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Posts posted by sharpe

  1. nothing about economics is scientific. Both economics and demographics are branches of sociology.

    That does not alter the fact the trend is downwards and has been for a long time now.

    a 65 year old worked is subject to more medical shocks to his earning capability than a 30 year old worker. Consequently the 65 year old worker will save more and spend less.

    how does that help? doing this will reduce output and that would create either negative return on capital and/or a depression.

    Mortality improvements have gone upwards (google the cohort effect) in the developed world.

    You are right older working people will have greater health risks, but inspite of this will be net producers. The saving comparison you are making is what young adults need to do for their children vs what older people do for their health care.

    As savings will fall for child care as a proportion of the population, this might be partially offset by saving for health care of older workers.

    With a significantly higher proportion of the population working in future output can be maintained for the same labour spread over more people and less days a week.

  2. The projections given rest on the assumption of economic growth carrying on at the same rate as it has done for the last century or two. It won't, though, because it can't. In fact there is going to be massive economic contraction. That being the case, we are probably looking at the peak of the human population right now or there abouts. From this point in human history going forwards, the population is set to decline. Steadily if we are lucky. However, it's perfectly possible that there will be a precipitous die-off in the coming 5 decades such that by the end of them we could be looking at a population less than half what it is now.

    Great we have the full range - population explosion to population collapse.

    Whilst it is worth understanding the likely consequences of any of these scenarios - it is speculation to suggest anyone as more likely.

  3. yeah, the future's gonna get puckered up.

    As we have seen before projecting mortality improvements is not scientific. It is highly subjective - and boasts a long history of widely inaccurate doom sayers.

    If the number of years in retirement stays the same (people retire later) an aging population will have a greater proportion of workers to non workers, with the requirement for saving unchanged.

    A properly organised society could start to reduce the number of working days a week

  4. http://finance.yahoo.com/news/Is-Gold-Pointing-to-Lehman-cnbc-134824876.html;_ylt=Ajd2Qrxy9.ej5FhZeOipk8u7YWsA;_ylu=X3oDMTE1czJjYjFvBHBvcwM3BHNlYwN0b3BTdG9yaWVzBHNsawNpc2dvbGRwb2ludGk-?x=0&sec=topStories&pos=5

    Is Gold Pointing to Lehman Mark II?
    On Thursday July 29, 2010, 10:28 am EDT
    Gold and oil prices are flashing warning signals
    that this summer may look more like the summer before the collapse of Lehman Brothers than the one that preceded the onset of the crisis in 2007, according to Simon Derrick, head of currency research at Bank of New York Mellon.
    "The leading indicator of investor sentiment in both 2007 and 2008 was the price of gold," Derrick wrote in recent research.
    In mid-August 2007, gold stood at a "relatively modest" $650 a troy once. But, after the Federal Reserve's aggressive rate cutting later that month, it began a rally that saw it add 58 percent to its price by March 2008, he added. Gold hit its peak price of $1030 on March 17 2008, Derrick said.
    Oil prices continued to rally into the summer of 2008 despite losses for gold, which stood at $680 in October 08, just a month after the collapse of Lehman Brothers.
    In light of this we find the recent weakness seen in the price of gold particularly telling," Derrick wrote.
    "Although it is tempting to say that much of the 7.7 percent slide seen in the price since June 21st has been driven by the supposed rehabilitation of the euro as a credible store of value, this doesn't really fit with the available facts," according to Derrick.
    He believes it is telling that with the exception of June 21st, the day that
    China changed its currency policy, falls in the price of gold have come
    after the publication of uninspiring US economic data.
    "The current decline in the price is down to deterioration in sentiment about the economic outlook (and the threat of rising deflationary pressures) rather than a reflection of greater optimism about the standing of the euro," Derrick wrote.
    Demand for gold from India fell by 30 percent last year and could fall by as much as 40 percent next year
    if the Bombay Bullion Association is to be believed, Derrick said.
    "All this comes at a time when the
    technical picture for gold is sending some very clear warning signals
    . Most notably, a series of lower highs on our favored momentum indicator since the fourth quarter of last year speaks of a longer term trend that is looking increasingly tired," he added.
    "With the oil price flashing a similar warning, it seems we are getting closer to answering the question whether this feels more like the summer of 2008 or that of 2007. On the basis of the current evidence it seems like July of 2008 provides a better fit," Derrick wrote.

    Might offer some good buying opportunities as the dips start rolling in. This article is definitely a contrary signal for buying. There is still a lot of pent up demand and there is a shortage of supply which will keep gold prices moving up. If there is any move in the other direction the price will definitely plateau before moving up again. And what does anyone with the name "Derrick" know anyway.

    Wait, wait - are you saying buy gold?

  5. Gold: 1162.90 -20.20 -1.71%

    1 GBP = $1.55387

    Looks like the UK currency is everyone's favourite--even at the expense of gold. Normally, the market sees the UK as the high risk bet given that our debt is far in excess of the other G7 and there is still no plan to reduce it. Safe haven status now with the pound at the expense of gold which is not fulfilling the promise of soaring with the SDC and other areas of risk.

    Pound up/gold down is a strange brew.

    I thought you were going to miss this...

    is it the last twitching of the paper bitches?


  6. I recall about 6-7 months ago walking out to the car and spending an hour digging it out of the car park before spending 2 hours driving to work.

    There was no rock salt available anywhere - probably quite cheap right now - likely a fortune in 6 months - what does anyone think?

    Short term killing or washed away in the rain?

  7. Thank you for this 'real world' contribution! I'll take a look at the paper and report back shortly.

    [edit: sharpe, I suggest you take a look at meat puppet's citation as well. Then we can can compare notes]

    Thanks for the pointer - I had a quick look through. It seems less relevant to your theory - as your theory relates to a closed system, whereas much of the data relates to specific countries.

    The counter theory proposed (i.e. that economic growth causes population growth rather than the other way around) seems to have support from this paper also. figure 1 captures the point nicely - highlighting the low birth rates in the recessionary decades.

    The only evidence I see seems to support the counter of your theory

    I also found this population projection:


    Which captures just how unscientific the process is

  8. I'll go with that.

    Not much. See this from http://en.wikipedia.org/wiki/British_Agricultural_Revolution

    "The agricultural productivity of Britain grew significantly in the period of the agricultural revolution. It is estimated that the productivity of wheat was about 19 bushels per acre in 1720 and that it has grown to 21-22 bushels in the middle of the eighteenth century. It declined slightly in the decades of 1780 and 1790 but it began to grow again by the end of the century and reached a peak in the 1840s around 30 bushels per acre, stabilising thereafter.[2]

    The Agricultural Revolution in Britain proved to be a major turning point in history. The population in 1750 reached the level of 5.7 million. This had happened before: in around 1350 and again in 1650. Each time, either the appropriate agricultural infrastructure to support a population this high was not present or plague or war occurred (which may have been related), a Malthusian Catastrophe occurred, and the population fell. However, by 1750, when the population reached this level again, an onset in agricultural technology and new methods without outside disruption, and also the effects of sugar imports, allowed the population growth to be sustained.

    The increase in population led to more demand from the people for goods such as clothing. A new class of landless labourers, products of enclosure, provided the basis for cottage industry, a stepping stone to the Industrial Revolution. To supply continually growing demand, shrewd businessmen began to pioneer new technology to meet demand from the people. This led to the first industrial factories. People who once were farmers moved to large cities to get jobs in the factories. It should be noted that the British Agricultural Revolution not only made the population increase possible, but also increased the yield per agricultural worker, meaning that a larger percentage of the population could no longer work in agriculture but could and/or had to work in these new, post-Agricultural Revolution jobs.

    The British Agricultural Revolution was the cause of drastic changes in the lives of British women. Before the Agricultural Revolution, women worked alongside their husbands in the fields and were an active part of farming. The increased efficiency of the new machinery, along with the fact that this new machinery was often heavier and difficult for a woman to work, made this unnecessary and impractical, and women were relegated to other roles in society. To supplement the family's income, many went into cottage industries. Others became domestic servants or were forced into professions such as prostitution. The new, limited roles of women, dubbed by one historian as "this defamation of women workers", (Valenze) fuelled prejudices of women only being fit to work in the home, and also effectively separated them from the new, mechanised areas of work, leading to a divide in the pay between men and women.[citation needed]

    Towards the end of the 19th century, the substantial gains in British agricultural productivity were rapidly offset by competition from cheaper imports, made possible by advances in transportation, refrigeration, and many other technologies. From that point, farming in Britain entered a period of economic struggle which continues to the present day."

    An increase in

    It fits perfectly. The fact that the process comes to a head rapidly does not mean that it has not been building slowly over time. It is precisely the slow nature of population change and the facts that its effects on debt dynamics have not been generally understood (because most people intuitively think like you) that the negative effects of population changes build up without being mitigated.

    Particularly pernicious is the demographic dividend effect. In this, when the boomers had less kids, not only was their economy buoyed by their own rising spending, it was also boosted by having less childcare expenses! Of course this 'dividend' is only borrowed, and has to be given back when the boomers want to retire - because they have not produced enough new workers to support them.

    So had they been genuinely sensible, they would not have spent that dividend, because they have to give it back. But they did spend it, and the whole economy leveraged up assuming the dividend would never be recalled. And that, is the motive, fundamental force behind not only the banking crisis but also the stagflation of the 1970s and the coming period in which we will get monetary deflation and high wages at the same time (due to labour scarcity).

    The scandinavian, japanese and US/UK/Eur banking crises can all be seen to have happend when the bulge in these population pyramids reached the 50-55 age. Japs first, then the nordics now us.

    Population rises occur due to agricultural advances seems to be the clear lesson. We surely agree on that.

    One thing that I find confusing is the reference to a closed system - you site japan as an example - yet dismiss others as they are not closed and making money from exports.

  9. here is the graph again. The peak is at about 1963. The 70s saw the first grown-up bloomers entering the workforce. The boomers never had has many kids as their parents so growth rates have been declining ever since boomers came of child bearing age.


    this mitigate loss of output to some degree and lessens tax burdens on the younger. However a 65 year old is less prodictive than a 40 year old. That is a well studied fact. Likewise although they may be retiring later they are likely to be saving more in the age range 50-70, so the economy must absorb more savings, even at the time when the generation that needs investing in is smaller and thus has a lesser investment demand. This is why ageing economies are supposed to export.

    But now, they are all ageing.

    If all these aging boomers die off quicker than expected I agree that helps, but it doesn't alter the number of kids they had, and doesn't alter the actual fertility of non immigrant childbearing age couples in the west now, having significantly less then 2.1 fertility rate.

    Note that just the slowing of population growth after a big baby boom was sufficient to traumatises various global banking systems. When it starts falling in various places (I believe italy is looking at losing near 50% of its population over the next 40 years), the game will be up and no amount of prudent hand-wringing and 'doing the right thing' is going to change that or prevent the inflation that world aging is going to bring with it.

    taking it back to the agricultural revolution. In practice what happened was a large increase in productive capacity of the existing population - this lead to an increase in population.

    Let's imagine people had not had more children (or mortality rates stayed the same). You would have had more abundant food requiring less effort for the same population. Would the gdp per person have risen?

    I find the arguement that population is behind the banking crises particularly weak. Espeically given the rapidity of the crises and the long term nature of population changes.

  10. no, the decline was in population growth rates. hence the average decline in economic growth rates during the same period.

    a population that is growing more slowly, is getting older, by definition (assuming the cause of the fall is slowing births and not accelerating deaths)

    {edit,and don't forget the adverse effects of slowing birth rates do not manifest for approx 50 years)

    the projections graphed in the %-age of people over 65 is rock solid reliable - because all these people are alive now, and the only uncertainty is the number to be born between now and then. Any uptick in young ones in the coming years will add to short term pain (as they are a non working burden) before delivering economic benefit approximately 30 years after being born.

    Further, the pop growth projected by the red line graph is the UN 'medium' scenario. This sees pop growth turn -ve by 2050. The UN low scenario sees world pop growth turn negative by 2025.

    In the 1970s is almost near the peak 2%?

    What is the impact of people retiring significantly later on your theory?


    is a seminal paper summarising the fairly huge problems with mortality projections - especially trends. Over 65 projections are not scientific

  11. here is your data. I posted it ages ago in this thread:


    I (scepticus) plotted this chart from data downloaded from the OECD database, and it shows the population over 65 as a percentage of the total for various OECD nations.


    "This chart shows population growth rates trend (although I'm not sure it is particularly accurate wrt dates). Population growth is the main driver of aggregate economic growth, so from this we can see that economic growth will be slowing dramatically for the rest of our lives:"


    There's some red herrings for you. Enjoy your meal.

    Thanks for that detail. The population grew between 1950 and 2008 at around 1-2% per annum according to your graph - I do not see the decline in population in the 1970s you talked about. I would be sceptical about the projections - there is a long history of getting this very wrong - there is no scientific premise for population projections.

  12. excellent, we are getting there. Now lets go back to 1300:

    1300) a decrease in population growth rates (WHY?)

    1330) a decrease in aggregated GDP some 30 years later followed by a decrease in population

    1350) a decrease in per capita GDP some 20 years later

    now back to today:

    1970) a decrease in population growth rates

    2010) a decrease in aggregated GDP some 40 years later

    2030) a decrease in global per capita GDP

    did your graph show significant increase in population growth rates - globally?

  13. sharpe, stop twisting it.

    The data shows this sequence:

    1) an increase in population

    2) an increase in aggregated GDP some 80 years later

    3) an increase in per capita GDP some 130 years later

    farming efficiency is a technological advancement, as was the development of the pendulum clock in 1656. The former resulted in a major increase in both measures of GDP, and the latter did not.

    technological changes and advances do not constitute economic growth my friend, therefore you cannot claim that farming technology innovation as an instance of growth. If you do claim that, then you need to explain why a millennia of technological advances prior to 1750 provided .. no growth.

    I think the sequence is:

    0) Significant technological advance that results in significant growth in the economy - i.e increased capacity to provide food.

    1) an increase in population

    2) an increase in aggregated GDP some 80 years later

    3) an increase in per capita GDP some 130 years later

    You have skipped step 0) - but do you agree it is key to this process?

  14. Yes it did increase population, but it did not increase PER CAPITA income meaningfully if at until about 1830 despite the revolution taking half in the earlier part of the 17th century, some 100 years before per capita income starts to take off.

    My point being, that it didn't make anyone wealthier for 100 years - it just allowed more people to be alive.

    What it did do in the period in between, was make a few people A LOT wealthier while leaving most in the same poverty as before, since the increasing population increased the value of their land and increased the return to capital by ensuring that there was a large labour pool.

    The increased population also supported increased division of labour, which is also a pre-requisite for economic growth and productivity increases.

    My theory is entirely consistent with the data I have presented, while yours - that economic growth creates and precedes pop growth, is not supported by my evidence.

    So your theory now is there was a rise in economic growth - which resulted in an equivalent population rise. This population rise then resulted in per captia increase in economic growth.

    The same data shows a rise in efficiency in farming standard preceeded an increase in per capita income. Even if by 100 years - it still holds.

    I see no evidence to support your theory and some very limited amount to suggest the alternate cause.

  15. The protectionist (2nd) imperial era was only the first half. After that free trade was imposed. I'll grant you that it was "imposed" with all that that entails, but it was profitable.

    The likes of Canada and Australia did well out of it, as colonies.

    I think in the case of the Congo a short burst of profit when the rubber was being exploited would have gone downhill fast. in fact it did go downhill, almost immediately. You had those guys roaming around looking to make necklaces of ears because production was falling. It's possible for a tyranny to absolutely strip an area dry and cart off, in an unsustainable way, a lot of wealth in a short time.

    But within a very few years of that the place would end up a total economic desert. In a few years, not a century or more.

    That sounds right - it did run for a few decades but most of the natives were fairly finished after that.

    Other tyrannies have lasted a long time - such as the US use of slave labour and in arabia etc

  16. The same wealth could have been achieved by free trade, and in the later years it was. The very concept of imperialism was based on flawed economics, ie mercantilism, the assumption that trade is a zero sum game and markets must therefore be tightly controlled. The Opium Wars were fought over mercantilism. The whole point of Empire was to take over and control markets on a grand scale as it was felt that whoever had the biggest market, 'wins'.

    India was used as a market, cheap British finished goods were exported to the place from the time of the Industrial Revolution on. They were being exported to everywhere though, not just India. Certainly by the 20th century there was little being exported from India, all the goods were going the other way. The Indian textile industry, for example, was very advanced in the 18th century, but in the 19th it was unable to compete with the textile mills of northern England. The Indian textile industry today is still unable to compete on the world market, thats why India is not rich.

    It could certainly be argued that imperial (mis)management of India meant that they didn't advance as quickly as they should have - though it's not like the governance of India was enlightened before we got there so we really have no idea whether it would be or not, that is pure speculation. I think it is also a slightly different issue.

    Interesting what you say about Nigeria, I was unaware of that. However, even colonial regimes that went for out and out pillage, like the Belgian Congo say, proved unprofitable in the end. The cost of controlling a colony and exploiting it exceeded the cash that could be made. Tyranny is simply not as profitable. Free trade had all the profit and none of the expenses of paying for soldiers to keep their boot on the locals neck. In any case, there is a very poor correlation between natural resources and wealth, even for nations that have managed to keep rapacious Johnny Foreigner out and their resources under their own control.

    If you own the monopoly you make more profit than if you have a number of competitors - this is the idea the imperialists practiced.

    The scramble for Africa by thomas packenham detailed the profits in the belgian congo - these declined sharply one basic human rights were introduced. Tyranny can be very profitable to those practicing it

  17. the 'green revolution' of the 18th century (a series of farming innovations) preceded the exponential population growth.

    The farming revolution increased the agricultural yield of the land. Initially, this surplus surplus was used to expand population. Only later, after a series of waves of urbanisation and social innovations came along did per capita income meaningfulyl increase.

    here is a graph of real per capita income since 1500


    here is the rate of pop growth:


    now tell, me what cause and effect do you see here?

    So the farming revolution resulted in increase in population. This supports the alternative theory I proposed - in causality contrast to that you proposed (I.e. That population growth is a prerequisite to per capita economic growth in a closed economic system.)

  18. Sceppy's quote:

    Your reply:

    Sceppy is quite clearly talking about historical precedents - and you choose, it appears, to counter with the flotsam and jetsam of your mangled mind.

    I say choose because when challenged about your mythical Giles - you claim he lived in world where two people can claim income by merely swapping goods in kind.

    Do you believe in the tooth fairy too? You must do given that most people in history are not and never were net producers. Nor were they farmers.

    I have seen no historical examples supportive of the theory proposed.

    Most people were farmers of one sort or another or directly related to one over the last 6000 years. This is still true today.

  19. will do.

    I think you mean:

    "Increased per-capita economic growth causes increased population growth - as people are wealthier they can afford more children"

    unless the growth is per capita no-one is more wealthy. You can have aggregate economic growth with no change in per capita wealth. places like bangladesh are basket cases but have high population growth rates. In societies like that people either just have kids and don't think too much about it and have little access to contraception, and/or tend to see their kids as money making entities - which is why they are put to work so early.

    note that if the aggregate economy is growing due to population growth then this is supportive of positive interest rates even if per-capita income is not increasing.

    Further, western per-capita has increased significantly since the war, yet it is during this very period that birth rates have fallen off.

    sure we can - we can look at whether increases in population precede or lag changes in GDP.

    The article was interesting. I was disappointed that it did not show causality, even if it did mention it as being important.

    The article presents a hypothetical problem. Is the hypothetical solution to increase retirement age? That way there could be a greater proportion of people working than in a developing country.

  20. not so. population reached a high in the last 13th century before crashing in the 14th. Europe did not return to 13th century population levels until about 1700! And about 1750, the exponential in the graph I presented above gets going.

    analyse that.

    also you can read more about my theory here:


    note that its not just about population numbers per se, population growth is required to keep an oversupplied labour market without which capitalism doesn't work.

    Would you mind pasting the link in this forum?

    There is a counter theory that I would propose.

    "Increased economic growth causes increased population growth - as people are wealthier they can afford more children"

    Given economic growth and population are correlated is it impossible to prove causality?

  21. fair enough I did say that, and I am standing by it, but I need to restate it slightly like so:

    population growth is a pre-requisite for aggregate economic growth in any closed economic system.

    now, that neatly removes your ability to cite individual countries, if they are engaged in exporting to others. A better test is to look for historical instances featuring largely closed economic systems, like europe in the high middle ages.

    So you have a theory - it is not down to others to prove or dis prove - you would need to able to demonstrate it for it to be taken seriously.

    It is difficult as population as almost always grown. And when the economy grows people naturally have more children.

    I await with interest for your demonstration.

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