8 Billion And Counting…
According to the UN, this week the world’s (human) population hit 8 billion.
As DB’s Jim Reid notes, “it’s incredible to think that several million people alive today were around when the world population first crossed 2 billion in around 1927” Consider this: during the lifetime of the oldest people on earth today, the world’s population has seen exponential growth in a way it has never seen before.
In Reid’s opinion, the impact of this is still being felt everywhere in financial markets and economies today: rapid population growth in the twentieth century onwards encouraged democracies, encouraged the welfare state and forced governments to spend more than they took in taxes for the first time in peace time in order to be re-elected.
In the peak years of population growth of the second half of the twentieth century (1964 was the peak growth year), governments could use future strong population growth to pay for their real time promises to their citizens. This period, of course, started with low global government debt levels, but ultimately the promises were only possible by breaking the Bretton Woods gold-based system (1971) and moving to fiat-based money and structural deficit financing.
50 years later and population growth is grinding to a halt in the developed world but the debts remain and the promises are coming home to roost and also getting bigger and bigger in real time.
It doesn’t end there: the world’s population will likely hit 9 billion in 2037 and 10bn in 2058 (absent a “great reset”, of course). And yes, these extra 2 billion will mostly be in the least developed nations with the most developed countries now being flat or declining in aggregate out to the end of the century.
As Reid concludes, “it’s a real head scratcher as to how the more developed world will pay for the promises made when the world was seeing exponential population growth. Hopefully, the burden won’t all fall on the 8th billion person on the planet who will be born today.”
Fri, 11/18/2022 – 16:40