Stocks Crashing Causes a MAJOR *New* Problem.

The stock market selling off is a

massive problem. It's not the problem

you would think it is. No, it's not even

margin debt, which is a problem. It's

not even your net worth going down. It's

something worse. It's the collapsing of

one of the support pins of the economy

that hasn't existed before the pandemic.

In fact, it has everything to do,

according to BCA research, with this

chart here. And you might think when you

hear these stats, this has nothing to do

with you. Let me tell you, it has

everything to do with you, regardless of

your age. And if you're blind to this,

you're blind to the biggest problem the

Federal Reserve is facing right now.

Folks, this has to do with the fact that

out of every 10 Americans who are over

55 years old, six of them are not

working. I said that right. Six out of

10 Americans over 55 are not working.

40% retired, 20% never had a job and 40%

are working. So that means 60% are not

working for one reason or another. And

this is leading to what's a very weird

phenomenon is being referred to as

American or excess American retirees.

And that's a big problem for the economy

and inflation and jobs. And you're going

to see in just a moment. Take a look at

this. In 2019,17 and 18 and before we

had uh you know essentially senior

retirements somewhere around this

baseline here and the uh level of

civilian labor force participation by

those older than 55 55 or older has

collapsed after co now there are a few

reasons why we've seen this collapse.

Why we've collapsed doesn't really

matter so much as to the fact that it's

happening and it's uniquely American.

Take a look at this. In France and

Italy, you've actually got more older

folks working post pandemic. The same is

true in Germany, Japan, and Canada, and

almost true in the United Kingdom. This

is really unique to the United States,

where the United States is really

negative here. Now, why could that be?

It could be because of how we shut down,

how quickly we and briefly we shut down,

how quickly we reopened, leading to

potentially more seniors getting sick.

This isn't to debate what CO was about.

We covered that daily then. But that's

the argument that's being made here. For

whatever reason, whether it's COVID and

how we handled COVID or not, older folks

retired. And then the problem with older

folks retiring is what's keeping their

wealth going right now is the stock

market. Take a look at this line right

here. The 2.5 million excess American

retirees can afford to stay retired only

as long as the stock market boom

continues. Hm. Thereby, this generation

is not uh only generating demand for

labor by buying and consuming goods and

services, but they're literally not

contributing to the labor supply. And as

a result of that, BCA makes the argument

that these 2.5 million people are

actually contributing to hot inflation

America. in America. They say one of the

reasons we have this de facto 3%

inflation in America is not just

tariffs, but it's also the fact that

many of these older workers who were

skilled like top professors or surgeons

or lawyers just retired and now these

are being these roles are being filled

by people with less experience and less

longerterm skill set because they just

haven't been in the industry that long.

Very uh very reasonable explanation

here. And it's leading to uh

unfortunately a tighter labor market and

tighter inflation and a more aggressive

Federal Reserve. You might even hear

people talking right now about how the

Fed, you know, isn't sure if they're

going to cut in December. But the

problem is this, a recession typically

happens when the unemployment rate rises

by just 1.5%.

And if you take the US labor force of

about 175 million people and you

multiply that by that 1.5% you need to

trigger a recession, you literally equal

2.5 million workers, which happens to be

exactly the amount of excess retirees we

have. So BCA argues that if the stock

market crashes and those excess retirees

have to go back to work, you will

trigger a recession because of a stock

market selloff. Now, that's kind of

wild. And they argue there is a near

perfect explanation of why inflation is

settling near 3%. And it has everything

to do with this shortfall of workers

leading demand to be higher and

therefore price demand to be higher and

therefore workers to be lower because

these 2 and 12 million people for

whatever reason in America are not

working right now, which is leading the

Fed to accept this de facto 3% inflation

target. And then of course you have to

think about it this way and I thought

this was quite frankly fascinating in my

opinion. Listen to this line. I'm going

to read it. There are recessions that

trigger market crashes. For example, the

recession of the 70s, the early '7s, the

early 80s and the global financial

crisis. Those were shocks that led to uh

market crashes. Basically something

broke in the financial system and then

the stock market crashed. But then there

are also market crashes that turn into

recessions. The Great Depression was

actually a market crash that led to

recession. Well, depression in this

case. The Japanese bubble burst of the

'90s and the dotcom bubble. These were

market crashes that led to recession.

And so this is where BCA gets a little

aggressive and they go as far as saying,

"Hey folks, we could actually have a

major risk over the next year or two

that the economy and the entire world

economy could actually end up suffering

a market crash which ends up triggering

a recession." Because when you get a

market crash when markets have never

been this concentrated and the uh you

know US stock market is 40% concentrated

in the top 10 stocks with the belief

that all these AI gains are going to go

to corporate profits eventually that

narrative is going to collapse and when

that narrative collapse in a very

fragile ecosystem where we are now when

that collapses stock valuations come

down. stock valuations come down. All of

a sudden, all those excess retirees

can't afford to stay retired anymore.

And all of a sudden, they start showing

up for whatever job they could possibly

get their hands on, which then leads to

a skyrocketing of the unemployment rate,

a normalization of the beaver curve, and

boom, you literally have a stock market

fall that generates the recession.

That's freaky. and excess retirees could

be why America has been so strong for

the last few years and it's something

not even the Federal Reserve has [music]

been paying attention to but at least

now you are.

>> Why not advertise these things that you

told us here? I feel like nobody else

knows about this.

>> We'll we'll try a little advertising and

see how it goes.

>> Congratulations, man. You have done so

much. People love you. People look up to

you.

>> Kevin Papra there, financial analyst and

YouTuber. Meet Kevin. Always great to

get your take.