Economy pays only to the ones producing. Thus high population grow causes poverty because there ones producing finance the children below production age. It's been mankind's way for millennia.
For a moment -that lasted 60 years- the world economy could pay the ones working as well as the ones not working, i.e., the retirees.
Initially, the retirees were being paid by the contributions of the ones working and contributing to the social system.
Once population stopped growing, a trick was put in place. Not use working people's money to pay for retirees but creating a pool of money, invest it, and use profits to pay for retirees.
But this pool of capital in pension funds was being invested at home. At home in the very same economies that were not growing nor employing young people, which was the original reason why pension funds were created.
As the economies were hollowed out, the economic growth was no longer based on manufacturing but in services and finance. This worked as long as the money available was scarce which forces someone, outside the system, to pay high interests rates.
Someone outside the system is Brazil paying high interest rates to keep the system going. As the system had no more economic growth artificial growth started being created.
Japan bubble, tech bubble, housing bubble. The artificial piling up of capital in a system that had for all practical purposes stagnated, (Japan was dismantling factories and sending them to S. E Asia) proved that would kill the economy as the Japanese case proves.
The bright start Japan that degenerated into a White Dwarf Japan can only use its capital to finance economic activities in a world scale that keep using its brands, technologies and know how.
That said, there is no way, Europe and the US will not implode into a White Dwarfs whose only economic activities would be similar to Japan.
To avoid White Dwarfization, those economies are still part of the world economy, as trading centers through which the materials and goods used elsewhere are traded. Therefore it is in the interests of Europe and the US to profit from growth elsewhere by simply acting as middle men.
Slowly those middle men will be cut out as currencies of the markets where the growth is, are internationalized, i.e., they will be used to trade between two countries instead of converted back and forth.
|
