Home » Posts tagged 'chris hamilton'

Tag Archives: chris hamilton

The Problem:
The Fed and major central banks believe they are fighting a deflationary spiral battling ongoing misses to their inflation targets. But in truth their misguided policies are contributing to a depopulation spiral. They are forcing low interest rates that only exacerbate overcapacity for a consumer base among whom growth is fast decelerating. The cheap money is causing rapid asset appreciation absent like wage growth. Asset holders (primarily older and wealthy) are reaping the rewards while those with little or no assets (young, poor, those of childbearing ages) are paying higher rents, insurance, medical care, schooling, etc. etc. This inequitable inflationary pressure is pushing birth rates to all time lows and cutting off present and future demand…and this is met with even more of the medicine that made the patient sick in the first place.

From a US perspective, there has essentially been no bottom up US population growth since 1950. Chart below shows average annual US births per decade (including births from all sources, legal and illegal). Lower boxes show current age of the population borne during each decade. Births have essentially been flat for seven decades.

Average annual births per each generation and current age of each group, below. Again, births by generation have been flat since the completion of WWII.

Below, annual births highlighting each generation. From the early ’50’s to present, births have been remarkably flat, given the tripling of the total population.

15 to 64 year old population (red line) and year over year change (blue columns). Average annual growth, per period below, has decelerated 50% but will decelerate nearly 80% over the next decade. Average growth, per period:

1970 – 2009, +1.93 million
2010 – 2018, +0.98 million
2019 – 2030, +0.36 million

…click on the above link to read the rest of the article…

Slowing Growth the Problem, Asset Appreciation the Solution?

April 16, 2019

Slowing Growth the Problem, Asset Appreciation the Solution?

Average annual births per each generation and current age of each group, below. Again, births by generation have been flat since the completion of WWII.

Below, annual births highlighting each generation. From the early ’50’s to present, births have been remarkably flat, given the tripling of the total population.

1970 – 2009, +1.93 million
2010 – 2018, +0.98 million
2019 – 2030, +0.36 million

Through 2030, the working age population is estimated to grow by less than 4 million versus 19 million more 65+ year olds. The result is that the US is currently at full employment with little further labor force growth available, detailed HERE and HERE.

…click on the above link to read the rest of the article…

Weekly Commentary: No One Knows How Monetary Policy Works

March 17, 2019

Weekly Commentary: No One Knows How Monetary Policy Works

My interest was piqued by a Friday Bloomberg article (Ben Holland), “The Era of Cheap Money Shows No One Knows How Monetary Policy Works.” “Monetary policy is supposed to work like this: cut interest rates, and you’ll encourage businesses and households to borrow, invest and spend. It’s not really playing out that way. In the cheap-money era, now into its second decade in most of the developed world (and third in Japan), there’s been plenty of borrowing. But it’s been governments doing it.”

I remember when the Fed didn’t even announce changes in rate policy. Our central bank would adjust interest rates by measured bank reserve additions/subtractions that would impact the interbank lending market. Seventies inflation forced Paul Volcker to push short-term interest-rates as high as 20% in early-1980 to squeeze inflation out of the system.

Federal Reserve policymaking changed profoundly under the authority of Alan Greenspan. Policy rates had already dropped down to 6.75% by the time Greenspan took charge in August 1987. Ending 1979 at 13.3%, y-o-y CPI inflation had dropped below 2% by the end of 1986. Treasury bond yields were as high as 13.8% in May 1984. But by August 1986 – yields were down to 6.9% – having dropped almost 700 bps in 27 months.

Lower market yields and economic recovery were absolute boon for equities. The S&P500 returned 22.6% in 1983, 5.2% in 1984, 31.5% in 1985, 22% in 1986 – and another 41.5% for 1987 through August 25th. Markets had evolved into a speculative bubble.

One could pinpointing the start of the great Credit Bubble back with the 70’s inflation. For my purposes, I date its inception at the 1987 stock market crash. At the time, many were drawing parallels between the 1987 and 1929 market crashes – including dire warnings of deflation risk – warnings that have continued off and on for more than three decades.

…click on the above link to read the rest of the article…

Economic Doom Loop Well Underway

March 4, 2019

Economic Doom Loop Well Underway

From 2007 through 2018, births in the US have declined by 470 thousand on an annual basis, or an 11% decline. The US fertility rate has likewise cracked lower, from 2.12 births to 1.72, an 18% decline (2.1 births over a females childbearing years is considered zero growth). This has resulted in 4.5 million fewer net births in the US since 2007 than the Census had estimated in 2000 and again in 2008. This is over an entire years worth of births that never took place. The sharp decline in births, against an anticipated rise, and a deceleration from anticipated immigration has resulted in the Census downgrading US population growth through 2050 by over 50 million persons (detailed HERE). This decelerating growth and outright declines are happening across the globe among the “wealthy nations”, leaving little growth opportunity for the “poor nations” (detailed HERE).

The decline in US births has been particularly steep among those with the lowest incomes and assets. From 2007 through 2016, Native American fertility rates have collapsed from 1.62 to 1.23. Hispanic birthrates have fallen from 2.85 to just 2.1. Black birthrates have turned lower from 2.15 to about 1.9 and white birthrates from 1.95 to 1.72. Again, these birthrates are only through 2016 and the declines in 2017 and 2018 are significant and accelerating downward.

The reason for fast declining birthrates since 2007 in the US and among most nations globally seems to be the current ZIRP and low interest rates and Quantitative Easing programs which have the effect of inflating asset prices. The majority of assets are held by large institutions and post child bearing age populations. The flow through of these policies are asset prices rising significantly faster than incomes. For example, non-discretionary items like homes, rent, education, healthcare, insurance, childcare, etc. are skyrocketing versus wages.

…click on the above link to read the rest of the article…

Census Bureau, Treasury, EIA Detail American Insolvency

February 24, 2019

Census Bureau, Treasury, EIA Detail American Insolvency

Since 2007, US births and net immigration have consistently and unexpectedly fallen sharply. Over the same span, US federal debt and unfunded liabilities have soared while federal tax receipts, as a percentage of the federal debt and unfunded liabilities, continue declining. Total US energy consumption also peaked in ’07 and continues declining in contradiction to those soaring asset valuations.

Simply put, this article details an American insolvency and the ongoing attempt to print and inflate away this reality. America has shown it isn’t afraid of (mis)using this digital printing press via collusion among the Federal Reserve, Treasury, and the Federal Government to disguise the simple truth that America is bankrupt and incapable of meeting its present and future obligations absent unlimited and unending monetization.

Demographic Development and Population Growth
According to the latest 2017 Census projection, the Census expects a near halving of population growth…or 50 million fewer Americans than it expected just 8 years earlier. But critically, nearly all the projected declines are among the under 45 year old population while the 65+ year old population growth is still on track to swell.

Given the record low birth rates in 2017 and 2018, which came in 700 thousand annually below the ’08 Census projections, plus diminishing immigration, netting at least a half million annually below ’08 Census projections, the 2020 Census is likely to significantly further downgrade the potential for US population growth. The impact for US economic growth, unfunded liabilities, and outgrowing personal, corporate, and federal debt is devastating.

What Happened?
From the mid 1990’s to 2007, a surge in immigration (both legal and illegal) and a rise in births resulted in significantly larger child bearing population and broad assumptions that America could outgrow its unfunded liabilities and debt issues.

…click on the above link to read the rest of the article…

Economic Breakdown Starts In East Asia due to Collapsed Births & Childbearing Populations

January 12, 2019

Economic Breakdown Starts In East Asia due to Collapsed Births & Childbearing Populations

The floor under the East Asia neighborhood (consisting of China, Japan, South / North Korea, Taiwan, & Mongolia) is about to fall away. These nations (combined) equal slightly more than 20% of the global population and consume 27% of total global energy. From 2000 through 2016, this region (spearheaded by China) represented 48% of the global growth in total energy consumption. So, when I tell you these countries are economically entering long-term domestic declines (or perhaps outright collapses), the impacts will reverberate everywhere.

Why domestic economic decline or collapse? This is simply following a massive population decline which has already taken place (past tense). The chart below details the 44% fall in births since the double peaks seen in East Asia in ’67 and ’89. This is an ongoing birth dearth of over 14 million fewer annually, since 1995. Now this birth dearth will be compounded by the rapidly falling childbearing population of 15 to 39yr/olds, represented by the red line below (I exclude the 40+yr/olds because they simply have so few children as to simply create distraction). By 2035, the East Asia child bearing population will decline by 30% or -202 million (no estimation, this population is already born and will just shift forward). Absent some seismic shift (or turning away from the inflationary urbanization underway?), births will continue to tumble and national populations will ultimately likewise crumble.

Noteworthy above is the low water mark of just 15 million births in 1996…and the muted L shaped aftermath. Those born in 1996 will be 23 years old in 2019, or generally entering adulthood. On an annual basis, this is a relatively sudden 50%+ decline in new adults, new potential employees, new potential parents, new potential consumers entering the economy…and this is just the start of the “new normal”.

…click on the above link to read the rest of the article…

Monday Musings on Monetization and Markets (or Fundamentals Don’t Matter, Liquidity Does)

January 7, 2019

Monday Musings on Monetization and Markets (or Fundamentals Don’t Matter, Liquidity Does)

Being I’m not an economist nor associated with any financial or investment institutions nor do I have anything for you (dear reader) to buy or sell, I have total freedom to say what I please and freedom to share what I see.

In that spirit, I round back on the Federal Reserves balance sheet versus the curious case of excess reserves of the mega-banks. Last week I detailed that every time the Fed has ceased adding to its balance sheet or outright reduced, the outcome has been decidedly negative for asset prices (HERE). However, like everything, there is a little more to the story.

The chart below shows the rise in the Fed’s Treasury’s (blue line), Mortgage Backed Securities (red line), and rise plus fall of Bank Excess Reserves. What is so interesting is that bank excess reserves didn’t begin declining when the Fed’s Quantitative Tightening began, but immediately upon the conclusion of QE in late 2014. And excess reserves have already declined by $1.2 trillion while the Fed’s balance sheet has declined by “only” about $400 billion.

Now, if I were cynical, I’d say it’s almost like the Fed’s plan with the excess reserves was to use them like a sponge to soak up liquidity during QE and then continue releasing liquidity long after QE ended…and even well after QT was underway (actually, I’m quite cynical). The term for this is “monetization”, something the Fed said it would “never do”.

The chart below shows the massive rise in the Fed’s balance sheet (white line), bank excess reserves (black line), and the quantity of monetization (yellow line) floating in the system just waiting to be leveraged into 5x’s or 10x’s or perhaps even 20x’s that amount.

…click on the above link to read the rest of the article…

2019 Considered…Macro Population Cycle & Business Cycle Turning Down Together?

January 6, 2019

2019 Considered…Macro Population Cycle & Business Cycle Turning Down Together?

Well, 2019 is here and it’s time to consider what sort of growth is possible. Speaking from a macro’est viewpoint, it’s helpful to acknowledge that 90% of the wealth/ income/ savings and nearly 90% of global energy is consumed by the high and upper middle income nations of the world (those with per capita incomes ranging from nearly $90k/yr all the way down to $4k/yr). This is the high income nations of the US/Canada, most of the EU, Japan/S. Korea, Aus/NZ, etc. plus the upper middle income nations of China, Russia, Mexico, Brazil, Turkey, Thailand, Iran, etc (as defined by World Bank…previously detailed HERE). In 2019, this represents about 3.85 billion of earths approximate 7.7 billion population…or about half of earths population (50% consume 90%, while the other 50% consume just 10%).

So, let’s examine the primary fuel source available in 2019…the growth among the 0 to 69yr/old global consumer population. The blue line in the chart below shows the total 0 to 69yr/old population which includes the potential working age population (20 to 69yr/olds?) and child bearing population (15 to 45yr/olds) versus the annual change in that population (red columns). Astute chart watchers will note that population growth has decelerated by 30 million annually, a 75% reduction, since the 1988 peak. 2025 is the year growth ceases entirely and by 2035 this population is estimated to be declining by <10> million annually.

Consider that upon the completion of every business cycle since 1960 and onset of recession, (highlighted by the blacked out columns in the chart below), there was still significant growth (fuel) among the global consumer population. That population growth coupled with the Federal Reserves rate cuts and federal governments stimulus restarted not just domestic but global economic growth. The macro population cycle among the global high/upper middle income nations consumer base expanded anywhere from 30 to 40 million persons annually from 1960 through 1990, but growth slowed to about 20 million annually from 1995 though 2015.

…click on the above link to read the rest of the article…

Why the Fed, Nor Any Central Bank, Can Ever Truly “Normalize”

December 31, 2018

Why the Fed, Nor Any Central Bank, Can Ever Truly “Normalize”

Last week, I highlighted that since ’00, when the Federal Reserve has ceased adding to its balance sheet or begun “normalizing” (via rolling off assets), equity markets have swooned (detailed HERE).

A simple idea today…that the end of population growth (where it matters) has long been upon us (detailed below). Absent population growth among the nations that do nearly all the consuming, a debt based economic and financial system (to coerce ever higher levels of debt fueled consumption) can’t ultimately succeed. That is, without population growth, assets generally don’t appreciate, homes are just shelter rather than “investments”, and debt is generally only a drag on future spending. Likewise, without population growth, total global energy consumption is on the precipice of secular decline (detailed HERE).

In this reality, the only means of maintaining or lifting asset prices further is ever more central bank monetization (aka, centrally planned and executed counterfeiting). Of course, this monetization scheme is doomed to fail but while it continues, the gains are privatized while the losses are socialized. But ultimately markets (and economies, as a means of honest exchange), will get cleared. So, without further ado, I detail the end of population growth (particularly where it matters):

1- Simply put, topline global population growth (births) ceased increasing almost 30 years ago! Looking solely at the top-line (dashed black line, chart below), note that from 1950 to 1989, annual global births increased 73% (+57 million). Conversely, from 1989 to 2018, annual global births have risen just 1% (+1 million). Based on UN data and UN median (overly optimistic) future 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.

…click on the above link to read the rest of the article…

A Debt Based System Can’t Succeed Without Population Growth

December 30, 2018

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.

…click on the above link to read the rest of the article…

Most Bearish of Economic Charts Are Reason To Be Most Bullish on Financial Assets

October 6, 2018

Most Bearish of Economic Charts Are Reason To Be Most Bullish on Financial Assets

In the land of the blind (economics), the one eyed man is king. So, forget everything you know (or don’t know) about economics and follow some very simple math that economists (and financiers, Fed chiefs, and administration after administration) are unwilling to publicly acknowledge. Disregard theories about ever greater production equating to economic growth…all that truly matters is the ability to consume that production (otherwise production turns into excess inventories).

Simply put, every person on earth is a unit of consumption multiplied by their income, savings, and access to and/or utilization of credit (even if it is government provided via social programs). Thus, it is the annual change in the population (multiplied by these levers) which is the primary driver for the annual change in consumption. But population growth among the nations with the income, savings, and access to credit has fallen in half since peaking decades ago…and growth among the all important work force is facing imminent and ongoing decline.

Thus to maintain consumptive growth, a series of stop-gap steps have been undertaken, each more drastic than the last. First, unfunded governmental social programs alongside interest rate cuts were used to entice higher consumption absent higher income or savings. Once this broke down, governments and central banks took over debt creation and asset eradication in an attempt to maintain still higher consumption without the concomitant rise in income/savings.

However, these policies and actions to maintain consumptive growth (enabling higher production) are about to become far more difficult if not impossible. The lack of population growth among the consumer nations coupled with the negative distribution of that growth (almost solely among the elderly) is set to slow growth to a crawl or cause outright declines. Why?

…click on the above link to read the rest of the article…

End of Growth Among “Haves” Dooms Growth Among “Haves” & “Have Nots” Alike

September 12, 2018

End of Growth Among “Haves” Dooms Growth Among “Haves” & “Have Nots” Alike

The global economic system is premised on growth, not just any growth, but growth where it matters (economically). However, population growth (the foundation of economic growth) among the high and upper middle income nations of the world is rapidly winding down. As I have outlined previously, total births have been declining among the combined high/upper middle income nations since 1988 and now births are declining everywhere but among the low income nations of the world (HERE). Without growth among the importers of the world with the income, savings, and/or access to credit…there is no growth for exporters.

The high and upper middle income nations represent 49% of the worlds population but 91% of global GNI (gross national income) and 89% of total global energy consumption (as well as gross commodity consumption). The decades, or more properly, centuries of growth among these wealthier under 65 year old populations (that drove economic activity) will cease around 2022. All subsequent population growth will be among the 65+ year olds of the wealthier nations, particularly among the 75+yr/old population and the masses of the poor nations. The end of population growth and subsequent reversals in these wealthier nations is ushering in an era of economic and consumptive decline unlike the contemporary world has ever seen.

FYR – The national income groupings are based on the World Bank Atlas method (detailed HERE) and listed in full at the articles end. High income nations have per capita incomes over $12k/yr (and as high as $80k/yr) and upper middle nations have income per capita ranging from $12k/yr to $4k/yr. This is compared with lower middle income nations with per capita income ranging from $4k/yr to $1k/yr and low income nations below $1k/yr. All population data is based on UN data and medium variant forward looking estimates.

…click on the above link to read the rest of the article…

Global Economy On Precipice of Secular Decline…Detailed via Shifting Population, Demographics, Income, and Consumption

August 22, 2018

Global Economy On Precipice of Secular Decline…Detailed via Shifting Population, Demographics, Income, and Consumption

Many look at global population growth as a given to greater consumption…and looking at the chart below of total global population set to hit 7.8 billion by 2020, one might be forgiven for this viewpoint. However, the reality, when one looks into the numbers, is that growth in global consumption has ended, as I recently detailed, Investing for the “Long Run”? You May Want to Consider This. This article explains why this population growth will no longer equate to economic or consumptive growth.

0 to 64 year old Global Population
The 0 to 64 year old global population is about 7 billion persons, as of 2018. The chart below shows the distribution and changing size of that population from 1950 through 2050 by high income (black line…$12,000+ income per capita including the US/Canada, most of Europe, Japan, Aus/NZ, etc.), upper middle (yellow line…$12,000 to $4,000 per capita income including China, Russia, Brazil, Turkey, Mexico, Thailand, Columbia, etc.), lower middle (red line…$4,000 to $1,000 per capita income including India, Indonesia, Pakistan, Bangladesh, Ukraine, Philippines, Egypt, etc.), and low income nations (blue line…less than $1,000 in per capita income including most of sub-Saharan Africa, Afghanistan, Haiti, etc.). The simple takeaway should be that the 0 to 64 year old populations among the high and upper middle income countries have ceased growing and will now be shrinking, indefinitely. All 0-64 year old population growth from now forward will be among the lower middle and low income nations of the world. So what?

Income by Age of Head of Household
Why the focus on 0 to 64 year old populations? Average income and expenditures vary greatly by the age of the head of household.

…click on the above link to read the rest of the article…

America’s Greatest Crisis Upon Us…Debt to GDP Makes It Clear

June 18, 2018

America’s Greatest Crisis Upon Us…Debt to GDP Makes It Clear

America in the midst of its greatest crisis in its 242 years of existence. I say this based upon the US federal debt to GDP (gross domestic product) ratio. In the history of the US, at the onset of every war or crisis, a period of federal deficit spending ensued (red bars in graph below) to overcome the challenge but at the “challenges” end, a period of federal austerity ensued. Until now. No doubt the current financial crisis ended by 2013 (based on employment, asset values, etc.) but federal spending continues to significantly outpace tax revenues…resulting in a continually rising debt to GDP ratio. We are well past the point where we have typically began repairing the nation’s balance sheet and maintaining the credibility of the currency. However, all indications from the CBO and current administration make it clear that debt to GDP will continue to rise. If the American economy were as strong as claimed, this is the time that federal deficit spending would cease alongside the Fed’s interest rate hikes. Instead, surging deficit spending is taking place alongside interest rate hikes, another first for America.

The chart below takes America from 1790 to present. From 1776 to 2001, every period of deficit spending was followed by a period of “austerity” where-upon federal spending was constrained and economic activity flourished, repairing the damage done to the debt to GDP ratio and the credibility of the US currency. But since 2001, according to debt to GDP, the US has been in the longest ongoing crisis in the nations history.

But what is this crisis? The chart points out the debt to GDP surges in order to resolve the Revolutionary war, the Civil War, WWI, and WWII. But the debt to GDP surges since 1980 seem less clear cut. But simply put, America (and the world) grew up and matured, but the central banks and federal government could not accept this change.

…click on the above link to read the rest of the article…

The Faster America “Grows”, The Faster America Goes Bust

March 2, 2018

The Faster America “Grows”, The Faster America Goes Bust

As of October 1st of 2007 (the start of the 2008 Federal Government fiscal year), federal debt stood at $9 trillion and 70 billion. In the subsequent ten years and five months, the US federal debt has grown $11 trillion and 805 billion and now stands at $20 trillion and 875 billion (chart below). Over the same period, US GDP grew $5 trillion and 169 billion. Simply put, for every $1 of new federal debt undertaken, the US achieved $0.44 cents of economic activity or “growth”.

However, as the chart below shows, the huge increase in federal debt (red line) was accompanied by a minimal increase in interest payable on all that debt (blue line). The boxes detail the total debt incurred during each period against the annual increase in interest payments on that additional debt. The Federal Reserve is primarily to thank for the cheapening of debt and encouragement to undertake all that debt, but many fear the same Fed is set to hike those interest payments with its ongoing rate hikes.
In five months of fiscal year 2018 (through Feb 28), the Treasury has already issued $630 billion in new debt. The Treasury is on pace to issue $1.2+ trillion in new debt (2017 was a mere $672 billion increase). But let’s be conservative and assume the Treasury reins it in and “only” issues another $370 billion over the next seven months…for a nice round $1 trillion in new debt. Big numbers are hard to comprehend, so I’ll show just the added responsibility from the debt undertaken in 2018, per every full time employee in the US (there are 127 million FT US employees):

+$31 per work day
+$157 week
+$658 month
+$7.9 thousand annually
…click on the above link to read the rest of the article…

Tag Archives: chris hamilton

Content

Post categories

Economic Links

Energy/Resource Links

Environmental Links

Geopolitical Links

Liberty Links

News Links

Other Links

Survival Skills

Post navigation

Latest Posts