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Like everything else that was shut down in 2020 and 2021, Britain’s job market was broken. As businesses attempted to reopen, they were faced with a massive labour shortage. Lorry drivers, for example, had all but disappeared. Skilled construction workers were also in short supply. But the biggest shortages were in traditionally low-paid sectors such as social care, retail, and hospitality.

One consequence of this “vacancy crisis,” was that it fed into a misguided neoliberal analysis of the sharp rises in prices following lockdown. A proportion of the price increases were “monetary inflation” – the result of people spending the excess currency creation used to fund business support and workers’ furlough payments during lockdown. But the majority of the price rises were simply the manifestation of a global economy attempting to incorporate and overcome broken supply chains. Nevertheless, economists, journalists, and politicians began regurgitating the myths of the 1970s, and especially the fabled “wage-price spiral” in which higher wages would force prices to rise even further.

In those sectors of the economy where skilled workers were in short supply, wages did rise. But the majority of vacancies were – and are – in low-skilled sectors where pay has remained depressed. According to Office for National Statistics data, 814,000 of the total 932,000 current vacancies are in traditionally low-paid services; 401,000 in retail, hospitality and social care. Nor is that low-pay merely a choice by business owners. Rather, it is the result of decades of neoliberal austerity which has forced retail, hospitality, and social care businesses to be among the leanest and most cost-conscious in the economy. Prior to the pandemic, this had the benefit (although not for the workers) of keeping those services cheap – a core purpose of neoliberalism. But it also meant that, faced by labour shortages for the first time in decades, these businesses simply couldn’t afford higher pay because they were already cut to the bone.

…click on the above link to read the rest…

The Coming Retirement Crisis Will Affect Everyone

January 3, 2022

The Coming Retirement Crisis Will Affect Everyone

We are on the cusp of a retirement crisis that will affect everyone. Far too many promises have been made and the demographics we face do not bode well for a bright future. The answer that some people tout is we should have more children or open the borders. This is based on the idea we need more workers and ignores many other factors feeding into this issue. There is simply no way “more children” or workers can ever pay enough into the system to fulfill the promises that have been made.The competition for programs from the government to support the needs of different generations is about to explode as young and old Americans reach out for more help. Much of our problems stem from a slew of bad policies either driven by stupidity, corruption, or an unwillingness to accept the reality you can postpone a reckoning for only so long. Investors and the public at large suffer from a “recency bias of hope” that tends to blind them from unpleasant long-term realities.

The coming together of surging investment risk, an interrupted business cycle, and demographics are coming together to form the perfect storm. To clarify, much of the wealth in America is held in the hands of the baby boomers that have just or are about to retire, and over the years, many have moved into risky investment in search of yield. It has been years since we have had a major recession so sooner or later, it is logical one will arrive. Last, but not least, we are now seeing demographics play a larger role in the economy as boomers downsize (sell assets) and cut spending.

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

Minsky Melt-up Explained?!?

June 7, 2020

Minsky Melt-up Explained?!?

America (and the world at large) are in the midst of an entirely predictable demographically driven crisis, between an economic/financial system requiring infinite growth and a very finite human/physical world (detailed HERE, or HERE). This mismatch will only become more acute for decades to come. As the growth of demand is decelerating, central banks are using interest rate policy cuts to encourage higher consumption via greater leverage/debt. Federal debt is soaring absent the economic (and tax revenue) growth to accompany this deluge of debt. I will show that the primary purchasing sources of that debt have turned to net sellers…and that into this breach, the Fed has thrust itself as the buyer (counterfeiter) of last resort. The result is likely to be a Minsky Melt-Up…and then the fall that typically follows.
First, by year end 2020 (estimated below), federal debt will almost surely cross $28 trillion while GDP will collapse in Q2 with likely recovery through Q3/Q4. The outcome will be a debt to GDP ratio likely around 140%…smashing the WWII previous high water mark. Noteworthy also in the chart below are the new standards of ZIRP and reliance on the Federal Reserve balance sheet (QE) to maintain zero percent interest rates.

Since 2008, public (marketable) federal debt has nearly quadrupled, up by $14.7 trillion. Social Security and like Intragovernmental trust fund holdings have risen $1.8 trillion. The Federal Reserve balance sheet has increased by 8x’s, up by $6.3 trillion. In fact, most simply, it is the Federal Reserve using it’s balance sheet as the substitute for the demographically decelerating IG purchasing. As the IG holdings will only continue to decline due to the unfunded liabilities (and with it the primary source of Treasury buying for decades turns to a decade of Treasury selling), the Fed’s balance sheet will rise inversely to avoid an interest rate Armageddon.

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

Global Demographic Fact Vs. Central Bank Sorcery

February 29, 2020

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).

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

Adapting to a Fast-Forward World

February 24, 2020

Adapting to a Fast-Forward World

The world is going through a period of accelerating change, as four secular developments illustrate. Firms and governments must make timely adjustments, not only to their business models and operational approaches, but also to both their tactical and strategic mindsets.

LONDON – Firms and governments must increasingly internalize the possibility – indeed, I would argue, the overwhelming probability – of an acceleration of four secular developments that influence what business and political leaders do and how they do it. Decision-makers should think of these trends as waves, which, especially if they occur simultaneously, could feel like a tsunami for those who fail to adapt their thinking and practices in a timely manner.

The first and most important trend is climate change, which has evolved from a relatively distant concern, on which there is ample time to take remedial action, to an imminent and increasingly urgent threat.

The mobilization of various concerned segments of society, owing partly to unusual climatic disruptions in recent years, has greatly increased the pressure on companies to act now. BP’s recent announcement that it intends to achieve “net-zero” carbon emissions by 2050 – a notable promise by an energy company that operates in several highly challenging settings – is the latest example of business responding to such calls. It is only a matter of time until this pressure also prompts governments to take further steps, not only to encourage green activities, but also to tax and regulate those that cause pollution.

Second, privacy concerns have grown alongside technical innovations involving artificial intelligence and big data.

Society is increasingly recognizing that recent technological advances allow not only for more efficient compilation of huge amounts of personal data, but also for using this information to monitor and alter behaviors.

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

Putting Federal Debt In Perspective Against those Responsible In The Future

November 2, 2019

Putting Federal Debt In Perspective Against those Responsible In The Future

Since 2007, US federal debt has risen 150% while annual US births (legal and otherwise) have fallen almost 14%. Said otherwise, over the dozen years since 2007, federal debt has increased by $13.8 trillion while 5.2 million fewer births have occurred over the same period than the Census projected. This is probably worth a little closer look. Starting with…
US federal debt, split between publicly held debt and IG (Intra-Governmental holdings; aka Social Security trust fund, etc.). Clearly, publicly held debt is skyrocketing since 2007 while IG growth is decelerating and will turn to net declines (as SS turns to a net seller) within the decade. Relatively soon, all debt issued will be marketable and significantly more debt will be needed in order to pay for both the spiraling deficit alongside the declining IG holdings.

Next, looking at the annual issuance of federal debt, breaking out the annual issuance of publicly held marketable debt (red columns) versus IG (blue columns). ***Noteworthy, since August 1st of 2019, the Treasury has issued $920 billion in net new debt through October 23rd. The chart below is based on the assumption the Treasury will issue another $160 billion through the last two months plus the remainder of October (with a net issuance of $1.1 trillion for calendar year 2019).

Since debt is an obligation to be repaid or serviced in the future, I’ll put this in context with federal debt continuously divided by the future, the quantity of annual births. Below, annual births from 1950 through 2019 (blue columns) versus federal debt through 2019 (red line). ***Yes, I’m making a great leap to note that births will continue to fall in 2019…as they have been falling at an accelerating rate through Q1 of 2019, as noted by the CDC (HERE).

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

The New Trail of Tears

August 27, 2019

The New Trail of Tears

How climate change is forcing the relocation of species, including our own

In 1830 Congress passed the Indian Removal Act, designed to appropriate to the United States lands occupied by aboriginal Americans. The Supreme Court ruled it unconstitutional, but the army under Commander in Chief Andrew Jackson acted anyway. Now a lightning rod for condemnation of the expropriation of indigenous property, Jackson was an agent of demographic pressures and a lust for the resources found on tribal lands.

The result of this land grab and ethnic cleansing was the Trail of Tears, a highway of the dispossessed, en route from their homelands to less favorable situations away from the population centers of the European-Americans and their recently created nation. Those with the means self-deported; those who moved late moved in large numbers and suffered terrible losses.

Nearly two centuries later, we face the prospect of forced relocations on a scale that is difficult to fathom. This New Trail of Tears will involve humans on every inhabited continent, and it will impact countless other species as well. This time, the driving force is all humanity, agents of climate change through our greenhouse gas emissions.

A major consequence of climate change is the global rise in sea levels due to the melting of glaciers and the polar ice caps as well as the expansion of warmer oceans. Accompanied by more violent storms powered by the warmer atmosphere, rising seas will have a profound impact on coastal areas. Flooding is already common in coastal Florida; with just the few feet of sea-level rise expected by the end of the century, sizable portions of Miami and Fort Lauderdale will be inundated. “Superstorm” Sandy brought this lesson home to New York City in 2012.

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

Soaring Debt Vs. Shrinking Populations Of Young To Repay Or Service That Debt

July 28, 2019

Soaring Debt Vs. Shrinking Populations Of Young To Repay Or Service That Debt

Summary

Global debt is currently at $246.5 trillion and primarily in the Wealthier, Consumer Nations of the world.
The population of young in Consumer Nations has fallen 12% or over 100 million Since Peaking in 1975.
Debt on a per capita basis gauged against the consumer nations young is going parabolic.

For nearly a half century wealthy nations young populations have been declining versus rising young among poor nations…offset by secularly declining interest rates and the addition of over $240 trillion in global debt to maintain unnaturally high rates of economic growth. The consumer nations population of relatively wealthy young has been declining for nearly 4 and a half decades, falling over 100 million or 12% during that span. The population of relatively poorer nations young has increased by nearly 190% or increased by 570 million. On average, each wealthier nations young person represents $26.5k in per capita consumption versus each poor nations young represents $1.5k in per capita consumption. Said otherwise, it takes 15 more poor nations inhabitants to replace the loss of every one wealthier nations inhabitant to simply maintain flat consumption, thus the impetus for interest rate cuts and massive increases in debt among the wealthy. Obviously, consumption hasn’t been flat but has grown tremendously, primarily thanks to interest rate cuts, cheap debt, and only in a very small part from growth in consumption among the poorer nations population gains.

As I started in my last article, the world is characterized by stark inequalities among the global nations of “haves” and “have-nots”. The World Bank is kind enough to categorize the world’s nations into four buckets by the Atlas Gross National Income per capita (geographically detailed HERE and listed HERE).

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

Slowing Growth the Problem, Asset Appreciation the Solution?

April 17, 2019

Slowing Growth the Problem, Asset Appreciation the Solution?

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…

Debt & the Point of No Return

April 2, 2019

Debt & the Point of No Return

QUESTION: Mr. Armstrong; First I want to thank you for coming to Europe this year. It has been some time since your Berlin Conference. My question is simple. How can the ECB tell countries to reduce their debt when as you say nobody ever pays off the debt? Is this just fantasy or do they really believe what they are saying?

Looking forward to Rome.

WVM

ANSWER: The sheer demographics warn that more people will move into retirement, increasing expenditures at a faster pace than there are younger generations to compensate. This means that expenditures will rise and revenues will decline. Even if we were talking about governments that actually did pay off debt, they would still not be able to do so once we pass 2020.

Insofar as do they really believe their own nonsense? I am afraid they do. They have not yet reached the point where they will come to terms with the fact that this is a fictional world in which they dream of endless powers and they will prevail in the end. We have gone past the point of no return. We now require structural change and FAST!!!!!!!

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…

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 The Insolvent

July 21, 2018

Satansgoalie

America The Insolvent

A reckoning is due. One the elites are already readying for.

Watching the world these days, I’m experiencing the same fury that rises up from my gut when the driver in the car ahead me is weaving drunkenly, endangering everyone on the road.

Fury is a normal and rational human response when threatened with unnecessary harm. Women who are groped (or worse) by a disgusting predator like Harvey Weinstein, pensioners whose funds are stolen by Wall Street shysters, everyone who is being fleeced by corporations in search of a few extra dollars this quarter — all have the right to be infuriated.

It’s been especially hard of late for those of us who are “reality”-based; who value data, fundamentals and historical context.

I earn my living by reading, analyzing and making sense of the world, and then working to help orient people’s actions to align with both the current reality and future probabilities. But that’s become pretty damn difficult in a world where the financial markets are rigged and the main news outlets are unwilling (unable?) to cover the real issues, preferring instead to focus on distractions that mainly serve to keep us isolated and divided.

The trajectory our global society is on will not end well, and that infuraties me. And the fact that most of the coming suffering is unnecessary if only we’d make better choices — that really pisses me off.

Here’s just a small smattering of the threats we’ve created for ourselves:

$247 trillion of global debt, growing exponentially
Off-budget liabilities well over a quadrillion dollars globally ($220+ trillion in the US alone)
Massively underfunded pensions mathematically unable to meet their future obligations
A coming peak in world oil supply somewhere between 2020-2030 (and around 2022 for the US)
A global economy that requires perpetual growth, but can’t grow for much longer due to planetary resource constraints

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

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