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Wednesday, August 19, 2015

Depression Does Not Come Close to Describe What the World is About to Experience

What is happening economically and financially is very simple to understand (despite Fed heads garbled speeches).  Global and national population growth is slowing and turning to outright population declines.  In the absence of the growth rates (or in place of outright population declines), central banks and federal governments have encouraged and enabled a shrinking number of consumers to consume more via credit and debt and likewise for manufacturers to make more than true demand could absorb.  The national and global imbalances are beyond enormous...

Just to legitimize this, please note all population data is from the OECD.  First, world population and its components.  Global population will continue growing at least through 2050 and perhaps until 2100.  But, looking at the components and trends, it's clear the economic growth premised on ever larger population bases (with ever more credit layered on top) is horribly flawed.

Population growth looks quite different when viewing annual yoy growth for all ages vs. the more rapidly declining growth of global core populations (15-64yrs/old) below.

And the chart below shows the growth of core vs. the young populations.  The headwaters of global population growth are going dry...and it's just a matter of time as this smaller young population replaces the outgoing larger core.

As the chart below highlights, the lag between declining young and rapidly growing old populations can be quite deceptive.

So, to avoid any confusion about the course of global demand and the economic future of the world...the below chart highlights 0-64yr/olds vs. the 65+yr/old. 

But since not all population growth is the same when considering purchasing power and consumption, the chart below shows a little over 40% of the globes population (the part that does the vast majority of consumption).  This 40% includes all 34 OECD members (listed below) + China, Russia, and Brazil. 
  • Australia
  • Austria
  • Belgium
  • Canada
  • Chile
  • Czech Republic
  • Denmark
  • Estonia
  • Finland

  • France
  • Germany
  • Greece
  • Hungary
  • Iceland
  • Ireland
  • Israel
  • Italy
  • Japan

  • South Korea
  • Luxembourg
  • Mexico
  • The Netherlands
  • Norway
  • New Zealand
  • Poland
  • Portugal

  • Slovakia
  • Slovenia
  • Spain
  • Sweden
  • Switzerland
  • Turkey
  • United Kingdom
  • United States

It's very hard not to notice the collapsing growth of the 0-64yr/old population among these nations and the ramping old...why the Fed or economists wouldn't understand the lack of growth in global demand is hard to understand.  Population growth in India, Indonesia, Africa, and certain M. East nations is not akin to "wealthy" nations growth when it comes to consumption.

Finally, what you (unlike central banks around the world) may notice is that of the 63 million person growth in population in 2015...59 million are from generally low consumption nations and 4 million from high consumer nations.  And by 2019, high consumer nations 0-64yr/old population will begin outright declining...and the rest of the world growth continue slowing.  And these estimates of future population growth are likely far too high as they are based on economic growth absent typical economic cycles...

Perhaps central banks should consider a different course than serially lying that substituting debt for declining consumer demand could ever have made any sense...particularly given consumer demand will continue to decline, at least for the rest of our lives but the debt never will.

And for those curious how this plays out over the next decade or two...


  1. The world better get going on some serious productivity growth.

    1. Was that sarcasm (I hope)? Serious production of what, and to be consumed by whom? The whole point of all this is that there will be no one able to purchase all of that stuff you want produced.

    2. What productivity growth? Even if a worker can magically become 10x more efficient in like producing let's say TVs, its not going to increase the end demand of the same good. Heck if anything demand will drop now that even more people are out of work and can't afford to buy stuff.

      Technology stagnation and demographic changes are the true culprits to lack of demand. If people see new things are hardly better than the existing stuff already own such as cars, mobile phones or PC, they simply won't buy new stuff to replace them, period.


    I think that 1000 x Systemic Leverage: $600 trillion of Gross derivatives 'backed' by 600
    billion of collateral is way beyond fixing by increases in population or productivity. The chaos that will ensue when this house of cards falls is unimaginable.
    I hope that people will at least know who to blame so that the same mistakes are not repeated in the future; if there is a future.

  3. "Technology stagnation and demographic changes are the true culprits to lack of demand"
    I agree, also the loss of jobs is another cause. he bankers and .gov's must be able to see the future declines that are about to happen. the just think that "we can't handle the truth" so they will not tell us. no politician has the balls to open this can of worms. I think they all just want to enriched themselves as much as possible and hope that nothing happens on their watch, let the next politician that comes into power deal with it. we are all screwed. The slower it takes the sheeple to wake up to this the worse off we all are!

  4. Several obvious (altho politically unpalatable) solutions occur to me: (1) Bribe OECD citizens to have more children (b) open borders in OECD countries to 3rd-world immigrants (just make sure they assimilate) (c) Implement rapid-growth policies in third-world countries. Maybe China would be willing to lend their extertise - they are certainly good at it.


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