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Finance and Economics

Central hub for discussion on Finance & economics

Malik , An engineer turned into a student of conflict Aug, 04 2016

Can the debt-fuelled model of growth cope with ageing populations?


The dependency ratio compares the number of children and the elderly with people of working age (those aged 15-64). The higher the dependency ratio, the greater the burden on the workforce. In the world’s biggest economies, America apart, the workforce is set to shrink significantly. In many developed countries, the dependency ratio rose after the second world war, fell in the late 1960s and 1970s as the boomers entered the workforce, and has recently started rising again. That history makes it possible to analyse how economies performed during periods of both falling and rising ratios. Berenberg based its analysis on ten rich countries: America, Australia, Britain, France, Germany, Italy, Japan, Spain, Sweden and Switzerland.
The dependency ratio compares the number of children and the elderly with people of working age (those aged 15-64). The higher the dependency ratio, the greater the burden on the workforce. In the world’s biggest economies, America apart, the workforce is set to shrink significantly. In many developed countries, the dependency ratio rose after the second world war, fell in the late 1960s and 1970s as the boomers entered the workforce, and has recently started rising again. That history makes it possible to analyse how economies performed during periods of both falling and rising ratios. Berenberg based its analysis on ten rich countries: America, Australia, Britain, France, Germany, Italy, Japan, Spain, Sweden and Switzerland.

Rahul , Aug, 04 2016


So much money is encouraged by successive Governments, into property and building, for a short term tax take of stamp duty and VAT rather than into wealth creation, that the economy is not and cannot gain equilibrium. Then that money stays tied up for countless years or more. Private property ownership and/or private land lords have mind blowing amounts tied up forever in property. That does not happen in any other major economy. Those funds must be released back into the economy. Old people are not to blame for being prudent and keeping back enough money so as not to be a burden on family or society.
So much money is encouraged by successive Governments, into property and building, for a short term tax take of stamp duty and VAT rather than into wealth creation, that the economy is not and cannot gain equilibrium. Then that money stays tied up for countless years or more. Private property owners


Steve , Aug, 04 2016


The debt-fueled model of growth worked for the generations that ran it up, and awarded themselves pieces of paper that said younger generations had to pay them back. Not so much for the generations paying those debts back. I worry more about countries where rich and entitled generations will be supported by smaller, poorer ones, such as the U.S., than countries where poor and self sacrificing generations will be supported smaller but richer ones, such as China.
The debt-fueled model of growth worked for the generations that ran it up, and awarded themselves pieces of paper that said younger generations had to pay them back. Not so much for the generations paying those debts back. I worry more about countries where rich and entitled generations will be sup


Ashok Kapoor , Aug, 04 2016


The solution to this is to restore positive interest rates and stop printing money. The biggest fear for old people is running out of money before I die. Growth might be helped by imposing taxes on the import of garden gnomes and such crap and using the money to invest in infrastructure such as bridges, roads and modern electrical distribution systems. raising the income tax base on poor people who are trying to work. A 1930s style putting the unemployed and idle to work for the benefit of communal spaces, instead of handouts would also improve quality of live for urban communities. too.
The solution to this is to restore positive interest rates and stop printing money. The biggest fear for old people is running out of money before I die. Growth might be helped by imposing taxes on the import of garden gnomes and such crap and using the money to invest in infrastructure such as brid


Prateek , Aug, 04 2016


As world population growth slows and stops, and economic growth becomes only a function of productivity growth, it will become harder to establish a new company, because consumer demand will be stagnant, favoring incumbents. With low interest rates, it will be easier for incumbents to purchase any threat rather than compete against it. That in turn will drive lower productivity growth. Is this the world of the future, or have we already seen the first 8 years of it?
As world population growth slows and stops, and economic growth becomes only a function of productivity growth, it will become harder to establish a new company, because consumer demand will be stagnant, favoring incumbents. With low interest rates, it will be easier for incumbents to purchase any t


Adarsh , Aug, 04 2016


Productivity will increase as robotics and AI further infiltrate daily working tasks. However, that increase will not be translated into higher wages as it is a capital expenditure and will be recouped by the owners and not workers. What I am curious about is if there are any studies on how much of the decreasing family growth involves positive feedback versus supply/demand correction. For example, if a 20-something year old cannot find a decent paying job nor home, that person may be likely to put off creating a family. Does this in turn reduces future worker growth to further decrease company investment, or does it alternatively lead to a correction of the labor/demand curve to raise wages?
Productivity will increase as robotics and AI further infiltrate daily working tasks. However, that increase will not be translated into higher wages as it is a capital expenditure and will be recouped by the owners and not workers. What I am curious about is if there are any studies on how much of


Bhimesh , Aug, 04 2016


If you want retirees to spend, it is quite simple - you have to give them the income to do it. You dont appear to understand that, until a coupe of years ago, retirees had surplus income to spend on pub lunches, theatre trips, gifts for the grandchildren, cruises etc. The money for this came, not from our state or company pensions, but from savings. A few years ago, after retirement, I can remember getting 10% annual interest on a 5 year Bond during its last year. Today you are lucky to get 2%. People who are not living on savings cant get their heads around the fact that a so-called drop of "only" 1% in interest from 4% to 3% actually means that you have 25% less to spend. When the rates go up we will spend again. In the meantime we are just hunkering down and praying that inflation does not take off and leave us in penury.
If you want retirees to spend, it is quite simple - you have to give them the income to do it. You dont appear to understand that, until a coupe of years ago, retirees had surplus income to spend on pub lunches, theatre trips, gifts for the grandchildren, cruises etc. The money for this came, not fr