Energy And Demographics Is Signalling Huge Deflation Ahead

in energy •  8 years ago  (edited)

Once you understand energy and demographics, everything else makes sense.....this is one of my favourite blogs on demographics because it's very easy to see how:

1 - Cheap energy led to a population explosion, which is now in decline.

2 - Old people are net sellers, not buyers/consumers - they don't take on more debt, they draw down from savings and investments, and they don't pay taxes, so this trend is hugely deflationary for all paper assets (stocks, bonds, property), and will bankrupt social security and pensions.

3 - Immigration, debt and zero interest rates are being used as substitutes to prop up growth, taxes and consumption.

4 - We have reached the limit where these policies are effective at stalling or hiding the huge demand destruction ahead..

  • Trump voters and far right parties are rejecting mass immigration

  • Negative interest rates don't work as they are also deflationary, and a flat yield curve destroys banks and pension funds

  • Consumers are tapped out so banks won't lend, and instead they are hoarding excess reserves to cover rising NPLs.

5 - Guaranteed basic income / helicopter money will probably be the last attempt to create growth and consumption, and it will fail spectacularly. Barring some kind of free energy or alien intervention, there is only one outcome.

http://econimica.blogspot.com/

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