Category Archives: demographics

The Federal Reserve and Trump Intent on “Squeezing Blood from a Turnip”…Or Why Most Americans Are in a No Win Scenario, by Chris Hamilton

Economica has some great charts. This batch shows that America’s debt is climbing relative to its ability to service it. From Chris Hamilton at economica.blogspot.com:

According to conventional economic wisdom, growth is the increase in the capacity and production of goods and services, compared from one period to another.  This view deems that the greater the growth in capacity and utilization of that capacity, the greater the economic growth.  Strangely, what this school of thought fails to account for is the basis of the US consumer economy…the quantity of growth among the US population (aka, consumers)?  Or how a population growing ever more slowly can consume a capacity that (thanks primarily to innovation, technology, and ever cheaper and greater debt) is allowing for ever greater production?

The chart below shows three variables from 1790 to present;

  1. Columns are US debt to GDP
  2. Black line is annual total US population growth (%)
  3. Yellow line is annual under 65yr/old US population growth (%)
Given the US is a nation of immigrants, the US has had a naturally high rate of population growth due to this net inflow of immigrants.  However, annual population growth has consistently decelerated from an annual growth rate of 3.1% in 1790 to just 0.6% in 2017 (an 80% deceleration, with all growth now dependent on immigration).  The substitution of more and cheaper debt (likewise corporately and personally) to maintain an unnaturally high rate of economic growth while population growth decelerated is plain.  Also noteworthy is the abandonment of the Bretton Woods agreement in 1971 and the simultaneous shift from net exporter to net importer at progressively higher levels.  ***BTW, the sharp waterfall in population growth in 1918 was tied to the global H1N1 influenza pandemic.
However, gauging potential growth by the under 65yr/old population (yellow line in above chart), the organic basis of growth has nearly ceased (a 95% deceleration).  Why is the lack of under 65yr/old growth important?  Only this population is capable of child birth, this population makes up 90%+ of the work force, and this population (at its peak in earnings from 45 to 55yrs/old) earns and spends double the average 75+yr/old.  It is the under 65 population that utilizes credit while 65+yr/olds are credit averse (for good reason).  This is the segment that traditionally drives the economy but is now absent…and ever more and cheaper debt is the sad substitute.
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What Drives Long-Term National Debt Growth? from the Visual Capitalist

The US is in a world of debt trouble. From the Visual Capitalist at visual capitalist.com:

What Drives Long-Term National Debt Growth?

With the current 106% debt-to-GDP ratio, there’s no doubt that today’s government debt is high. The last time the United States reached this mark, it was during the aftermath of WWII in the late 1940s.

But despite nearly historic debt levels, it does not seem that the national debt is a key issue for most citizens and groups. What drives this accumulation of debt in the long run, and at what point does the debt level become so high that it becomes an undeniable and critical issue for the country?

Today’s infographic comes from the Peter G. Peterson Foundation, a NYC-based group that focuses on educating people about the fiscal challenges of growing government debt. The graphic illustrates the main factors driving the debt upwards, as well as the potential impact down the road.

RISING TEMPERATURES

The trouble with debt is that it delays today’s challenges well into the future, making it a tempting short-term solution when other things aren’t working. However, over time, that burden increases steadily, and the situation quickly represents the “frog and boiling water” parable.

So what’s raising the temperature of that water?

Right now, the aging of the Baby Boomers is a key factor, and the amount of people receiving social security benefits will swell from 62 million to 88 million people by 2035. At the same time, Medicare’s hospital trust fund will run out of money by 2029, and the program will only remain solvent until 2034.

Whether it’s the growing enrollment in these programs or the rapidly escalating costs of healthcare itself, more money will be put towards Social Security and healthcare over the coming years.

By about 2045, government spending on major health programs will nearly double in size to greater than 9% of GDP.

BOILING WATER

Today, interest on the debt is equal to about 1.4% of GDP.

However, if the projected pace is maintained, it’s anticipated that interest payments could be equal to 6.2% of GDP by 2047 – this is roughly 2x the average annual amount the federal government spends on education, infrastructure, and R&D combined.

 

To continue reading: What Drives Long-Term National Debt Growth?

One Day Soon, The Sun Will Not Rise, by Chris Hamilton

The Econimica blog has a lot of great graphs, and it usually has a different perspective than everyone else. From Chris Hamilton at econimica.blogspot.com:

When the Q4 US resident population data is released, something that has not happened in the post WWII era will take place.   The population of adults aged 15-64 years old will decline.  This was not supposed to happen and will put an end to seven plus decades of continuous population growth which has meant a growing workforce, a growing consumer base, and growing tax base.  A growing core US population, something considered as sacrosanct as the sun rising, will not happen.  On a year over year basis, where there once were up to 3 million more homebuyers than the previous year, 3 million more car buyers than the year before, 3 million more potential customers…there will be likely be thousands fewer.

Many will assume this is a demographic issue of boomers exiting the working age population…but actually demographics is simply the early onset of a disease that will only progressively worsen.  This is truly a population growth issue, not simply a demographic distribution problem.

The economic system the US and world have adopted are dependent on perpetual growth on a quarter over quarter and year over year basis.  Two negative quarters (or even zero growth) and a recession is called and all the Federal Reserve’s and federal governments tools are employed.

Given the importance of growth, the most important factor in growing the economy is the rising demand represented by a growing population.  But the US fertility rate has been negative for 45 years (chart below) meaning the native population (plus immigrants) have continually failed to replace themselves.

This means US population growth has simply been a story of immigration.  And until 2000, N. America was the primary destination for the majority of the world’s immigrants.  However, since ’00 and particularly since ’05, the migration patterns have significantly changed.

To continue reading: One Day Soon, The Sun Will Not Rise

Europe’s Migrant Crisis: Millions Still to Come, by Soeren Kern

It appears that some of the refugee flow into Europe from the Middle East may be abating as Syria and Iraq quiet down, but there is still a huge influx from Northern Africa on its way. From Soeren Kern at gatestoneinstitute.com:

“African exodus of biblical proportions impossible to stop”

  • More than six million migrants are waiting in countries around the Mediterranean to cross into Europe, according to a classified German government report leaked to Bild.
  • “Young people all have cellphones and they can see what’s happening in other parts of the world, and that acts as a magnet.” — Michael Møller, Director of the United Nations office in Geneva.
  • “The biggest migration movements are still ahead: Africa’s population will double in the next decades… Nigeria [will grow] to 400 million. In our digital age with the internet and mobile phones, everyone knows about our prosperity and lifestyle…. Eight to ten million migrants are still on the way.” — Gerd Müller, Germany’s Development Minister.

The African Union-European Union (AU-EU) summit, held in in Abidjan, Côte d’Ivoire, on November 29-30, 2017, has ended in abject failure after the 55 African and 28 European leaders attending the event were unable to agree on even basic measures to prevent potentially tens of millions of African migrants from flooding Europe.

Despite high expectations and grand statements, the only concrete decision to come out of Abidjan was the promise to evacuate 3,800 African migrants stranded in Libya.

More than six million migrants are waiting in countries around the Mediterranean to cross into Europe, according to a classified German government report leaked to Bild. The report said that one million people are waiting in Libya; another one million are waiting in Egypt, 720,000 in Jordan, 430,000 in Algeria, 160,000 in Tunisia, and 50,000 in Morocco. More than three million others who are waiting in Turkey are currently prevented from crossing into Europe by the EU’s migrant deal with Turkish President Recep Tayyip Erdogan.

To continue reading: Europe’s Migrant Crisis: Millions Still to Come

Debt and Taxes and Perdition, by Andrew P. Napolitano

Loading up future generations with debt is immoral. Fortunately, future generations won’t pay it. From Andrew P. Napolitano at lewrockwell.com:

Should the government borrow against the future? Should it guarantee higher taxes for your children and grandchildren in return for lower taxes for you?

If government’s moral legitimacy depends on the consent of the governed, as Thomas Jefferson argued in the Declaration of Independence, can the federal government morally compel those who haven’t consented to its financial profligacy — because they are not yet born — to pay higher taxes?

These questions are at the base of the debate — such as it is — in Congress these days over the so-called Republican tax reform plan. But you will not hear these questions even asked, much less answered, on Capitol Hill because the Republican leadership of the House and Senate is afraid that the answers might drive them from power. The same can be said for Democratic leaders when their party controls Congress.

In fact, with the exception of a few courageous senators, such as Rand Paul of Kentucky, and representatives, such as Justin Amash of Michigan and Thomas Massie of Kentucky, most in Congress in both parties think the only limit on the government‘s taxing power is what it can politically get away with at any given moment.

And it gets away with a great deal because vast majorities in both major political parties recognize no moral limits to the government’s sordid pattern of tax, borrow and spend.

The numbers are chilling.

The federal government collects about $2.5 trillion in revenue and spends about $4 trillion, annually. The difference between what it collects and what it spends is made up in borrowing. But it doesn’t borrow money as you or I do or any business does — with a planned schedule to pay back the principal it owes plus interest. Rather, it goes deeper into debt to pay its debts.

To continue reading: Debt and Taxes and Perdition

The Generational Wheels Are Turning, by Michael Krieger

Many cryptocurrency skeptics are older, and don’t understand their appeal to younger generations, who have been systematically screwed (see “The Kids Are Not Alright“) and welcome a currency option outside the control of a government. From Michael Krieger at libertyblitzkrieg.com:

“The electric light did not come from the continuous improvement of candles.”

— Oren Harari

If you only read my stuff sporadically, you might be surprised to hear that I’m actually quite optimistic about the future. The main reason I compose articles highlighting all the frauds, corruption and absence of ethics within our current paradigm isn’t to fill you with fear and dread, but to create awareness. Ignorance is not bliss, and I believe a deep appreciation about how completely broken and opaque the current way of doing things is can provide the spark of inspiration and determination necessary to create a new and much better world

As I’ve stated many times previously, it wasn’t until Bitcoin emerged and I started to understand the implications of it, that I became very encouraged about the future. Prior to that, I saw humanity living under a terminal, predatory system that would eventually consume itself, but I couldn’t see a plausible roadmap toward a better tomorrow. Bitcoin proved to me that not only did such a path exist, but the infrastructure for this better future was being built right in front of our eyes.

I first started writing about the revolutionary implications of Bitcoin in the summer of 2012, and looking back five years later I’m filled with an overwhelming sense of awe and appreciation for all that’s been achieved. While the optimist in me always thought we might get to where we are today, to see it actually happen is nothing short of extraordinary. The incredible energy and global talent that’s entered this space over the past several years brings a gigantic smile to my face. It truly is an idea whose time has come, and the more the concepts of decentralization and trustless systems infect the global consciousness, the more unstoppable they become. I think we’re already there.

To continue reading: The Generational Wheels Are Turning

France: Muslims In, Jews Out, by Giulio Meotti

Muslims are driving Jews out of many of their traditional districts in France. From Giulio Meotti at gatestoneinstitute.org:

  • Suburbs have become transformed into one of the most visible signs of the Islamization of France. Anti-Semitism is devouring the French Republic.
  • While Jewish symbols disappear from France, Islamic symbols proliferate, from burkinis on the beaches to veils in the workplace. Jews who have not fled France are trying to become “invisible”.
  • France’s suburbs are rapidly becoming apartheid societies. Hatred of Jews has become the gateway to “la France soumise” — the submission of France.

Suburbs (“banlieues”) — distant from the affluent boulevards and bistros of Paris — form the “other France“. They are the “peripheral France“, (“La France Périphérique”) as the geographer Christophe Guilluy calls them in an important book. They are where “living together” between communities has really been tested.

In the last 20 years, these French suburbs have not only become “concentrations of poverty and social isolation“, but have gone from being some of France’s most densely-populated Jewish areas to “lost territories of the Republic“, according to the great historian Georges Bensoussan, in his book, Les territoires perdus de la République.

These suburbs have become transformed into one of the most visible signs of the Islamization of France.

Anti-Semitism has returned as one of Europe’s worst diseases. France hosts Europe’s largest Jewish community, and Jews have been fleeing the suburbs to either emigrate or move to gentrified districts of the cities, where they feel more protected. What happens to the Jews will have a seismic impact on the entire continent.

In the Parisian suburb of Bagneux, someone recently vandalized the memorial plaque for Ilan Halimi, a young Jew who was kidnapped, tortured and murdered by a “barbarian gang” in 2006, just for being a Jew. At the time, it was France’s first case of murderous anti-Semitism in many years. After it, Islamists murdered Jews at a school in Toulouse and a kosher supermarket in Paris.

To continue reading: France: Muslims In, Jews Out