8 billion and counting… | ZeroHedge

According to the United Nations, this week the world’s (human) population reached 8 billion.

As DB’s Jim Reid notes, “It’s astonishing to think that several million people alive today existed when the world’s population passed 2 billion around 1927.” Consider this: During the lives of the oldest people on Earth today, The world’s population has experienced exponential growth in a manner never seen before.

In Reid’s view, the effect of this is still felt everywhere in financial markets and economies today: rapid population growth in the 20th century onwards encouraged democracies, and encouraged the welfare state. Governments were forced to spend more than they took in taxes for the first time in peacetime in order to get re-elected.

In the peak years of population growth in the second half of the 20th century (1964 was the peak year), governments could use future strong population growth to pay for their promises in real time to their citizens. This period, of course, began with low levels of global government debt, But in the end, promises were made possible only by breaking the gold-based Bretton Woods system (1971) and moving to financing based on fiat money and structural deficit financing.

50 years later, population growth in the developed world has stalled But the debts remain and the promises come home to crouch and also grow bigger and bigger in real time.

It doesn’t end there: the world’s population is likely to reach 9 billion in 2037 and 10 billion in 2058 (absent, of course, a “big reset”). And yes, those two billion more will be mostly in the less developed countries with the more developed countries leveling off or declining in aggregate until the end of the century.

As Reed concludes,It’s a real scratch how the more developed world has paid for the promises it made when the world was experiencing explosive population growth. We hope that the burden will not fall entirely on the shoulders of the 8 billion people on the planet who will be born today.