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The Advanced Economies are headed for a downfall

The Advanced Economies are headed for a downfall

It may be pleasant to think that the economies that are “on top” now will stay on top forever, but it is doubtful that this is the way the economy of the world works.

Figure 1. Three-year average GDP growth rates for Advanced Economies based on data published by the World Bank, with a linear trend line. GDP growth is net of inflation.

Figure 1 shows that, for the Advanced Economies viewed as a group (that is, members of the Organization for Economic Co-operation and Development (OECD)), GDP has been trending downward since the early 1960s; this is concerning. It makes it look as if within only a few years, the Advanced Economies might be in permanent shrinkage. In 2022, the expected annual GDP growth rate for the group seems to be only 1%.

What is even more concerning is the fact that the indications in the graph are based on a period when the debt of the Advanced Economies was growing. This growing debt acted as an economic stimulus; it helped the industries manufacturing goods and services as well as the citizens buying the goods and services. Without this stimulus, GDP growth would no doubt appear to be falling even faster than shown.

In this post, I will look at underlying factors that relate to this downward trend, including oil consumption growth and changes in interest rate policies. I will also discuss the Maximum Power Principle of biology. Based on this principle, the world economy seems to be headed for a major reorganization. In this reorganization, the Advanced Countries seem likely to lose their status as world leaders. Such a downfall could happen through a loss at war, or it could happen in other ways.

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