Countries That Purchase the Most U.S. Imports”
by Karen Waksman, Updated September 08, 2016:

FADING FAST
Page 7 of 42
Top 5 Countries That Import U.S. Products
The following is a list of the top 5 countries importing U.S. products and services on an annual
basis. According to the most recent data available from the U.S. Census Bureau and other U.S.
government sources, the following countries make the largest amount of purchases. Considering
the geography, no one should be shocked that Canada is the number one importer of U.S.
goods. However, the vast array of the types of products being shipped to these countries does
surprise many of those not familiar with US foreign trade trends.
1. Canada
Even with the global automotive industry in decline, the top U.S. product imported by Canada is
usually automotive-related, including accessories and parts.
Machinery and electronic equipment usually come next, while oil and plastics, medical and
technical equipment and air crafts follow after. In 2015, Canada imported $280 billion dollars’
worth of US goods. That amount is equivalent to 18.6% of the United States' overall exports.
2. Mexico
With all the media attention U.S. trade with China receives, it may come as a surprise that
Mexico still imports more U.S. goods and services than the far more populous country of China.
In 2015, Mexico imported $236.4 billion worth of US goods, the most being in machinery,
electronic equipment, and like Canada, automotive-related goods.
3. China
China comes a distant third in importing of US goods compared to Canada and Mexico. China’s
number one import is usually air crafts and computer accessories, parts, and peripherals. Part of
this is related to the computer assembly industry, but also includes sales to Chinese retailers and
end-users. In 2015, the import of US products amounted to $116.2 billion or 7.7% of the United
States' overall exports.
4. Japan
Typically, the primary import of American goods to Japan is civilian aircraft(s). However, medical
and technical equipment also equal to about the same amount in the types of products exported
to Japan from the US. Machinery and electronic equipment follow suit, with $62.5 billion or 4.2%
of the US' overall exports in 2015.
5. United Kingdom
With the U.S. travel market facing tough times, the aviation industry turned to the international
market.

FADING FAST
Page 8 of 42
Like Japan, the U.K.’s primary import from “across the pond” was civilian aircraft. Following this
were chemicals and primary resources (such as metal for manufacturing), then electronic
equipment and then pharmaceuticals. In 2015, America's exports to the UK amounted to $56.4
billion or 3.8% of the United States' overall exports.
The only country we need to significantly trade with is Canada. Why? To put it bluntly, we need
their heavy oil to run the refineries as long as they last. Hopefully, Americans will wake up soon
and start decreasing their driving mileage and increasing their fuel economy. The only way to do
that is to eventually drive much smaller American made automobiles and trucks with a larger
contingent of electrics. However, electrics are not the answer to maintaining any semblance of
the past. Natural gas consumption will play an increasing role in electric power production so
expect the price of electricity to increase everywhere significantly and the availability to decrease.
What about China? Forget China. They have a bigger economic bubble than the U.S., and their
debt situation is far worse. They made an effort to become the new world power, but it’s too little,
too late for them. Figure 23, “West Texas Intermediate Crude Oil Price”, shows that the price of
oil has made two trips above the $100 mark. Both times caused severe slowdowns in the world
economic pace.
The last attempt at holding the crude oil price above $100, which lasted for a couple of years,
finally killed the China boom. Figure 26, “Global Price Index For All Commodities”, shows how the
price for all commodities followed the price of oil up twice and now down twice in the last 10
years. China’s building bust, as shown in Figure 27, “Global Price of Iron Ore”, has significantly
slowed the industrial buildup that China hopes will move the U.S. off the world monetary throne.
China has more severe problems than the U.S. The overbuilt infrastructure is unaffordable to the
populace. The state controlled economy is so loaded with debt that there is no way expansion
can continue for long. If the Chinese should in some way get their motor running again, it will be
once again killed by rising oil and gas prices and lower world demand for everything. Their
internal economy can’t keep their motor running.
Just stay out of China’s way because we are on the same planet. We need to concentrate on
solving our own problems and protecting our own borders, which will be a formidable, expensive
task. Once all these U.S. natural gas consumers come on line, the price of natural gas will be
headed back above the $10 per MMBtu mark that was exceeded twice in the last 11 years. See
Figure 24, “Henry Hub Natural Gas Price”.
The Age of Growth is ending and the Age of Survival is beginning. Adapt or die!

FADING FAST
Page 9 of 42
FIGURE 1
M1 MONEY SUPPLY
THE FATAL
INJECTION OF
MONETARY HEROIN

FADING FAST
Page 10 of 42
FIGURE 2
M1 VELOCITY OF MONEY
THE FATAL
INJECTION OF
MONETARY HEROIN
DIDN’T GIVE THE
JUNKIE A NEW

FADING FAST
Page 11 of 42
FIGURE 3
M2 MONEY SUPPLY
THE FATAL
INJECTION OF
MONETARY HEROIN

FADING FAST
Page 12 of 42
FIGURE 4
M2 VELOCITY OF MONEY
THE FATAL
INJECTION OF
MONETARY HEROIN
DIDN’T GIVE THE
JUNKIE A NEW HIGH

FADING FAST
Page 13 of 42
FIGURE 5
MZM MONEY SUPPLY

FADING FAST
Page 14 of 42
FIGURE 6
MZM VELOCITY OF MONEY
THE ENGINE
STALLED A LONG
TIME AGO

FADING FAST
Page 15 of 42
FIGURE 7
THREE-MONTH TREASURY BILL
THE FATAL
INJECTION OF
MONETARY HEROIN
Baby Boomer
Mirage

FADING FAST
Page 16 of 42
FIGURE 8
BANK PRIME LOAN RATE

FADING FAST
Page 17 of 42
FIGURE 9
4-YEAR AUTO LOAN RATE

FADING FAST
Page 18 of 42
FIGURE 10
30-YEAR FIXED RATE MORTGAGE

FADING FAST
Page 19 of 42
FIGURE 11
WILSHIRE 5000 INDEX
THE FATAL INJECTION OF
MONETARY HEROIN
DIDN’T GIVE THE JUNKIE A
NEW HIGH, BUT IT HELPED
THE WALL STREET WILD
BUNCH

FADING FAST
Page 20 of 42
FIGURE 12
TOTAL U.S. POPULATION
START PRACTICING
BIRTH CONTROL SOON,
AND YOU MIGHT MAKE IT
TO 2060

FADING FAST
Page 21 of 42
FIGURE 13
TOTAL PUBLIC DEBT

FADING FAST
Page 22 of 42
FIGURE 14
GROSS DOMESTIC PRODUCT

FADING FAST
Page 23 of 42
FIGURE 15
FEDERAL DEBT HELD BY FEDERAL RESERVE BANKS

FADING FAST
Page 24 of 42
FIGURE 16
FEDERAL DEBT HELD BY FEDERAL RESERVE BANKS AS A PERCENTAGE OF GROSS
DOMESTIC PRODUCT

FADING FAST
Page 25 of 42
FIGURE 17
FEDERAL DEBT HELD BY THE PUBLIC

FADING FAST
Page 26 of 42
FIGURE 18
FEDERAL DEBT HELD BY THE PUBLIC AS A PERCENTAGE OF GROSS DOMESTIC
PRODUCT

FADING FAST
Page 27 of 42
FIGURE 19
FEDERAL DEBT HELD BY FOREIGN AND INTERNATIONAL INVESTORS

FADING FAST
Page 28 of 42
FIGURE 20
FEDERAL DEBT HELD BY FOREIGN AND INTERNATIONAL INVESTORS AS A
PERCENTAGE OF GROSS DOMESTIC PRODUCT

FADING FAST
Page 29 of 42
FIGURE 21
GROSS FEDERAL DEBT AS PERCENTAGE OF GROSS DOMESTIC PRODUCT
(In 1979 Baby Boomers are age 36 to 19 Years Old)
Baby Boomer
Mirage
Post WWII
ERA
The
Last
Bubble

FADING FAST
Page 30 of 42
FIGURE 22
U.S. MANUFACTURING EMPLOYEES
(Bill Gates Starts Microsoft in 1975)
Baby Boomer
Mirage
Post WWII
ERA

FADING FAST
Page 31 of 42
FIGURE 23
WEST TEXAS INTERMEDIATE CRUDE OIL PRICE
(Two Trips Above $100 a Barrel Have Caused Economic Slowdowns)
World Economic
Destruction
Range

FADING FAST
Page 32 of 42
FIGURE 24
HENRY HUB NATURAL GAS PRICE
(Prior to the Shale Gas Craze, Price Made Two Trips Above $10 Per MMBtu)
U.S. Economy
Non-Performing
Range

FADING FAST
Page 33 of 42
FIGURE 25
U.S. AVERAGE REGULAR GASOLINE PRICE

FADING FAST
Page 34 of 42
FIGURE 26
GLOBAL PRICE INDEX FOR ALL COMMODITIES

FADING FAST
Page 35 of 42
FIGURE 27
GLOBAL PRICE OF IRON ORE
China
Boom
China
Bust

FADING FAST
Page 36 of 42
FIGURE 28
U.S. GROSS PUBLIC DEBT
MODEL OF HOW THE FEDERAL
RESERVE, NEO-CONS, CRONY
CAPITALISM, AND THE
WELFARE STATE CAN
COOPERATE

FADING FAST
Page 37 of 42
FIGURE 29
U.S. LABOR FORCE PARTICIPATION RATE

FADING FAST
Page 38 of 42
FIGURE 30
U.S. EMPLOYED PERSONS

FADING FAST
Page 39 of 42
FIGURE 31
U.S. MANUFACTURING PAYROLLS

FADING FAST
Page 40 of 42
FIGURE 32
U.S. CAR PRODUCTION

FADING FAST
Page 41 of 42
FIGURE 33
U.S. STEEL PRODUCTION

FADING FAST
Page 42 of 42
FIGURE 34
U.S. HOME OWNERSHIP RATE

The Baby Boomer Mirage is Fading Fast

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