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A Debt Based System Can’t Succeed Without Population Growth

A Debt Based System Can’t Succeed Without Population Growth

A simple idea today…that the end of population growth (where it matters) is upon us.  Absent population growth among the nations that do nearly all the consuming, a debt based economic and financial system can’t ultimately succeed.  That is, without growth, assets generally don’t appreciate and debt is generally only a drag on future spending and activity.  The timing of the failure can be delayed and the gains privatized while the losses are socialized, but ultimately markets (and economies, as a means of honest exchange), will get cleared.  So, without further ado, the end of population growth:

1- Simply put, topline global population growth (births) ceased growing almost 30 years ago!  Looking solely at the top-line (chart below), note that from 1950 to 1989, annual global births increased 73% (+57 million/annually).  Conversely, from 1989 to 2018, annual global births have risen just 1% (+1 million/annually).  Data based on UN data and UN median estimates.

However, the distribution of those births among the differing groupings of nations (by income) has dramatically changed from 1950 to present…and will shift further by 2050.  The chart below shows the proportion of births among the high income, upper middle income nations, and China have nearly fallen in half since 1950…while the proportion of births among the lower middle and low income nations have soared.  More simply put, births among those that consume heavily (about 90% of total energy) have long since collapsed while births among those who consume relatively little (less than 10%) have soared.
But now, lets look at the sources and timing of those changing births and the implications for consumption.
High income nations births (blue line) and year over year change (red columns).  Incomes range from $90k to $12k, per capita, and these nations (US/Can, EU, Japan/S. Korea, Aus/NZ, etc.) consume 47% of total global energy.

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