Financial Crisis for Dummies, part II

09.23.08 | 3 Comments

Just stumbled across this quote from Asia Times Online and it’s too good not to share:

There is nothing complicated about finance. It is based on old people lending to young people. Young people invest in homes and businesses; aging people save to acquire assets on which to retire. The new generation supports the old one, and retirement systems simply apportion rights to income between the generations. Never before in human history, though, has a new generation simply failed to appear.

Now let’s hearken back to November of 2007, when I wrote a short post called Demographics and the Economy in response to David Wolfe’s essays on how shrinking population changes our whole economy. [Edit: And he just made a new post well worth reading.] Whether we realized it or not, we’ve always been able to count on population growth to drive demand for more goods. However, the availability of birth control and subsequent decline in the birth rate is causing massive fractures in the way we’ve conducted trade for millennia.

Forget global warming. Population change will change the face of the world within a generation. Geopolitical spheres of influence will shift based on population growth (positive or negative) and its ratio to the production of goods. We’ve seen the decline of European influence for more than a decade. Check out what the linked article has to say about the percentage of youth in Germany. What will this mean for the likes of China and India? It’s hard to say, since obviously population growth is only one factor. At the moment China seems like a slow moving, but unstoppable, behemoth. However, when I was a kid it seemed like the Soviet Union was an impenetrable force of nature.

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Comment by Kyle
2008-09-24 08:44:30

That’s OK, the United Nations saidthis morning that our solution is a global economy under their control. That’ll fix EVERYTHING……….

I think the bailout’s a bad idea. When the government gets its nose under a tent, they don’t go away.

These banks need to fail, and then we’ll pick up the pieces.

I’d agree: a self-sustaining population is necessary for survival of a species, in every segment of nature.

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Comment by Ed Wetterman
2008-09-25 12:09:15

So Kyle, Preston, and company….

When the Great Depression hits, and the folks in the big liberal cities take to the streets in protests, and the American society ends, and the UN declares it’s One World Government….

Are you with me in the 2nd Texas Revolution?

I’m getting my ammo ready….


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Comment by Kyle
2008-09-25 14:54:44

Damn straight.

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