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Fiscal Insanity - Realized Depopulation Vs. Potential Pandemic

There is great concern (rightly) about the current Coronavirus and potential for a regional or global pandemic.  The loss of life and associated deceleration of economic activity have a fair number of folks concerned.  However, this is unknowable and speculative.

What is known is that the four regions of the world that make-up just 36% of global population but nearly 80% of global GDP (plus 70% of commodity / energy consumption) including East Asia (Japan, China, Taiwan, S/N Korea), Western Europe, Eastern Europe, and North America (US, Canada) all have declining under-60-year-old populations as of 2019.  As the chart below shows, all four regions are now in decline and the under 60 year-old declines are projected to continue and worsen through 2040 in all but North America.  As for the US, the projections of a return to high rates of immigration and significant increases in fertility and births are unlikely to play out.  North America's under 60 year-old population is much more likely to hug the zero growth line through 2040 than return to growth.

Just to make it clear what is happening (and the ludicrous nature of the central banks asset rigging programs), I include the total primary energy consumption of each of the four regions...and guess what, they all look to be in secular decline.  Total primary energy consumption (including all oil, coal, natural gas, nuclear, and renewable energy consumption) is the best possible proxy for real economic activity.  Consider...

Eastern Europe total energy consumption peaked in 1990 and energy consumption has been in decline ever since.  Since 1990, it has been a 19 quadrillion BTU decline, or -29% over 30 years.

Western Europe total energy consumption peaked in 2006 and consumption has declined by 6 quadrillion BTU's, or -9% since 2006.

As for North America, total primary energy consumption peaked in 2007, and over a dozen years later, US/Canadian consumption is still -2% below that peak.And then there is East Asia, 2013 through 2017 saw just a 2% increase in total energy consumption.

Many point to growing demand in the "developing" or third world as a source to offset the first world decelerations and declines.  However, this view is entirely misguided as it is the third world that is dependent on the first world growth for third world growth in the form of exported commodities and goods.  Absent first world growth, these demographically positive nations have little domestic earnings, savings, or access to credit to spur their own economies.

To make this point of third world dependency on first world global growth, I point to Latin America, Africa, and South Asia (India, Pakistan, Iran, Indonesia).

Latin America

The primary energy consumption of the top 12 Latin American economies, by GDP, is charted below (Brazil, Mexico, Argentina, Colombia, Chile, Peru, Ecuador, Venezuela, Dominican Republic, Guatemala, Panama, Costa Rica).  If the roll-over in the blue line of total primary energy consumption isn't clear enough, check the collapse in annual energy demand growth.  Note previous global recessions generally correspond with the periods of low growth and decline in Latin American energy demand...and 2016/2017 was unlike anything Latin America had ever seen, including 2009.

Southern Asia

The primary energy consumption of the largest South Asian nations charted below (India, Pakistan, Iran, Indonesia).  Again, the first world weakness is visible in the decelerating growth in the columns showing annual change.

Africa

The primary energy consumption of Africa's top 12 economies, by GDP, is charted below (Nigeria, South Africa, Egypt, Algeria, Morocco, Kenya, Angola, Ethiopia, Ghana, Tanzania, Cote d'Ivoire, Libya).  Again, the first world weakness is showing up in the decelerating annual growth as global demand for commodities/exports has slackened.

Back to demographics, and what the change in the East Asian, North American, Eastern / Western European under 60 year old population looks like on an annual basis in millions of persons.  2009 was the gateway from centuries of secular growth to what is now decades or perhaps centuries of secular decline.  2020 is really the jumping off point, as a period of slight declines in the under 60 year-old first world population ends and the movement to the downside accelerates (particularly China in East Asia).

In 2020, the first world global population of consumers will decline by 5 million.  By 2030, the decline will be "at least" 17 million annually.  Why "at least"?  This data from the UN assumes birth rates and total births in these four regions far above what was observed in 2018 and 2019 and these assumptions of rising fertility and births is projected through 2040.  Birth rates and total births broke significantly to the downside in 2019...and the difference in births was over 2 million in 2019 alone and the delta is only growing over time.  The actual declines in the under 60 population will likely be in excess of 20 million by 2030.

But what of the rest of the world?  The chart below shows the annual change in the rest of the world under 60 year-old population (excluding Western / Eastern Europe, North America, and East Asia).  Note a clear period of accelerating annual growth from 1950 until 1989, a two decade plateau of relatively no change to that annual growth (annually adding about 60 million under-60 year-olds), and now we are in the secular period of decelerating population growth among the under 60 year-old RoW.  Again, oongoing outright population declines among first world and decelerating growth among the rest of the world, progressively shifting from developing nations to the poorest of poor nations.Strangely, the Federal Reserve and like central banks, in conjunction with federal governments, are attempting to make money cheaper to continue expanding the global productive capacity...in the face of fast declining populations that do all the consuming, have all the savings, income, and access to credit.  We are officially in a period of fiscal lunacy in the face of depopulation among the global consumer base.

Population data via UN World Population Prospects 2019, energy data via US EIA.

By the way, individual country views of primary energy consumption versus a demographic snapshot (annual births, 20-40 year-old females (childbearing population) vs. 40+ year-old females (post childbearing population)) might be of interest.  Noteworthy is that after the peak of the female childbearing population, energy consumption growth begins decelerating and nations have the option to export their way out and/or lower interest rates and take on ever more debt to sustain the appearance of growth.  Many/most nations went insane with interest rate policy promoting personal, corporate, and federal debt beyond what can ever be repaid...but credit to China, for officially going berserk'er than anyone else.  Unfortunately, the inevitable fall for China will be epic, but no one will be spared the global mess this time.

East Asia

China, $15.5 trillion GDP - Primary energy consumption vs. demographics

Japan, $5.5 trillion GDP

South Korea, $1.75 trillion GDP

Taiwan, $650 billion GDP

Europe

Germany, $4.1 trillion GDP (view from 1991 reunification through 2017)

UK, $2.9 trillion GDP

France, $2.8 trillion GDP

Italy, $2.1 trillion GDP

Spain, $1.5 trillion GDP

Netherlands, $950 billion GDP

Switzerland, $750 billion GDP

Sweden, $575 billion GDP

Belgium, $550 billion GDP

Austria, $500 billion GDP

Greece, $225 billion GDP

Eastern Europe

Russia, $1.7 trillion GDP

Poland, $650 billion GDP

North America

Canada, $1.8 trillion GDP

US of A, $22 trillion GDP

Oceania

Australia, $1.5 trillion GDP...New Zealand, $225 billion GDP

Latin America

Brazil, $2.1 trillion GDP

Mexico, $1.3 trillion GDP

Argentina, $500 billion GDP

Colombia, $350 billion GDP

Chile, $315 billion GDP

Peru, $240 billion GDP

Ecuador, $110 billion GDP

Venezuela, $70 billion GDP

Dominican Republic, $90 billion GDP

Guatemala, $85 billion GDP

South Asia

India, $3.3 trillion GDP

Indonesia, $1.2 trillion GDP

Turkey, $810 billion GDP

Saudi Arabia, $790 billion GDP

Iran, $500 billion GDP

Thailand, $550 billion GDP

Pakistan, $350 billion GDP

Malaysia, $400 billion GDP

Philippines, $390 billion GDP

Vietnam, $280 billion GDP

Africa

Nigeria, $500 billion GDP

South Africa, $390 billion GDP

Egypt, $330 billion GDP

Algeria, $190 billion GDP

Morocco, $130 billion GDP

Angola, $95 billion GDP

Ghana, $70 billion GDP

Libya, $50 billion GDP

Kenya, $110 billion GDP

Ethiopia, $100 billion GDP

Tanzania, $65 billion GDP