Global Demographic Fact Vs. Central Bank Sorcery
Summary
- The annual growth of the working-age population is the organic baseline for growth in national, regional, and global consumption.
- However, since World War II, interest rate policy has moved inversely of annual working-age population growth, to incent ever more debt as working-age population growth has decelerated to nothing.
- Interestingly, total annual change in energy consumption has mirrored annual working-age population growth.except where synthetic growth has been temporarily substituted to maintain the appearance of growth (aka, China).
- Eventually, the inorganically rising consumption and asset prices will return to their organic baseline.and that will be a very rude new dawn for those who believed in infinite growth.
The 1st world economy lives within a fractional reserve banking system. In a fractional reserve system, one persons debt is the systems new money, as money is lent into existence. At a progressive rate since 1980, it has been the combination of decelerating working-age population growth, declining interest rates, and ramping utilization of privately loaned debt that has simultaneously been the basis for increasing consumption and the creation of new money. As borrowers undertook new loans prior to 2008, this borrowing was the primary means of monetary growth. However, the changing demography since 2008 has changed everything as population growth has shifted from young to old…and federal governments and central banks have taken over money creation via monetization resulting in asset inflation.
- New debt is primarily undertaken in the 1st world nations where income and savings are higher but also credit is readily available and standards for this credit vary widely, by asset type (zero for student loans, low for vehicles, moderate to high for homes…since ’07).
- It is primarily the working-age population that undertakes new debt while those in the post working age population tend to deleverage and pay down existing loans (this has the opposite monetary effect of destroying money).
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