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Aging Nations Like Low Prices Over High Income

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http://www.bloomberg.com/news/2013-06-06/aging-nations-like-low-prices-over-high-income-cutting-research.html

The older a country’s population, the lower its inflation rate, posing a challenge for central banks in the world’s industrial nations, according to a UBS AG (UBSN) report.

Singapore-based economist Andrew Cates of the Swiss bank’s global macro team plotted average inflation levels over the last five years against changes in the dependency ratio, which compares the very old and very young to the working-age population.

The resulting chart showed nations that have aged in recent years typically faced very low inflation and, in the case of Japan, deflation. By contrast, those that have been getting younger, such as India, Turkey and Brazil, have relatively strong price pressures.

“Since aging demographics will now start to feature more prominently in the outlook for many major developed and developing countries this is clearly of some significance for how inflation might evolve,” said Cates in a May 30 report.

The finding clashes with the view of economics textbooks, according to Cates, which tend to say a slowdown in population growth should put upward pressure on wages -- and therefore inflation -- as labor supply shrinks. Still, this ignores how demographics influence demand for durable goods and property, Cates said.

Well economic text books have proved highly accurate in the real world. Although I doubt that young populations demand inflation and obviously it ignores the Feds role in creating inflation for emerging economies. Newer markets probably naturally have a higher inflation rate as they play catch up to the wealthy nations who have discovered property investment.

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I guess if you are young you might believe you can earn your way of it. Older people with often fixed and low incomes probably don't have that opportunity.

I do think they are struggling to understand correlation v causation though.

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Counterexample - China - very high inflation but aging population.

UBS have confused a the developed/ developing world split with older/ younger population split , and then written a report based on their misunderstanding to try and impress clients with.

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I guess if you are young you might believe you can earn your way of it. Older people with often fixed and low incomes probably don't have that opportunity.

I do think they are struggling to understand correlation v causation though.

As an older person with limited opportunities to increase my income I spend much of my time reducing my expenditure. It can be more profitable than working especially when the overheads associated with working are removed.

Edited by campervanman

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As an older person with limited opportunities to increase my income I spend much of my time reducing my expenditure. It can be more profitable than working especially when the overheads associated with working are removed.

Still working but I do the same - with a view to hopefully retiring early. I try to only spend money on things that'll either earn me money or save it. The missus, however, often has different plans.

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  • 238 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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