Two Big Trends Are about to Collide — Part One

In the final week of The Rum Rebellion, I would like to share with you my thoughts on two trends that are destined to have a profound influence on all of our lives.

Health and wealth.

We’re approaching an inflection point where the improvements in one and the deterioration in the other will have a deep and lasting impact on many lives. For some, it’ll be better and for others…well, not so good.

Over the years of writing for The Rum Rebellion, my articles have included hundreds of charts and graphs.

But there was one that was an absolute stand out. The feedback took me completely by surprise.

Here it is:

This next chart puts a dollar figure on the “fake wealth” the Fed has created in order to enable the US empire to keep up appearances.

Reversion to the 550–560% range (of US household wealth to net disposable income) will shred US$44 trillion of paper wealth.

That wealth currently sits in shares, property, and cryptos.

Federal Reserve Economic Data

Source: Federal Reserve Economic Data

[Click to open in a new window]

For a little perspective, in 2009 US household net worth shrank from US$70 trillion to US$59 trillion…wiping out US$11 trillion (which, at that time, equated to 80% of GDP).

A potential loss of US$44 trillion is the equivalent of 200% of US GDP.

Quantifying the amount of asset price inflation that’s at a real risk of being deflated made readers sit up and take notice.

Financial loss of this scale will be the ruin of many households across all generations.

When the next crash happens is an unknown. But we can be fairly certain it’s on its way.

The timing could not be worse…especially for boomer retirees and soon-to-be retirees.

Seeing how the intersection of these two big trends are going to alter our lives, we need to take a nostalgic trip back to 1999…the year before the dotcom bust.

1999 and its modern-day echoes

The US Senate acquitted President Bill Clinton of impeachment charges.

John F Kennedy Jr, his wife Carolyn, and her sister Lauren died at sea in a light aircraft crash.

The dotcom boom was in full flight.

The Y2K bug had us worried about planes falling from the sky, bank balances being erased, and getting stuck in elevators.

Nokia, Ericsson, and Motorola were the dominant mobile phone providers.

Remember the Nokia 3210?

Nokia 3210

Source: Pinterest

[Click to open in a new window]

It was the year the first of the Matrix franchise was released.

The Matrix Movie Poster

Source: Imbd

[Click to open in a new window]

Personally, I preferred Fight Club with Brad Pitt.

1999 was also the year when the drug rapamycin — an immunosuppressant to prevent the rejection of transplanted organs — was approved by the US Food and Drug Administration.

In recent years, there have been echoes of 1999.

The US Senate acquitted President Donald Trump of impeachment charges.

JFK’s younger sister, Jean, died in June 2020 at the age of 92.

HOODWINKED! Why Australia’s ‘miracle’ economy is a farce

We have another tech boom.

The world has trained its efforts on defeating another bug: COVID-19. This one has kept planes grounded, bank balances (courtesy of government largesse) have increased, and instead of elevators, people are being stuck in their homes.

Nokia, Ericsson, and Motorola are now relics on display in the tech museum, replaced by Apple and Samsung.

The latest in the Matrix franchise is due to be released in a couple of weeks.

Brad Pitt is in a Fight Club of sorts with his ex-wife Angelina…but that one is being slugged out in the divorce courts.

And rapamycin?

The November 2019 issue of Medical News Today gave us an update:

Rapamycin has anti-aging effect on human skin

Source: Medical News Today

[Click to open in a new window]

As reported (emphasis added):

A major mechanism through which rapamycin interacts with cells is the aptly-named mechanistic target of rapamycin (mTOR).

An earlier study by [associate professor of biochemistry and molecular biology, Christian] sell and colleagues had demonstrated that rapamycin could improve cell function and slow aging in cultured cells.

“When you slow growth, you seem to extend lifespan and help the body repair itself — at least in mice,” Sell continues, noting, “This is similar to what is seen in calorie restriction.”

The new investigation, however, is the first to demonstrate an anti-aging effect in living human tissue.

If science can successfully slow down the skin’s ageing process — the body’s largest organ — can the ageing process in other organs be reversed?

And if it can, what does that mean for old age?

The MIT Technology Review published this thought-provoking publication in Sept/Oct 2019:

Old Age is Over

Source: MIT Technology Review

[Click to open in a new window]

The publication runs for 92 pages (if you include the ads), so I’ve just selected a couple of extracts to share with you (emphasis added):

Joan B Mannick is cofounder and chief medical officer of a biotech company called resTORbio, spun out of Novartis in 2017, which is conducting clinical trials of RTB101.

It’s a drug candidate at the forefront of efforts to slow the age-related decline of the immune response.

Our immune system gradually weakens as we age.

Which is why the elderly are so vulnerable to COVID-19. They lack the number of immune ‘soldiers’ to ward off the virus ‘enemy’.

Respiratory tract infections are the seventh-leading cause of death in older people.

If biotech breakthroughs can keep the immune system healthier for longer, lifespans are likely to be extended.

And it could be happening sooner than the general public think. Remember, this was reported in Sept/Oct 2019 (emphasis added):

Mannick says we will have our first answer about the potential of this anti-aging intervention within a year.

When questioned on interim results, she said:

The exciting thing about this, which I don’t know if the aging field has realized, is this is the farthest along program of anything in the aging field.

We have two phase III trials targeting the biology of aging, to prevent aging-related diseases in humans, that will have a readout in a year. That’s huge! The field is not a decade away.

We don’t know yet, and we have to wait for the results of the trial. But if this result is positive and if health authorities approve this drug — which are two “ifs” — we’ll have a product for people that is targeting the biology of aging to prevent aging-related diseases.

Not just in our lifetime, but in, you know, a few years.

Joan Mannick’s optimism was a little premature.

The results are in. As reported in (emphasis added):

Despite the unsatisfying conclusion of the resTORbio respiratory illness program, important lessons have been learned. Feasibility and safety mTOR inhibitors in otherwise healthy people has been established, and there is reason for optimism that mTORC1 inhibitors will eventually be widely used for age-related indications.

This is all part of the trial-and-error phase.

When reporting on the clinical trial of RTB101, went on to say (emphasis added):

A second indication currently being pursued by resTORbio is Parkinson’s Disease, where a combination of rapamycin with RTB101 will be evaluated Alzheimer’s disease and related dementias are another area where a large body of preclinical evidence indicates that rapamycin may be effective. The drug is currently being used off-label as a preventative in people at high risk for Alzheimer’s disease…

Rapamycin appears to be far more than an immunosuppressant used solely for anti-rejection.

The MIT publication interviewed Juan Carlos Izpisúa Belmonte, a scientist at the Gene Expression Laboratory at San Diego’s Salk Institute for Biological Studies (emphasis added):

Izpisúa Belmonte believes epigenetic reprogramming may prove to be an “elixir of life” that will extend human life span significantly. Life expectancy has increased more than twofold in the developed world over the past two centuries. Thanks to childhood vaccines, seat belts, and so on, more people than ever reach natural old age. But there is a limit to how long anyone lives, which Izpisúa Belmonte says is because our bodies wear down through inevitable decay and deterioration. “Aging,” he writes, “is nothing other than molecular aberrations that occur at the cellular level.”

The way the ageing process works — as was explained to me in layman terms — is to think of our body’s ongoing cell regeneration as photocopying.

When you take the first copy of the original, it’s almost identical. There might be an ever so slight aberration.

Then you use the not quite identical copy to make the next copy. Keep repeating this process over and over again and the 1,000th copy is a blurred image of the original.

The same goes for our cells. Every time cells regenerate, there are slight changes to the original. Molecular aberrations occur.

If epigenetic reprogramming can minimise or eliminate the aberrations, the regenerated cell will be very close to or a perfect copy of the old one, slowing the ageing process down dramatically.

It’s still early days, so Izpisúa Belmonte isn’t promising us the fountain of youth.

However, the addition of decades to our lives is a real possibility (emphasis added):

…epigenetic tweaks won’t “make you live forever,” but they might delay your expiration date. As he sees it, there is no reason to think we cannot extend human life span by another 30 to 50 years, at least. “I think the kid that will be living to 130 is already with us,” Izpisúa Belmonte says. “He has already been born. I’m convinced.”

Scientists are well advanced in identifying the molecular ‘hallmarks’ of aging.

With rapid technological advancements, it’s conceivable we’ll see significant progress in the anti-ageing process over the next decade or two.

Who knows, in 20 years’ time, 80 could become the new 50 or even 40.

And, dear reader, this very real possibility has many unintended consequences. Not the least being the prospect of running out of money decades before you ever thought possible.

More on this tomorrow…

Until then.


Vern Gowdie Signature

Vern Gowdie,
Editor, The Rum Rebellion

PS: Vern is also the Editor of The Gowdie Letter and The Gowdie Advisory — investment services designed to help everyday Australians avoid the financial pitfalls of a volatile economy and make informed decisions to grow their wealth for generations to come.

Vern has been involved in financial planning since 1986.

In 1999, Personal Investor magazine ranked Vern as one of Australia’s Top 50 financial planners.

His previous firm, Gowdie Financial Planning, was recognised in 2004, 2005, 2006 & 2007, by Independent Financial Adviser magazine as one of the top five financial planning firms in Australia.

In 2005, Vern commenced his writing career with the ‘Big Picture’ column for regional newspapers and was a commentator on financial matters for Prime Radio talkback.

In 2008, he sold his financial planning firm due to concerns about an impending economic downturn and the impact this would have on the investment industry.

In 2013, he joined Fat Tail Investment Research as editor of Gowdie Family Wealth. In 2015, his book The End of Australia sold over 20,000 copies and launched his second premium newsletter, The Gowdie Letter.

Vern has since published two other books, A Parents Gift of Knowledge, all about the passing of investing intelligence from father to daughter, and How Much Bull can Investors Bear, an expose on the investment industry’s smoke and mirrors.

His contrarian views often place him at odds with the financial planning profession today, but Vern’s sole motivation is to help investors like you to protect their own and their family’s wealth.

Vern is Founder and Chairman of The Gowdie Advisory and The Gowdie Letter advisory service.

The Rum Rebellion