Contemplations for a Sunday (unless you can’t get around to it til Monday)
Some simple themes today…
Population growth, economic growth, and resultant energy consumption are inexorably slowing. The Federal Reserve knows it can not stop this and is simply slowing the inevitable with interest rate cuts to incent greater consumption via skyrocketing credit/debt (particularly government debt….debt that is undertaken with no intent of ever repaying it and is really just pure monetization).
The chart below highlights that employment among 25-54yr/olds (the foundation of US consumption) ceased growing in ’00. Once employment among this group ceased growing, total US energy consumption also ceased growing, and accelerating debt was substituted to maintain growth thanks to nearly 40yrs of interest rate cuts.
The impact of the declining rates and rising debt can be seen in the Wilshire 5000 (chart below). The Wilshire represents all publicly traded US equities radically moving upward with surging US federal debt but inverse to US total energy consumption, jobs creation, and economic activity since ’00.
The driver of the Fed’s federal funds rate was and continues to be the rate of population growth and the growing demand this population growth represents. The adult population growth rate peaked in ’79 and the federal funds rate peaked in ’80…rates plus population growth have been decelerating/declining together since.
The chart below showing the 0-64yr/old population growth vs. 65+yr/old growth. The demographic and population situation only continues to get worse. In fact, it’s unlikely the 0-64yr/old population growth will hit the already low estimates from 2017–>2030 due to the ongoing decline in birth rates and slowing immigration.
What about employment? Chart below shows total full time jobs growth has slowed to a trickle (net basis from peak to peak) and total energy consumption growth likewise decelerating, peaking in ’05, and now declining. Federal funds rate moving inversely, all the way to zero. Finally, Public US Federal debt (w/out Intra-governmental holdings) skyrocketing.
…click on the above link to read the rest of the article…