JP Morgan Warns Of A Dystopian Future Where America Will Kick Old People To The Curb

logan's run

Photo: Courtesy of MGM

JP Morgan’s Michael Cembalest gives a chilling analogy to America’s future: the 1976 film Logan’s Run.In the film, a world with insufficient resources maintains its equilibrium by killing everyone over the age of 30 (in the original book, the age was 21). The narrative revolves around how people are tracked through imprints in their hands, and how the protagonist tries to escape. It’s just a movie, but it taps into American fears about who makes these choices, and how they make them. With 30% of Medicare expenses taking place in the last year of life, and with government healthcare spending outstripping education spending by 10x over the last 50 years, this issue will be very hard to sort out.

JP Morgan’s chief investment officer, Cembalest says entitlement costs are unsustainable: “The United States (its politicians and its citizens) have jointly created a leviathan of entitlement obligations which are 10 times the real cost of all its wars since the American Revolution.”

He points to charts like these:

chart
chart

Long-term America must reform entitlements or face revolt in the treasury market.

Cembalest recommends “shorter-duration G7 government bond holdings, non-dollar assets and portfolios positioned for volatile markets (hedge funds, distressed assets and credit as a complement to equities).”

Check Out 16 Jaw-Dropping Statistics About The Retirement Crisis >

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.