Nouriel Roubini Talks Markets and Money

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**Tom Keene** (0:07)
It is not smoke and mirrors with Nouriel Roubini. He is Senior Economic Strategist at Hudson Bay Capital that barely describes his contribution to the Clinton administration, his years of service to New York University, and the books that just keep on coming.
One of them, No Beef with Getting Older, okay. That's fine and we'll look at that. I want to talk about that in a minute. Nouriel, welcome to the show. Ted Lieu was on the other day. What's the sweat on social security? Do we really have to risk losing a check on social security into the 2030s?

**Nouriel Roubini** (0:45)
Well, we know that the trust fund is going to start running out of money and therefore, Weber is going to be president after this administration in 2028, he or she will have to figure out together in a bipartisan way what to do about it. You can, how to say, lengthen retirement age, you can raise payroll taxes, you can cut benefits, you can do a combination of all those things, but definitely we have to do something about it.

**Tom Keene** (1:08)
It just popped into my puny head, he wasn't picked by a task force for Chairman Warsh. What an oversight that was. Let's go to Nouriel Roubini from, I believe it's four years ago, No Beef with Getting Older. In 1960, there were five active workers for every retired and disabled worker in these United States. But it's gone to three to one in 2009, headed towards two to one in four years. Instead of moving forward, we have slipped backward out of Fortune Magazine in 2022 So the clock is ticking. I mean, we're moving on. Do you get the sense the politicians have any understanding of what's going to happen? The first Wednesday of November in 2028 when we got to start really fixing this?

**Nouriel Roubini** (1:52)
Well, the politicians always kick the can down the road until something becomes critical. They prefer to avoid it. As we know, social security has been for a long time, the third rail of American politics. So we'll have to deal with it like we did a few decades ago, by creating commission at that time was run by Alan Greenspan, this time around somebody else, and they'll come with sensible ideas. We have to increase retirement age, we have to increase payroll taxes, or have the corporates that the winners pay for the workers, or we'll have to cut some benefits. So any combination of those things is going to have to happen at some point down the line.

**Scarlet Fu** (2:27)
Eric Balchunas just pointed out to me that Senator Tim Kaine, a Democrat from Virginia and Senator Bill Cassidy, a Republican from Louisiana, have proposed a plan to save social security by borrowing up $1.5 trillion to invest in the stock market, which would grow over 75 years to pay future benefits. Does that sound like something that could work, or is that kind of craziness?

**Nouriel Roubini** (2:46)
Well, there were some ideas in the past about, unquote, privatizing social security, and in countries that have sovereign wealth funds, because they're running fiscal surpluses and current account surpluses that can build up net foreign assets like Norway does, like in the Gulf they do, to create something of a buffer for the future. The problem with the US is we run a fiscal deficit and a large current account deficit. So if you borrow more to invest in the stock market, yeah, you get that margin, some returns, the returns on the stock market will be higher than what you pay on that borrowing, but it's a gimmick. At the end of the day, you have to do something else. That's not gonna solve the problem.
It's one step in one direction, but it's not gonna be enough.

**Scarlet Fu** (3:24)
Okay, not the solution. In the meantime, inflation is getting in the way of everyone's best laid plans. You look at price increases in elderly healthcare, for instance, home healthcare. Because of immigration curbs, it's outstripping, far outstripping the rise in college tuition. You can see there, although of course, the absolute cost of each is comparing apples with oranges.
Nouriel, are Gen Xers and Millennials all going to work until we're 90 years old because we need to pay for six-figure college tuition, as well as 24-7 care for our parents?

**Nouriel Roubini** (3:51)
Well, in principle, yes. The problem is going to be that with AI, eventually we're going to have a long-term, permanent tech unemployment. It's going to happen only slowly, but it's going to happen in the next 20 years. So even if you increase the retirement age, the problem is going to be a large chunk of the population is going to be replaced by AI and robots in the next 20, 25 years. So increasing the retirement age is not going to be a solution.