Baby Bust

  • Birth dearth: Global population in decline
  • Unmistakable correlation… and solution? 
  • Corona vaccine hope and market resurgence
  • Very, very relative economic numbers
  • The Donald and de-dollarization
  • China and Iran’s partnership (and deep state scolds)
  • Readers on the “others”… Trump/Nixon… Outsourcing hopes and dreams… And more!

From the Department of Problems We Hadn’t Started Worrying About Yet: “The world is ill-prepared for the global crash in children being born,” reports the BBC, “which is set to have a ‘jaw-dropping’ impact on societies.”

Yes, somewhere on the other side of the corona-crud and the new American civil war, “falling fertility rates mean nearly every country could have shrinking populations by the end of the century.”

Rewind to 1950 and the average woman on this planet had 4.7 children during her lifetime. By 2017, that number had tumbled to 2.4. And researchers at the University of Washington believe it will fall to 1.7 by 2100.

Relentless Decline

Anything less than 2.1 and population starts to fall. The researchers estimate global population will rise from the present 7.8 billion… to a peak at 9.7 billion around 2064… then fall to 8.8 billion by 2100.

Hmmm. It’s been your editor’s long-standing belief that if overpopulation is the problem, then prosperity — made possible only by the free market — is the solution.

The correlation is unmistakable: As societies become more prosperous, women have fewer kids.

That’s been the way of the Western world since the Industrial Revolution, and now the rest of the world is catching up. Poverty is falling, life expectancy rising.

It’s just that we Americans don’t notice, living as we do in a declining empire hollowed out by the Federal Reserve and the military-industrial complex.

No better example than China: The Communist Party’s break with Maoist madness four decades ago lifted a billion people out of abject poverty. The researchers estimate China’s population will peak at 1.4 billion only four years from now… then fall nearly in half to 732 million by 2100.

The United States, by the way, is projected to grow only a tiny blip from its present 331 million.

But the researchers are fretting: “It will create enormous social change,” Washington researcher Christopher Murray tells the BBC. “It makes me worried because I have an 8-year-old daughter and I wonder what the world will be like.”

Betraying his world-improver mindset, he continues: "I think it's incredibly hard to think this through and recognize how big a thing this is; it's extraordinary, we'll have to reorganize societies."

*Sigh* Of course.

The Beeb summarizes his concerns as follows: “Who pays tax in a massively aged world? Who pays for health care for the elderly? Who looks after the elderly? Will people still be able to retire from work?”

We’re confident that left to their own devices, the everyday people making up the next couple of generations will figure it out. Well, assuming governments don’t muck it up too much trying to “reorganize societies”… and send those societies tailspinning back into abject poverty.

Wall Street is on the rally tracks again today — supposedly because of promising developments on a corona vaccine by the biotech firm Moderna.

Never mind that we could have said the same thing back in May. The promising developments at that time turned out to be hot air — strategically timed by Moderna management so they could float $1 billion worth of new shares a few hours after their announcement.

In any event, the Dow is just a hair below 27,000 as we write. The S&P 500 has pushed back above 3,200. The Nasdaq is back above 10,500.

The earnings standout today is Goldman Sachs — whose trading revenue nearly doubled in the second quarter. As a result, its profits held steady. That’s quite the departure from the numbers issued yesterday by big-bank rivals JPMorgan Chase, Citigroup and Wells Fargo. Shares of the vampire squid are up 1.25% at last check.

Also up today is Apple, which just won a major court case in the European Union over back taxes. AAPL shares rest at a record-high $390.

The big economic number of the day is good — and a bit deceptive.

Industrial production grew 5.4% in June, according to the Federal Reserve — on top of the 1.4% jump in May.

Unfortunately, the collapse in March and April was so bad that the nation’s factories, mines and utilities are still operating at levels comparable to the summer of 2011.

In addition, the number was goosed largely by auto factory reopenings. But we see headlines this morning about major corona-absenteeism at GM and Ford, so who knows how long it will last?

Then there’s the capacity-utilization number: 68.3% of the nation’s industrial capacity was in use during June. Yes, that’s a darn sight better than May’s 64.8%. But it’s still among the lowest figures in records going back more than 50 years.

Meanwhile, the Fed delivered the first so-far-in-July number today, the Empire State manufacturing index. At plus 17.2, New York state manufacturing is growing again for the first time since the pandemic hit. However, the factory managers responding to the survey have dialed back their previous optimism about the months ahead. Re-closings, anyone?

With his signature on the Hong Kong Autonomy Act, Donald Trump has just accelerated the process of de-dollarization.

Not that it’s any surprise he signed it. The bill passed Congress unanimously — a response to the regime in Beijing stripping Hong Kong of its home rule powers. Among other things, the new U.S. law penalizes banks doing business with Chinese officials who are carrying out the new crackdown on Hong Kong.

To the best of our knowledge — although it’s hard to keep up these days — this is the first time Washington has laid sanctions on specific individuals in China.

Up to now, such measures have been limited to much weaker nation-states. It’s one thing to freeze some random Iranian mullahs out of the global dollar-payments system. Doing it with the Chinese? That’s a whole new level of Washington trying to wield its might as the “economic policeman of the planet,” to borrow the French finance minister’s expression.

So it’s inevitable that Beijing will seek to extract itself from the global dollar-payments system even faster than it is already.

We’ve been chronicling this de-dollarization process since 2014. With a quarter of the world’s population living under governments under one or another form of punitive economic measures by Washington, those governments are bound to act.

So far, it’s been China, Russia and Iran taking the lead.

As part of that process, “Iran and China have quietly drafted a sweeping economic and security partnership that would clear the way for billions of dollars of Chinese investments in energy and other sectors,” says The New York Times.

The Times got its hands on an 18-page draft of the agreement, which “would vastly expand Chinese presence in banking, telecommunications, ports, railways and dozens of other projects. In exchange, China would receive a regular — and, according to an Iranian official and an oil trader, heavily discounted — supply of Iranian oil over the next 25 years.”

The Times story does not describe how these deals would circumvent the global dollar-payments system. But that’s gotta be part of the plan. Perhaps gold would be involved — a first step toward the “axis of gold” arrangement our Jim Rickards has described involving China, Iran, Russia and Turkey.

Done right, there won’t be much Washington can do about it. Surely the Times is channeling the frustration of the beltway foreign-policy “blob” and the national security state with its headline…

Defying US

Because of course it’s the natural order of things for Washington to dictate to other peoples how to conduct their affairs, and anyone who chooses a different path is “defiant.”

But that’s how it goes for a declining empire.

Just in: Secretary of State Pompeo is promising to lay still more sanctions on the Nord Stream 2 pipeline project, bringing Russian natural gas to Germany. “Sanctions tools include property seizures, visa restrictions and exclusion from a broad range of banking and financial services,” says The Wall Street Journal. And the beat goes on…

To the mailbag, and a reader’s response to some feedback we got last week.

Here’s what a reader wrote us at the conclusion of Friday’s 5: “The main inflection points of our country's current events really have been so politicized that just one’s opinion on the virus itself can say a lot about them…”

And our reader’s response today: “It is very frightening and malinformed to assume and generalize all political opinions based on one issue.

“Furthermore, like all stereotyping it’s intellectually lazy. It is polarizing, and flat out wrong. This is how you get to ‘If he believes A, he must be a racist. If he believes B, he must be a socialist.’

“I’m fiscally conservative and socially liberal and have no party or candidate who I agree with on 100%, 80% or even 50% of the issues. Our system forces a choice that may make it ‘look’ like that, but that is a false and unfair assumption. I’m left only with voting for whomever I believe will do the least, which I extrapolate to mean they will also do the least harm.”

The 5: The mask thing is getting preposterous. Not only are many people wearing them (or not) to express their tribal identity, but they’re automatically assuming anyone who does the opposite belongs to “the other.”

Nothing good will come of this…

And now an email we weren’t exactly expecting…

“Like back when Nixon Took the US off the Gold standard and he had a parralel Petro economy to swap over to, Trump is planning the reverse — coming off Petro/oil and going back to the gold standard. Until he does he is working the current system til it bursts. Sinking the federal reserve and the central bank system is the plan, not a mistake.

“Once we are back on gold, money will again be worth something.

“The debt incurred with the central bank system will eventually be too much to bear and we will see it crater… Debt will never be repaid. That's the way I see it without an in depth explanation.

“Let's see what happens. Trump is very savvy and will not only burst the central banking system but take out the corrupt players in government.

“Can I say orange jumpsuits are going to become very popular in DC and around the country, rightly so.”

The 5: “Trust the plan?”

Sorry, we just don’t see it. We stand instead with our former colleague David Stockman. As he put it in a recent interview, the nation is supposed to choose this year between a challenger who’s been part of the problem for nearly 50 years and an incumbent who still doesn’t grasp what the problem is.

Which brings us back to the guiding principle of The 5’s founder Addison Wiggin: Sauve qui peut, a French expression that translates to “Let he who can save himself.”

In a declining empire, there’s no other way to be. Don’t outsource your hopes and dreams and prosperity to a politician. Any politician.

Best regards,

David Gonigam

Dave Gonigam
The 5 Min. Forecast

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Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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