Strangely, the world is suffering from two seemingly opposite trends...overpopulation and depopulation in concert. The overpopulation is due to the increased longevity of elderly lifespans vs. depopulation of young populations due to collapsing birthrates. The depopulation is among most under 25yr old populations (except Africa) and among many under 45yr old populations.
So, the old are living decades longer than a generation ago but their adult children are having far fewer children. The economics of this is a complete game changer and is unlike any time previously in the history of mankind. None of the models ever accounted for a shrinking young population absent income, savings, or job opportunity vs. massive growth in the old with a vast majority reliant on government programs in their generally underfunded retirements (apart from a minority of retirees who are wildly "overfunded"). There are literally hundreds of reasons for the longer lifespans and lower birthrates...but that's for another day. This is simply a look at what is and what is likely to be absent a goal-seeked happy ending.
In a short yet economically valid manner, every person is a unit of consumption. The greater the number of people and the greater the purchasing power, the greater the growth in consumption. So, if one wanted to gauge economic growth, (growth in consumption driving economic growth), multiply the annual change in population by purchasing power (wages, savings) per capita. Regarding wage growth, I hold wages flat as from a consumption standpoint, wage growth is basically offset by inflation. Of course, there is another lever beyond this which central banks are feverishly torqueing; substituting the lower interest rates of ZIRP and NIRP to boost consumption from a flagging base of population growth. (There is one more boost to consumption, huge increases in social transfer payments primarily among the advanced economies...but while noted, these are a story for another day.)
The chart below is total annual population growth broken down by OECD nations (33 wealthiest nations...representing 1.3 billion people, OECD members), BRIICS (Brazil, Russia, India, Indonesia, China, S. Africa...representing 3.4 billion people), and the RoW (Rest of the World...representing about 3 billion people). Takeaways - 1) total annual population growth peaked in 1988 and has been decelerating since falling 13% & now down 12m/yr from peak. 2) Growth has been shifting away from the BRIICS to the RoW.
US 20-59yr/old annual population growth vs. the Federal Reserves FFR (%) and US total debt (below). Federal Reserve actions have been and remain a simple (ultimately unwinnable) fight vs. the decelerating growth among the core US population since the early 1980's. The great recession of 2008-'09 shouldn't be a shocker given the sharp 20-59yr/old population growth deceleration culminating in '07.
Below, Germany's 20-59yr/old annual population change vs. debt to GDP. Germany's 20-59yr/old population turned negative in '94 but the implementation of the Euro and Euro wide market (with the Maastrich treaty in 1992 and implementation Euro area wide in 1999) quintupled Germany's available export base under a now common currency (2nd chart below). The impact was a stay of execution for Germany but a grinding, terminal cancer for the remainder of the Euro area.
An economic and financial system premised on perpetual growth was bound to run into trouble (what do you do when you have taken a wrong turn?...apparently just keep going!). The inevitable deceleration of population growth was the trigger that turned central bankers into pushers offering ever cheaper credit. The lower rates drove unsustainable rates of consumption absent even further rate cuts and likewise drove overcapacity which likewise needed even lower rates. But negative rates of NIRP are simply no longer under the heading of capitalism (a market that doesn't value capital likely isn't capitalism?!?). When we've clearly changed "ism's"...we've crossed the Rubicon.
What happens as population growth turns to population decline is honestly and literally a complete and total game changer. A flat to declining number of buyers and consumers opposite ramping elderly sellers plus their unfunded liabilities is a problem with no happy resolutions. Currencies (what will constitute "money"), "free-markets", and perhaps the basis of civilization hang in the balance of the transition from high population growth to potential outright depopulation.
I believe this is the correct lens through which to view and understand why growth is perpetually weakening, why commodity overcapacity and slowing demand will only accelerate, why the Treasury market continues to see "buying" despite the near total absence of buyers (Treasury Mystery), why equities are a "buy" (but for all the wrong reasons), and why precious metal valuations are so extremely suspect in the face of a monetary onslaught.