STOCKS AND BONDS ARE NOW HAZARDOUS TO YOUR WEALTH

STOCKS AND BONDS ARE NOW HAZARDOUS TO YOUR WEALTH

Submitted by Chris Martenson PhD on Wed, 14 Jul 2010

Within the next 20 years, the most profound changes in economic history will sweep the globe. The economic chaos and turbulence that we are now experiencing are merely the opening salvos in what will prove to be a long, disruptive period of adjustment.

At least that's my theory, and careful investors owe it to themselves to hear me out. If I'm right, long-term investing in stocks and bonds will deliver lackluster returns at best and be destroyers of wealth at worst.

To explain why, I need to tell you about how "Three Es" -- the economy, energy, and the environment -- are interconnected and why we need to consider all three at once.

THE FIRST "E" -- THE ECONOMY
The first "E" refers to the economy. Even if we were to limit our analysis to this realm only, I could make a compelling case that stocks and bonds face the most daunting structural headwinds seen in generations. As I argued in The Great Asset Bubble, as baby boomers transition from being net savers to net spenders, this will have a dramatic downward effect on the value of the stocks, bonds and real estate that they will need to sell.

Further, we might note that the developed world has doubled its debt load over the past 10 years and seems unlikely to be able to do so again. Even more dramatically, there has been an explosive expansion in unmatched pension and entitlement liabilities. Without these increases in debt and unfunded liabilities, global growth over the past decade would have been a great deal less than it was.

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