Looking For Economic Growth in a Low Birth Rate World
Where will future growth come from?
The modern economic system is based on growth fueled by demographics.
On one hand, the pension system assumes that kids will pay their parents’ pension.
On the other, the debt system assumes future ease of paying due to inflation created by demographic growth.
What does that mean?
Modern economies like the Eurozone have a 2% yearly inflation target.
This makes money lose its value and debt easier to repay.
For example:
Let’s imagine that €1 = $1 in 2024.
Now, the dollar remains stable while the euro loses 2% of its value every year.
The formula goes as follows:
€ in 10 years = €1 x (1−2%) power 10 years.
-> = €1 x (0.98)10
-> = 0.8117
In 2034, €1 will be worth 80% of what it was worth in 2024.
This means that if your salary has increased following inflation, you used to earn €10/hour ten years ago and now earn:
10 x (1.02) power to 10
