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Page added on March 4, 2019

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Economic Doom Loop Well Underway

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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.

For young adults, this means a far greater reliance on debt to educate themselves and a far greater portion of their subsequent income to service that debt.  Greater reliance for young adults on debt to purchase a home or a greater portion of their income to pay their rent, provide healthcare, insure themselves, or provide childcare (as both parents are more typically working full time).  The net result of these federal government and central bank policies to boost the stock market, home prices, and collapse interest paid on savings are collapsing birthrates and collapsing total births.  This is diminishing present and future demand and quality of life for the young, poor, primarily non-white in perhaps the greatest transfer of wealth mankind has seen.

This is creating an economic doom loop whereas fast rising asset valuations push up the costs of living far faster than wage growth, pushing birthrates (and present and future demand) lower.  The lower birthrates fall, the greater the reliance on asset boosting policies, and the majority of young, poor, and minorities with little or no assets are most harmed…wash, rinse, and repeat.

The American Fertility Rate

The chart below shows the US fertility rate since 1970 plus the Census estimates for fertility rates from January, 2008 and January, 2017.  The ’08 and ’17 estimates show an expected fertility rate plus an extreme high and low fertility potential.  Looking back at the 2008 Census fertility projection, the worst case scenario that the Census could envision in 2008 has come true.  Birth rates have collapsed over the last decade, hitting, 1.72 per female of childbearing population in 2018.

Strangely, now with a decades very clear trends in hand, the most recent Census projection made available in January of 2017 couldn’t even conceive of our current reality, let alone something like the fertility rates the US and so many other nations are experiencing.  The base case is a laughable accelerating fertility rate through the middle of the decade while the US is currently significantly below the lowest possible fertility rate the Census could put to paper in 2017…and fertility rates are still falling fast.  The shortfall economically and from unfunded liabilities (like Social Security with their own assumptions built off the failing Census estimates), is of radical (and worsening) proportions.  This means Social Securities 2032 projected demise is far too optimistic…and a significantly sooner failure is imminent.

The tanking fertility rate has resulted in declining births since 2007 versus continued and ongoing Census projections of an impending turnaround (chart below).

The chart below details the Census population upgrades from 2000 to 2008, and then massive downgrades since 2008.  From the 2008 to 2017 projection, that is a decrease of 50 million Americans.  And as the green dashed line suggests (based on actual births and immigration since the 2017 projection), a far lower projection is coming.  As I have previously detailed, over 90% of the decrease is among the under 45yr/old population.

But the largest declines in the fertility rates and immigration are among Hispanics, hard hit by the rising cost of living with relatively low offsetting asset holdings.  This has resulted in a 50% decrease in the 2008 vs. 2017 Census projected Hispanic population growth from 2020 to 2050.  Of the 2017 versus 2008 projected 50 million fewer Americans by 2050, it is the disproportionate decline of 33 million Hispanics that is driving this.  Of course, this was before the current administration came into power and before the far lower birth rates that have occurred since 2016.  Said more simply, significant further downgraded population growth projections are coming and I expect the bulk of the downgrades to be among the Hispanic segment of the population (while Native American’s will continue to be the most significantly impacted).  But hypercritically, almost all the projection downgrades will be among the under 45 year old population, particularly among Hispanics…the population with the highest birthrates in the US.  The meme of relatively positive US demographics is all but dead.

So, the US continues the ludicrous debate over “Trump’s Wall” and internationally births continue collapsing from China to Russia, across Europe, Japan, and South Korea, etc..  The culprit for the decelerating births is ongoing central bank and federal government “medicine” to goose asset prices, destroying the future to ease the wealthy and elderly’s passing.  The result is collapsing fertility rates the world over…passing the financial gains to a diminishing minority of asset holders and the losses to the young, the poor, and those with little to no assets.

While supposed “progressives” in America call for more of the same via Modern Monetary Theory, it’s time to discuss the removal of the plaque from the Statue of Liberty with the words “Give me your tired, your poor, your huddled masses yearning to breathe free”?  The only real question is what the new “message” will read?

Chris Hamilton via Econimica blog



16 Comments on "Economic Doom Loop Well Underway"

  1. makati1 on Mon, 4th Mar 2019 6:31 pm 

    The Great Leveling continues. But, at some point, the pitchforks come out and then to be wealthy will be a death sentence. Wait and see.

  2. Cloggie on Mon, 4th Mar 2019 9:11 pm 

    The culprit for the decelerating births is ongoing central bank and federal government “medicine” to goose asset prices, destroying the future to ease the wealthy and elderly’s passing.

    Utter BS.

    The real reason is the breakdown of family, hand in hand with the economic mobilization of women, who are discouraged to procreate and instead pursue careers. Having children is seen as too much trouble and a hindrance in the cycle produce-consume. The wealthier a society, the stronger this tendency.

    https://www.theguardian.com/world/2018/dec/27/japan-shrinking-as-birthrate-falls-to-lowest-level-in-history

    The totalitarian capitalist economy is literally eating its own children. Only a real economic/financial collapse can break this fatal cycle.

  3. Cloggie on Mon, 4th Mar 2019 9:19 pm 

    it’s time to discuss the removal of the plaque from the Statue of Liberty with the words “Give me your tired, your poor, your huddled masses yearning to breathe free”? The only real question is what the new “message” will read?

    Glad you ask. How about:

    “Economic gate crashers and parasites and higher civilization destroyers: drop dead. You are killing the Goose with the Golden Eggs. It’s not even in your own long term interest that that happens.”.

  4. Chrome Mags on Mon, 4th Mar 2019 11:00 pm 

    You can’t squeeze blood out of a turnip. People have less time and money and that translates into fewer kids. You can’t have it both ways, lower EROEI and more kids. Let’s see, how many other ways can this be put…

  5. makati1 on Mon, 4th Mar 2019 11:16 pm 

    Chrome, I would say that fewer kids is due to more than EROEI or even time. It is mostly due to more DEBT, aging demographics and more educated females. Especially in Western countries. Not to mention the need for many kids to survive to maturity to take care of their parents in old age, is declining in many countries. China is an anomaly, and it is partly because they had a “One Child” policy too long and not enough breeders want more than one child now. They are becoming “Westernized”.

    Look at this map. My assertion holds for the most part.

    https://en.wikipedia.org/wiki/List_of_sovereign_states_and_dependent_territories_by_birth_rate

    Also, it appears that the chemicals we eat, drink and breath are also reducing fertility. Not to mention drugs of all sorts. The human species is headed for extinction in so many ways.

  6. Davy on Tue, 5th Mar 2019 5:39 am 

    “The culprit for the decelerating births is ongoing central bank and federal government “medicine” to goose asset prices, destroying the future to ease the wealthy and elderly’s passing. Utter BS. The real reason is the breakdown of family, hand in hand with the economic mobilization of women, who are discouraged to procreate and instead pursue careers. Having children is seen as too much trouble and a hindrance in the cycle produce-consume. The wealthier a society, the stronger this tendency.”

    Obviously there are multiple reasons. The most powerful force is the awakening of women to opportunities of education and careers. This then leads to options some of which destroys the basis of traditional family. There is also the breakdown from the disfranchisement from wealth transfer policies affecting the working poor and barely middle class. This is also about a process of civilization in overshoot with population and consumptions. The pie is shrinking because of this so affluence is dropping for some and they can’t afford or can’t maintain families. Civilizations cycle and our modern global one is cycling in its own special way with a combination of affluence and overshoot and with disfranchisement and privilege.

  7. Cloggie on Wed, 6th Mar 2019 12:32 am 

    After Hillary, Bloomberg won’t run either:

    http://www.spiegel.de/politik/ausland/michael-bloomberg-tritt-nicht-gegen-donald-trump-an-kaempft-fuer-klimaschutz-a-1256451.html

    Now Trump probably has to face either that jewish fool Sanders or airhead AOC.

    Should be a walkover for the Trumpert.

    How are we going to bring this sad news to the mobster? LOL

  8. Davy on Wed, 6th Mar 2019 1:22 am 

    “or airhead AOC.”

    clogged, get educated, AOC is too young

  9. Davy on Wed, 6th Mar 2019 1:43 am 

    OOPs, not a good way to start off democratic socialism by killing a golden goose.

    “Ocasio-Cortez Regrets Costing NYC 25,000 Amazon Jobs As CoS Backpedals”
    http://tinyurl.com/y6r5o5lp Zero Hedge

    “Rep. Alexandria Ocasio-Cortez is backpedaling after pissing off Amazon, costing New York City 25,000 – 40,000 jobs after they decided to abandon plans for a New York City HQ2. AOC’s money-shuffling chief of staff Saikat Chakrabarti offered Bloomberg Television a vastly different message to AOC’s February 14th celebration of ‘defeating Amazon’s corporate greed’ – which NY Governor Andrew Cuomo (D) described as putting her own “narrow political interests” above her community. “What she was vocal about was the process by which it happened,” explained Chakrabarti, completely ignoring the fact that the hill AOC died on revolved around the $3 billion in tax breaks the company would receive (which she repeatedly suggested was being “handed” to Amazon).”

    “Following the decision, a billboard went in Times Square offering a mocking ‘thanks’ to Ocasio-Cortez for her opposition while members of both parties criticized her for helping kill the deal. Meanwhile, Cuomo is begging Amazon CEO Jeff Bezos to reconsider, according to the New York Times, which reports the Governor is “working intensely behind the scenes” to make a personal pitch. The governor has had multiple phone conversations with Amazon executives, including Mr. Bezos, over the past two weeks, according to two people with knowledge of the efforts. In those calls, Mr. Cuomo said he would navigate the company through the byzantine governmental process. -New York Times Cuomo has offered guarantees for support for the project, according to the WSJ, while Amazon executives have given no indication that the company would reconsider.”

  10. Cloggie on Wed, 6th Mar 2019 2:04 am 

    “clogged, get educated, AOC is too young”

    Women are never too young, provided they are over 18.

  11. Sissyfuss on Thu, 7th Mar 2019 12:36 pm 

    Clog you ignorant slut.

  12. Sissyfuss on Thu, 7th Mar 2019 12:47 pm 

    Stop bitching about a 1.7 fertility rate. We need a minus 25 and we soon will get there. Sustainability will come on Gaia’s terms and most of us aren’t included. The more overpopulated we become, the more our perspective is anthropogenic in substance. The Earth is at our disposal and we are disposing of it at an ever increasing velocity. This is future shock in its incipience which appears to be cancelling out our reason and replacing it with our despair and panic. We are no longer controlling the spaceship, just useless passengers waiting for the landing. Isn’t the scenery interesting.

  13. Mann Splainer on Sat, 9th Mar 2019 4:30 am 

    I’m just happy feminists convinced women to educate themselves, work, pay taxes and support themselves. Heck, women might even soon become eligible for the draft, which is great news for men too (reduces cultural male disposability). There was a time when men were socially shamed into becoming women’s providers and protectors – which is why I’m deeply grateful that I didn’t grow up to become the financial servant and human sacrifice of women and their state husbandry (a provider and protector).

  14. Davy on Sat, 9th Mar 2019 5:16 am 

    Something is forcing me to speak the truth:

    I’m so sorry PO.com readers for losing my shit this morning. I realize it’s not too difficult to figure out I routinely engage in identity theft and deploy multiple sock puppets.

    Why? I am sick.

  15. Not Davy on Sat, 9th Mar 2019 5:17 am 

    Davy on Sat, 9th Mar 2019 5:16 am

  16. JuanP on Sat, 9th Mar 2019 5:18 am 

    Something is forcing me to speak the truth:

    I’m so sorry PO.com readers for losing my shit this morning. I realize it’s not too difficult to figure out I routinely engage in identity theft and deploy multiple sock puppets.

    Why? I am sick.

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