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Unfortunately much of the financial system (in the US anyway) is highly dependent on population growth. Many existing entitlements were created during periods o
by boh 6y ago
Unfortunately much of the financial system (in the US anyway) is highly dependent on population growth. Many existing entitlements were created during periods of uncommon birth-rates with the expectation that the babies being born will grow and reproduce at the same rate as their parents. This growth hasn't materialized, and much of the existing growth can be attributed to immigrant inflows. Regardless of the environmental arguments against overpopulation, we are living in a competitive world, and historically, declining birth-rates have often not been favorable for sustaining sociopolitical influence and relevance or economic growth and stability. We are however, living in a unique time were robots and AI can potentially pick up the slack for whatever losses of productivity a lower population may cause. We will however still have to operate in a period of growing stagnation and inequality. Wealth will be less available through incomes (as it already is), and inequality, without the proper counter measures, can inflate to the levels more familiar in Jane Austen's time. You have more economic growth if you give 1 million people $100 dollars (since they are more likely to spend it on goods/services) vs giving $100 million to one person (who will likely spend the bulk of their money on financial instruments). An economy needs many people to spend money to grow, we’re now expected to have less people with less money to spend.
- rsync 6y ago"Unfortunately much of the financial system (in the US anyway) is highly dependent on population growth." I came to this discussion ctrl-f'ing for "deflation" and while I got zero hits, your comment is close enough ... I will abstract one level deeper and rephrase what you said as: "Much of the financial system is highly dependent on economic growth." There continues to be fervent discussion of the results of QE over the last 10 years and the results of various covid stimulus packages and how these things could be inflationary, etc., etc. Some of this may come to pass - we may, indeed, find ourselves in geographic or temporal pockets of inflation - possibly very high inflation. Make no mistake, however: the world we are living in is massively deflationary and even dramatic and innovative attempts to maintain (low) inflation are barely keeping us above water ...
- shortandsweet 6y agoWhy do you feel we're living in deflationary times?
- lurquer 6y agoDon’t mean to butt in, but personally, the fact that I’m typing this on a piece of $300 hardware (phone) that would have cost millions in the 80’s, hundreds of thousands in the 90’s, and definitely over a thousand in the 00’s is a good indicator.
- ryder9 6y agothat's economies of scale and manufacturing momentum, nothing to do with deflation
- u801e 6y agoI think computer hardware is one of the few things that decreased in price over time. The price of most other good and services has definitely increased since the '80s.
- Supermancho 6y agoAnd despite the same technological improvements, gasoline is decisively more expensive. Technology is purely deflationary, so the situation with phone cost isn't very telling. What is more impactful is the cost of phone service vs median income across those decades, despite technology's deflationary forces.
- nradov 6y agoGasoline pump prices are highly impacted by taxes and regulations so those don't tell us much about core inflation or deflation. Look at the spot price of crude oil on international markets. The price today is still well below previous peaks.
- UncleOxidant 6y agoBeen to the grocery store, ordered takeout or tried to buy a house lately? The prices of electronics (calculators, watches) fell consistently throughout the 70s which was a period of very high inflation. You can't cherry pick one sector.
- ChrisLomont 6y ago>You have more economic growth if you give 1 million people $100 dollars (since they are more likely to spend it on goods/services) vs giving $100 million to one person (who will likely spend the bulk of their money on financial instruments). The US spends the majority of it's Federal Budget on giving small amounts of money to the non-rich, to the order of trillions of dollars per year. Also, when someone puts money into a financial instrument, that money usually flows immediately into productive use. Capital flows are attributed with about 30% of the economic growth over the last century, which is a huge increase in quality of life, especially for the most poor.
- imtringued 6y ago>Also, when someone puts money into a financial instrument, that money usually flows immediately into productive use. Yes but only under the assumption that aggregate demand always exceeds supply, which isn't true nowadays and that's why the economy is broken.
- dcolkitt 6y ago> We are however, living in a unique time were robots and AI can potentially pick up the slack for whatever losses of productivity a lower population may cause. Productivity growth is currently the lowest it's been since before the industrial revolution. AI and robotics may be revolutionizing a few specific domains. But there's no evidence that they're replacing the need for human labor any time soon. That probably will happen at some point. But probably not in our lifetimes or even our children's lifetime. We still need able-bodied workers to run the economy.
- rayiner 6y ago> Unfortunately much of the financial system (in the US anyway) is highly dependent on population growth It's not the financial system, it's the underlying economy. Back in the day, people had to have kids so there was someone to take care of them in their old age. The financial system abstract, but does not eliminate, that structural feature of the underlying economy. You still need young bodies producing goods and performing services for the elderly non-working population.