By Brett Munster
Demographics Necessitate Debasement
One of the most underappreciated forces shaping the long-term trajectory of U.S. fiscal policy is demographics. While political and business cycles dominate headlines, demographic trends operate slowly but relentlessly, exerting structural pressures that are far more difficult to reverse. The United States is now confronting a population dynamic that all but guarantees persistently larger budget deficits over time. The aging of the Baby Boomer generation is not merely a social development; it is a fiscal one. The logical endpoint of that process is increased money creation and a continued debasement of the dollar.
In 2024, we wrote about how demographics are structurally bullish for crypto over the long term, focusing then on the coming generational wealth transfer. Baby Boomers, the wealthiest generation in human history, are expected to pass an estimated $70–90 trillion to younger generations over the next two decades. Millennials and Gen Z—digital natives shaped by repeated financial crises, rising student debt, declining housing affordability, and deep skepticism toward traditional institutions—invest very differently from their parents. Despite sharing a strong preference for real estate, Baby Boomers have largely allocated capital to stocks and bonds and maintained negligible exposure to cryptoassets. Younger cohorts, by contrast, show a pronounced preference for bitcoin and digital assets relative to equities and fixed income. Even a modest reallocation of inherited wealth into crypto could generate capital inflows that dwarf the industry’s current market capitalization.
Yet the demographic story extends far beyond wealth transfer. Aging populations also impose hard constraints on government finances—constraints that increasingly necessitate currency debasement.
At a high level, different age cohorts play very different economic roles. Children and teenagers consume resources but contribute little in taxes or production. Young adults and those early in their careers tend to be heavy consumers as they transition into adulthood, forming households, purchasing vehicles and housing (historically to a greater extent than today) raising children, and investing in education and skills. Mid-career workers, roughly ages 40 to 65, form the backbone of the fiscal system. They are typically at peak earnings, pay the most in income and payroll taxes, and contribute disproportionately to savings and capital formation. Retirees, by contrast, consume less, pay significantly less in taxes, and draw down savings accumulated over decades. Economies function most smoothly when the population is weighted toward working-age contributors rather than retirees drawing on public and private systems.
For several decades, the United States benefited enormously from favorable demographics. Baby Boomers moved en masse into their peak earning years, driving tax revenues to repeated all-time highs. This period coincided with strong consumption, robust savings flows, and sustained demand for financial assets, including U.S. Treasuries. That virtuous cycle is now reversing. Boomers are retiring at scale, and the largest population cohort in American history is shifting from net contributors who funded the system to net beneficiaries who now draw from it.
This transition has profound fiscal implications. During their working years, individuals generate taxable income, spend on goods and services, and save for retirement. Those savings flow into banks, pension funds, insurance companies, and asset managers, which then allocate capital to equities and government bonds. In retirement, that dynamic flips. Income falls, tax payments decline, consumption slows, and savings are drawn down to fund living expenses. Retirees become net sellers of assets rather than accumulators. Deposits leave the banking system, and investment pools gradually shrink.
The United States is now entering a prolonged period in which this demographic shift accelerates. The working-age population is growing far more slowly than in prior decades and, in some years, effectively stagnates. Meanwhile, the population over 65 continues to expand rapidly. Fewer workers must therefore support more retirees. Tax revenues face structural pressure just as entitlement spending—Social Security, Medicare, Medicaid, and other age-linked programs—rises automatically. These programs are not discretionary; they are embedded in law and politically untouchable at scale. At the same time, interest expense on the national debt has already become one of the fastest-growing line items in the federal budget.
This is the crux of the problem. The U.S. government ran large deficits even during periods of economic expansion, when tax receipts were the strongest. Those deficits accumulated while Baby Boomers were still largely in the workforce, paying income taxes, consuming heavily, and saving aggressively. As that cohort retires, the tax base shrinks relative to the population, and the pool of domestic savings available to absorb new Treasury issuance declines. Raising taxes becomes less effective when there are fewer high-earning workers to tax. Cutting spending is constrained by mandatory programs that grow automatically with aging demographics. The math simply does not work going forward.
As we have argued repeatedly in reference to the U.S. government’s debt spiral, outright default is not a practical option, and there is no political appetite in either party for sustained austerity. That leaves increased reliance on central bank balance sheets and the creation of new money to fund obligations that cannot be met through taxation or borrowing alone. This outcome is not ideological; it is mathematical.
Here, the demographic narrative comes full circle. The same forces driving a massive wealth transfer to Millennials and Gen Z are also driving fiscal outcomes that make scarce, non-sovereign monetary assets more attractive. An aging population structurally pressures government budgets, increases the likelihood of persistent deficits, and raises the probability that those deficits are financed through monetary expansion. In such an environment, assets with fixed supply and credibility independent of any single government become increasingly relevant.
Demographics do not change overnight, nor do their consequences. But they are predictable, and they are already in motion. The retirement of the Baby Boomer generation simultaneously reduces the tax base, increases mandatory spending, drains traditional savings pools, and constrains policy choices. Combined with a generational shift in investment preferences, these forces create powerful long-term tailwinds for crypto—not as a speculative fad, but as a structural response to the fiscal realities of an aging society and a currency system under persistent strain.
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Disclaimer: This is not investment advice. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content is information of a general nature and does not address the circumstances of any particular individual or entity. Opinions expressed are solely my own and do not express the views or opinions of Blockforce Capital.
Disclaimer: This is not investment advice. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content is information of a general nature and does not address the circumstances of any particular individual or entity. Opinions expressed are solely my own and do not express the views or opinions of Blockforce Capital or Onramp Invest.
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