Overview

Since the end of the Second World War the developed world has been relatively stable. But today our world is on the brink of upheaval. Most people do not realize the scale of the Baby Boomer population boom - or more importantly the even larger worldwide fall in birth rates which followed it. When the Baby Boomer generation retires en mass - only a few years from now - the world will experience the first fall in the working age population of the world in centuries. According to the UN, Population ageing is unprecedented, without parallel in the history of humanity. By 2050, the number of older persons in the world will exceed the number of young for the first time in history. This is because the Baby Boom was one of the largest population explosions in history, followed by the most dramatic fall in fertility rates ever. This decline of the working age population and the increase in the proportion of elderly people is a tremendous problem for everyone today - because our current debt-based financial systems depend on growing populations. Nations around the world have taken advantage of the earlier population boom - borrowing from them in the form of treasury bonds and other sovereign debt to fight the cold war and later to spend on entitlements. The world has borrowed on an unprecedented scale from this generation - and promised them even more in their old age.The risk to the world from the accumulated debt and the fall in the working age population is more than just a question of possible cuts to promised entitlements or future tax hikes. Governments around the world have been running deficits for decades. Taking advantage of the large size of the Baby Boomer generation to create pay as you go systems that cannot be funded as the population of the developed world shifts from young to old. The real threat in the demographic decline lies in the leveraged nature of the world monetary system and debt that nations have already taken on. Financial institutions overvaluing subprime mortgages caused the 2008 financial crisis. Regarded as safe assets, they were highly leveraged in the banking system. When borrowers could not pay the mortgages, they fell in value. The leveraged nature of the assets meant that such loss of value, created havoc throughout the financial system. Havoc that affected not only homeowners, or banks which had made risky loans, but everyone in the economy. Similarly, but on a much greater scale, sovereign debt underpins the global financial system. Considered the safest of all assets - legally assigned zero risk of default in some nation's banking systems - sovereign debt is incredibly leveraged. If sovereign debt fell in value like subprime mortgages assets did, the world would face a financial crisis that would make 2008 pale in comparison. The world is at risk of a crises unlike anything since the turmoil that followed the First World War. This economic upheaval will be thrust on a world already poised for geopolitical turmoil. Even without an economic crisis, geopolitically, the world is facing a major realignment. Without the external threat of the U.S.S.R., foundations like N.A.T.O. and the European Union are under pressure. The rapid rise of China means that we have left the uni-polar world of U.S. dominance and are transitioning to a bipolar world order. When you combine this potential for political instability with the demographic shift and its economic consequences the world faces economic and geopolitical turmoil as it has not for a century.

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9781793927750

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