Outperforming

Harry

A Trend Worth Considering – The Price of Gold Since 1971

I occasionally get comments on articles posted on the Schiff Gold Facebook page by people complaining that they’ve lost a lot of money in gold because they bought when the market was at its absolute peak in 2011 and the yellow metal nearly hit $1,900. I can certainly understand their frustration, but I don’t buy their argument that their experience proves gold is a bad investment. While eight years seems like a long time, it’s not in the big scheme of things. 

When it comes to gold, that key moment is August 15, 1971. That’s the day that Richard Nixon slammed shut the gold window and eliminated the last vestige of the gold standard. From that date, the US — and the world — has been on a pure fiat money system. Governments have taken advantage of it by inflating the money supply relentlessly. As a result, the price of gold has skyrocketed from that moment. 

Looking at it another way, the purchasing power of gold has increased dramatically since Nixon closed the gold window. When Nixon made his announcement, gold was official $35 an ounce, but the actual market price was around $45 per ounce. If you take the recent price which has been hovering between $1,450 and $1,500 per ounce, the price has increased by 3122%.

DYI: 

Let’s put that to the test and see if the numbers stack up as the author claims.  First step is to go to Average Return Calculator for gold at $45 dollars an ounce in 1971 till today at $1500.  Average annual return…drum roll please…7.42% Ok so far so good.  Next stop is Political Calculations that has historical returns for the S&P 500.  January 1971 till today…drum roll please…10.56% [dividends reinvested].  Stocks currently over this time frame are the clear winner over gold.  However as I’ve stated so many times before us mere mortals only have 20 to 30 years to put it all together for retirement.  We don’t have the luxury of almost halve a century [49 years] AND with one massive investment at day one!

Harry Browne to the rescue

Harry Browne’s Permanent Portfolio concept was ground breaking with his four uncorrelated assets – stocks, long term bonds, cash and gold – permanently maintain at 25% of the portfolio total.  The idea is winning asset(s) would outshine the losing asset(s) thus propelling the portfolio ahead all with very low downside volatility.  And by George it does work.  The Permanent Portfolio since its inception in 1983 with an average annual return of 5.96% as compared to the S&P 500 at 11.39% [capturing 48% of the S&P 500].  Despite this big difference downside volatility is at a minimum.  This makes it possible to place a large lump sum to work without fear that your timing is poor producing huge losses thus requiring years not just to break even but to move the account forward with some reasonable return.

3 fund portfolio is U.S. and international stocks plus U.S. bonds 

My problem with Harry

Despite Harry’s ground breaking advancement a forerunner of modern portfolio theory I always had a problem maintaining 25% in each asset at all times. There are times such as today with long term bonds and U.S. stocks being massively overvalued.  Why would anyone want to have 25% in bonds and another 25% in stocks?  Over a 5 to 10 period you will be generating losses.  Very easy to see over speculated markets for those who are valuation players.

Outperforming Harry

DYI’s goal is to outperform Harry’s permanent portfolio with low downside volatility and a secondary ambition of capturing ¾ [over long time periods] of the S&P 500.

DYI’s averaging formula has our model portfolio either increasing or deceasing [sometimes to zero] depending upon the historical valuation of each asset.  In my opinion DYI is well positioned to out perform the Permanent Portfolio over the next 5 years.         

Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 12/1/19

Active Allocation Bands (excluding cash) 0% to 50%

50% - Cash -Short Term Bond Index - VBIRX

50% -Gold- Global Capital Cycles Fund - VGPMX **

 0% -Lt. Bonds- Long Term Bond Index - VBLTX

 0% -Stocks- Total Stock Market Index - VTSAX

[See Disclaimer]

** Vanguard's Global Capital Cycles Fund maintains 25%+ in precious metal equities the remainder are companies they believe will perform well during times of world wide stress or economic declines.  

 This blog site is not a registered financial advisor, broker or securities dealer and The Dividend Yield Investor is not responsible for what you do with your money.

This site strives for the highest standards of accuracy; however ERRORS AND OMISSIONS ARE ACCEPTED!

The Dividend Yield Investor is a blog site for entertainment and educational purposes ONLY.

The Dividend Yield Investor shall not be held liable for any loss and/or damages from the information herein.

Use this site at your own risk.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

DYI

lllll

                  

Bubble

News

THE GLOBAL DEBT TICKING TIME-BOMB: The Reason To Own Gold & Silver

As Global Debt reached a new record high of $250 trillion this year, gold and silver came briefly back on the radar for investors.  After five long years, the precious metals finally broke through key technical levels this summer.  However, after the Fed started the Repo Operations in September and the $60 billion a month of “Not-QE” in October, the focus returned once again to the Bloated Stock and Bond markets.

DYI: 

When Dr. Pavlov rang the dinner bell for his dog it has now become the same when the Fed’s ring the dinner QE bell conditioning market participants to gorge themselves on stocks and bonds.  However just as the Japanese have experienced it takes on an ever expanding money supply to maintain elevated markets.  When this ever growing bubble will burst is the unanswerable question.  There will come a time when additional QE no matter how massive will not stop a falling market.  DYI’s secular peak to trough – [this may take multiple cycles] – market drop estimation is 65% to 80%.  That level of decline will bring stocks below Shiller PE scale of ten.  Thus returning stock valuations to levels not seen since the late 1970’s!

 

As of 12/22/19

30.88

The U.S. economy isn’t even in a recession, and the Fed is acting as if it was 2008-2009 all over again.  What happens when the U.S. economy finally rolls over??  It’s going to be terrible news, especially considering the record amount of global debt.  According to the IIF, the Institute of International Finance, global debt reached a record high of $250 trillion in the first half of the year.  However, the IIF estimates that global debt will reach $255 trillion by year end. 

In just ten years since the 2008-2009 financial crisis, the world added another $100 trillion in debt. Now, the majority of that debt went into the Stock, Bond, and Real Estate Markets.  This is precisely why the U.S. stock market has reached an all-time new high.  Unfortunately, when the U.S. and the global economy finally enters into a recession-depression, the asset values will crash while the debts remain. 

Total global debt will reach $255 trillion by the end of 2019 versus $3.4 trillion worth of gold and $90 billion in silver.  Thus, the total world gold investment holdings are only 1.3% of the outstanding global debt, while world silver investment is a measly 2.6% that of gold.

When the poop hits the fan market players will scramble for safe havens.  Their top choice that has zero counter party risk is physical gold and silver and after that will move to U.S. and Swiss Treasury bonds.

Currently, the massive Global Debt Time-Bomb isn’t impacting the values of the precious metals.  This is because the mentality driving the market isn’t considering the FUTURE ENERGY needed to pay back all this debt.  We must remember that Debt represents future obligations that can be paid back only when the global economy BURNS ENERGY.

This chart is very easy to understand.  All one has to know is that as the NET ENERGY from oil delivered to the market (Orange line) has declined, the total World Debt to GDP (Red line) has increased.  The data in the chart is a bit old, but the trend continues in the same direction. Based on the total global debt reaching $255 trillion by the end of 2019 and the estimated $88 trillion in world GDP, that equals a World Debt to GDP of 290%, much higher than the 240% shown in the chart.  So, as you can see… the world continues to head towards the ENERGY CLIFF.

Simply put there is no longer enough net energy from all sources to support this level of debt.  When this is recognized by the majority on Wall Street the world wide markets will begin their declines.  Of course at the expense of being repetitive no one knows when that will happen.   

Negative Interest Rates 

Are Destroying Our Pensions

(Bloomberg Opinion) -- It’s becoming increasingly apparent that the negative interest rates introduced in several countries in the wake of the global financial crisis are trashing bank profitability. Less obvious, though perhaps more crucial for society as a whole, are their debilitating impact on pension plans. And that’s why the days of sub-zero borrowing costs may be drawing to a close. 

There’s nothing irrational, however, in fearing the economic consequences of keeping borrowing costs below zero for a sustained period of time. The emergency measures introduced to resuscitate growth, including central banks expanding their balance sheets by embarking on quantitative easing, were supposed to be transient. Instead, they’ve become fixtures of the economic firmament. 

It’s been disastrous for pension plans. A 1% decline in interest rates increases calculated pension liabilities by about 20%. It reduces the funding ratio, which measures a pension provider’s ability to meet its future commitments, by about 10%. Those estimates come from a survey of 153 European pension providers with 1.9 trillion euros ($2.1 trillion) of assets sponsored by Amundi SA, Europe’s biggest asset manager, and published by Create-Research earlier this month.

Those low returns store up trouble for the future. It’s especially worrying as responsibility for putting aside retirement cash is increasingly transferred to individuals and away from companies and governments. Danish central bank Governor Lars Rhode went so far as to call the burden unacceptable: 

“The task of bolstering the pension system to withstand pressures from lower rates and higher dependency ratios cannot be delegated to the individual pension saver,” he said earlier this month.

As of 12/23/19

S&P 500 dividend yield 1.78%

30 year T-bond is 2.34%

10 year T-bond is 1.92%

 

As of 12/23/19

Shiller Pe

30.88

I’ve been reporting for years how our sub atomic low yields are destroying the remainder of our old fashion pension plans.  These types of plans are primarily with our State and Local government employees that are extremely unfunded and will eventually require retirees to take on significant reduced benefits.  For those who are placed into the do it yourself category [with or without 401k’s] due to a such sub atomic low return environment individuals today would have to put away 25% of their income to foster some semblance of a retirement.  Obvious that is not in the cards for the vast majority.

With the ever present decline in the purchasing power of the American dollar [inflation] placing savers/investors behind the eight ball requiring returns greater than the government ability to debase our currency.  This is why I created my four asset category model portfolio [for in depth explanation]  that will over time react positively to any economic conditions.

 Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 12/1/19

Active Allocation Bands (excluding cash) 0% to 50%

50% - Cash -Short Term Bond Index - VBIRX

50% -Gold- Global Capital Cycles Fund - VGPMX **

 0% -Lt. Bonds- Long Term Bond Index - VBLTX

 0% -Stocks- Total Stock Market Index - VTSAX

[See Disclaimer]

** Vanguard's Global Capital Cycles Fund maintains 25%+ in precious metal equities the remainder are companies they believe will perform well during times of world wide stress or economic declines.  

 This blog site is not a registered financial advisor, broker or securities dealer and The Dividend Yield Investor is not responsible for what you do with your money.

This site strives for the highest standards of accuracy; however ERRORS AND OMISSIONS ARE ACCEPTED!

The Dividend Yield Investor is a blog site for entertainment and educational purposes ONLY.

The Dividend Yield Investor shall not be held liable for any loss and/or damages from the information herein.

Use this site at your own risk.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

DYI

Bubble

News

Why a 60-65% Market Loss 

Would Be Run-Of-The-Mill

One might view the very comparison of present stock market conditions to 1929 market peak as exaggerated and preposterous, but then, one would be wrong. 

The fact is that on the valuation measures we find most strongly correlated with actual subsequent long-term and full-cycle market returns across history (and even in recent decades), current market valuations match or exceed those observed at the 1929 peak.

DYI:

Extreme market valuations I’ve been reporting on since 2012 when stock prices reached their 1966 valuation high then take their long journey to mean invert in 1982 for a 17 year bear market!  Now we have blown past valuation markers for 1929 [see chart below] and could be on our way [who knows?] for a redo of the year 2000!

Meanwhile, given the depressed yields on long-term bonds, our estimate for 12-year total returns on a conventional asset mix (60% stocks, 30% Treasury bonds, 10% T-bills) has collapsed to just 0.8% annually [May 2019][see chart below]. 

This is lower than any point in history except a 6-week period surrounding the 1929 market top, a 3-week period surrounding the January 2018 pre-correction market peak, and a 6-week period surrounding the September 2018 pre-correction market peak.

 

December 2019

Estimated annual nominal return

0.28%

As a final note on valuations, it’s important to understand that because corporate earnings are more volatile than stock prices themselves, the price/earnings ratio of the S&P 500 is dramatically affected by the position of the economy in the economic cycle. When earnings are depressed, even very high price/earnings ratios can actually be associated with very high expected market returns. On the other hand, investors are regularly misled at bull market peaks by the fact that P/E ratios are often “well below historical extremes” at those points. The error comes in applying an elevated P/E ratio to already elevated (sometimes record) earnings. Historically, this has been a recipe for disaster.

No doubt this economy is long in the tooth an expectation of a soon to be expected recession is with warrant.  When the downturn will begin remains up in the air as my recession indicators have all receded.

Be careful not to assume that there is some reliable linear relationship between government deficits and subsequent inflation. There isn’t. Inflation has an enormous psychological component. The central point is that there is far greater risk of destabilizing public expectations about the soundness of government liabilities when deficits move well beyond the level that would be appropriate, given the position of the economy in its cycle. That’s a risk that investors seem to be wholly ignoring here. 

 

The OPEC+ Deal Was The First Step To $100 Oil

The price of oil has been trapped in the mid-$50s because of fear: 

1) Fear that OPEC+ would break ranks and flood the global market with oil. 

2) Fear of weaker oil demand thanks to a global recession, which now looks extremely unlikely. 

3) The belief that the United States can ramp up oil production at will to meet global demand. 

Fear #1 was eliminated on December 6^th: Now that the OPEC Cartel members and Russia have agreed to lower their output by another 500,000 barrels of oil per day through March, oil traders can check that box and we can focus on debunking the “Fear of Recession”. 

Fear #2 remains subdued as the U.S Economy is expanding: 

“These are blowout numbers and the U.S. economy continues to be all about the jobs,” Tony Bedikian, head of global markets for Citizens Bank said in a note. “The unemployment rate is at a 50-year low and wages are increasing. Business owners may be getting more cautious due to trade and political uncertainty and growth may be slow, but consumers keep spending and the punch bowl still seems full.” 

It is impossible to believe that there will be a global recession if the world’s largest economy is this strong. With or without a trade agreement between the U.S. and China, the November jobs report should push WTI over $60/bbl. If a “Phase One” agreement is signed with China, look for WTI to move over $65/bbl within weeks. 

Fear #3 U.S. is unable to ramp up production at will: 

U.S. production growth is the annual increase in well depletion rates. More and more of our production comes from horizontal shale wells that have steep first year decline rates. After massive frac jobs, horizontal wells (some with more than two-mile laterals) come on strong, payout quickly and then decline by 50% to 70% within twelve months. It is not uncommon for a Permian Basin oil well to produce over 1,000 barrels of oil per day in the first 90 days and then decline to less than 100 barrels per day within two year. Well level economics are great, even at $55/bbl oil, but upstream companies in the shale plays must have an aggressive development drilling program to hold production flat. 

Conclusion: This world now consumes over 3 Billion barrels per month of hydrocarbon-based liquids, most of which are refined from crude oil. The oil & gas industry has a massive supply chain that most people cannot comprehend. It only takes a crude oil shortage of 1% to cause a very large price spike. All previous price spikes, including the one to $147/bbl in early 2008, caused a bidding war between refiners for the world’s important commodity –  oil.

If this comes to past with oil prices at $100 plus per barrel expect a soon to arrive recession causing deflationary pressures.  Over the shorter run of two to three years out it appears that the inflationary genie remains in his bottle.  An asset smash for stocks, bonds, and to a lesser degree real estate is in the cards.  When the smash does arrive the Fed’s will print like mad men in their attempt to turn around prices.  Eventually the Fed’s will have their inflation with the unfortunate possibility of letting the genie out of the bottle with a redo of the 1970’s and 80’s.

DYI

Market

Update

DYI:

The chart below is showing you the huge secular bull market move for stocks and bonds are essentially finished.  There is a possibility of one last party for long term bonds as it is highly likely during the next recession the Fed’s will move to negative interest rates.  Be as that may be it is obvious historically long term bonds and stocks are no bargain as valuations have leaped to the heavens. 

Stocks are now 125% above their mean [see chart above].  What this is telling us as a market valuation investor those holding or buying stocks now better be prepared over the coming years for massive losses.  From secular peak to secular trough a case can be made for a 60% to 85% decline due to such massive overvaluation [see chart below]. 

As of 12/13/19 

$59.84

In my mind what is holding up prices are two fold; massive or should I say gargantuan Federal Reserve intervention AND reasonable energy prices.  

Oil Prices in Inflation Adjusted Terms

The major peaks occurred in December 1979 at $125.23, October 1990 at $65.68, and June 2008 at $145.93 (all inflation adjusted to 2019 dollars). Another interesting item to note is that the inflation adjusted average price has been increasing. The average for the entire period from 1946 to present is $44.75 but the average since 1980 is $55.99 and the the average since 2000 is $64.66.  This may be the result of increased extraction costs as it becomes harder to find and requires much greater technology to extract oil.

Energy prices and especially oil and its cousin gas have a huge impact on the economy with high prices acting as a tax slowing economic growth or possibly pushing into recession.  Below is my Oil Indicator.

 12/01/19

Updated Monthly

Oil Prices: 
11/27/14....  $69.86

12/01/19......$65.72   

Down 6%(rounded)
(oil prices approximately five years earlier due to weekends & holidays)
ANS West Coast prices   

 OIL INDICATOR:  Positive  Oil indicator will remain positive until it's rise is greater than 75% from five years earlier.

Oil prices are well known for their volatility in the short term, longer term due to dwindling reserves energy prices are in a secular bull market.  Technologies such as fracking will extend the life of oil fields but major new discoveries arrive at a snails pace far slower than the world's growth.  

As long as prices rise in a slow and orderly pace our economy can adjust to those changes, however if prices spike (international tensions, war etc.) high energy costs behave as a massive deflationary tax. This will send our economy tumbling down and very possibly the U.S. stock market.

If oil prices rise greater than 75% from five years earlier, investors at that time should shift their portfolio geared towards deflationary times.  This would be an oil indicator as negative.

If oil prices rise from five years earlier less than 10% or drop then the inflationary play is in effect; a positive for economic growth along with possible higher stock prices.

Where to find five year earlier oil prices?  Alaska Department of Revenue    

Oil indicator positive                
  5%  High-Yield Corporate Bonds
10%  REIT's
10%  Energy
10%  P.M.'s
65%  Small Caps
  0%  Lt. Gov't Bonds

Oil indicator negative
  5%  REIT's
10%  Energy
10%  P.M's
10%  Small Caps
65%  Lt. Gov't Bonds

Vanguard Funds

REIT's
REIT Index Admiral  VGSLX

Energy
Energy Fund  VGENX

Precious Metals (P.M.'s)
Global Capital Cycles Fund VGPMX

Small Caps
Small Cap Value Index Admiral  VSIAX

High-Yield Corporate Bonds
High-Yield Corporate Bond Fund VWEHX

Long Term Government Bonds
Long-Term Government Bond Index Admiral  VLGSX

Stocks may continue to rocket ahead however they may soon run out of gas [sorry for the pun] as low oil prices lose their effect to power the economy.  After that super high valuations will begin to feel their effect with stocks along with their respective valuation revert back to the mean.  

If oil prices where to go back up [$100+] pushing the economy into a steep recession these super high valuations will bring down stocks in a great hurry with a one to two year horrific bear market.  Anyway you look at it stocks and long term bonds are a poor investment currently for the long term investor.
  
All is not lost as DYI works through four asset categories.  Stocks, long term bonds, precious metals [and their respective mining shares] and short term bills/notes [cash].  Thus providing an investor with at least one asset class being in a bull market at all time. 

What I find amazing [I’m 65 years old] is how everything has gone full circle with during the 1970’s money market funds [or short term notes] were all the rage.  Today the most unloved area and thus very undervalued is money market funds or short term bills and notes.  The second best area is precious metals or their respective mining companies.  This is best shown by my sentiment indicator for my asset categories.

Market Sentiment

Smart Money buys aggressively!
Capitulation
Despondency
Max-Pessimism *Market Bottoms* Short Term Bonds
Depression MMF
Hope Gold
Relief *Market returns to Mean*

Smart Money buys the Dips!
Optimism
Media Attention
Enthusiasm

Smart Money - Sells the Rallies!
Thrill
Greed
Delusional
Max-Optimism *Market Tops* U.S. Stocks
Denial of Problem Long Term Bonds
Anxiety
Fear
Desperation

Smart Money Buys Aggressively!

Capitulation

So…This creates by using my averaging formulas DYI’s model portfolio.

 Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 12/1/19

Active Allocation Bands (excluding cash) 0% to 50%

50% - Cash -Short Term Bond Index - VBIRX

50% -Gold- Global Capital Cycles Fund - VGPMX **

 0% -Lt. Bonds- Long Term Bond Index - VBLTX

 0% -Stocks- Total Stock Market Index - VTSAX

[See Disclaimer]

** Vanguard's Global Capital Cycles Fund maintains 25%+ in precious metal equities the remainder are companies they believe will perform well during times of world wide stress or economic declines.  

 This blog site is not a registered financial advisor, broker or securities dealer and The Dividend Yield Investor is not responsible for what you do with your money.

This site strives for the highest standards of accuracy; however ERRORS AND OMISSIONS ARE ACCEPTED!

The Dividend Yield Investor is a blog site for entertainment and educational purposes ONLY.

The Dividend Yield Investor shall not be held liable for any loss and/or damages from the information herein.

Use this site at your own risk.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

  DYI

Dismal

Returns

DYI: 

Amazing at it may seem precious metals and short term bills and notes are the best value among DYI’s four asset categories.  Long term bonds and stocks have been priced to the heavens leaving those with future returns to be dismal at best!  The charts below spell out what is ahead!

Market Sentiment

Smart Money buys aggressively!
Capitulation
Despondency
Max-Pessimism *Market Bottoms* Short Term Bonds
Depression MMF
Hope Gold
Relief *Market returns to Mean*

Smart Money buys the Dips!
Optimism
Media Attention
Enthusiasm

Smart Money - Sells the Rallies!
Thrill
Greed
Delusional
Max-Optimism *Market Tops* U.S. Stocks
Denial of Problem Long Term Bonds
Anxiety
Fear
Desperation

Smart Money Buys Aggressively!
Capitulation

Gold has outperformed the stock market over the last year 

For more than a year, I’ve been strongly encouraging readers to consider buying gold. 

Over the last 12 months, the price of gold is up 21.1%, handily outperforming everything from the S&P 500 index in the US to stock markets in China, Europe, and Canada, plus bonds, real estate, and even major commodities like oil. 

The real demand that’s worth watching comes from foreign governments and central banks– institutions with such a heavy appetite that they buy gold by the metric ton. 

And according to freshly-minted international banking regulations, gold is now considered to be a “zero-risk asset” for central banks and large financial institutions. 

This is important– because a number of central banks and foreign governments are really looking for alternatives to diversify away from the US dollars. 

And that’s why so many countries are starting to stockpile gold instead. It’s the best alternative to US dollars, and they’re buying up as much as they can.

Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 12/1/19

Active Allocation Bands (excluding cash) 0% to 50%

50% - Cash -Short Term Bond Index - VBIRX

50% -Gold- Global Capital Cycles Fund - VGPMX **

 0% -Lt. Bonds- Long Term Bond Index - VBLTX

 0% -Stocks- Total Stock Market Index - VTSAX

[See Disclaimer]

** Vanguard's Global Capital Cycles Fund maintains 25%+ in precious metals equities the remainder are companies they believe will perform well during times of world wide stress or economic declines.  

 This blog site is not a registered financial advisor, broker or securities dealer and The Dividend Yield Investor is not responsible for what you do with your money.

This site strives for the highest standards of accuracy; however ERRORS AND OMISSIONS ARE ACCEPTED!

The Dividend Yield Investor is a blog site for entertainment and educational purposes ONLY.

The Dividend Yield Investor shall not be held liable for any loss and/or damages from the information herein.

Use this site at your own risk.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

DYI

Social

Insecurity 

Another Record Low: 

Will The U.S. Fertility Rate’s 

Collapse Ever End?

2018 

Total Fertility Rate

1.730

Once again, the CDC has released figures on the fertility rate in the United States. Once again, the figures show an all-time low. In May, the CDC released its provisional 2018 rates, with a total fertility rate of 1.728 births per woman. On Wednesday, the CDC released its final rate, at 1.730, a decline from 1.766 in 2017 and 1.821 in 2016. That puts it at an all-time low, slightly below its 1976 trough of 1.738.

Postponing children in a time of economic uncertainty makes sense, although a study at the Center for Retirement Research attributes the recent decline to a host of other long-term factors, including declines in religious affiliation, the increasing “opportunity cost” as the gap between men’s and women’s wages narrows, and the impact of changing immigration patterns.

At the same time, the demographer Lyman Stone offers an alternate explanation: it’s not about childbearing in isolation but about marriage. Despite the worries about nonmarital childbearing, it is due to the postponement of marriage that Americans are having fewer children. And this isn’t merely speculation - it’s based on the math of differing fertility rates by marital status and changing marriage patterns over time.

Dream-hoarding? Maybe dream-rejecting. Or, Holy Moly, would you look at these marriage statistics?!

It’s now something that’s been observed repeatedly:  marriage is increasingly a middle/upper-class status.  There are all manner of explanations for this:  marriage is a poverty-avoiding tool, so unmarried people are more likely to be poor; poor people have lives which are chaotic enough that they can’t have the sort of healthy relationship that marriage requires; poor men are such screw-ups that women find the idea of marrying them no better than having another child to take care of; poor women would rather get benefits from the government than be married (but might be OK with cohabitating); etc.

The losses that less-educated, lower-income men “have experienced since the 1970s in job stability and real income have rendered them less ‘marriageable.’ ”   Stagnant or declining wages for middle- and working class couples impede their ability to afford a home, which is the most valuable financial asset most households own.  Couples lacking property may “have fewer reasons to avoid divorce.”

DYI: 

Having a birth rate below replacement social Security and Medicare intergenerational programs will continue to feel the financial heat with less and less young workers feeding these programs.  What will eventually happen Congress will move these programs funding from stand alone to general income taxes. Medicare will have this happen within 3 to 5 years as their trust fund will be exhausted.  This shortfall from FICA taxes will be made whole from general revenues.  The same will happen when Social Security’s trust funds run out in the year 2034.  Anyone stating these programs are going bankrupt simply doesn’t understand their funding and most important the political environment as no politician will vote against these programs.  If he or she did they would be voted out in their next election.

Marriage Class Struggle  

What I find interesting and dismaying at the same time is marriage percentage divided by class.  This social phenomena of significantly higher percentage marriage middle and upper middle class is further pressing out the boundaries between the haves and have not's.  This is especially true in the higher tier professions.  I haven’t come across any studies however today so many doctors will marry another doctor.  Back in the 1970’s or 80’s they would be billed as a “power couple.”  Today no such label occurs as this is seen as the norm.

 DYI