We're Reaching the End of the Road, Part 2

From my 2017 post, We're Reaching the End of the Road, I show a litany of problems that together spell the end of real economic growth in the US, especially since the Great Financial Crisis in 2008.  If real growth has ended, the rapid and unsustainable increase of debt at every level of the society spells an inevitable doomsday financial crisis: perhaps the greatest one.  

Since GDP includes government spending, increasing government spending has given headline GDP numbers a lift and gives the impression that all is well -- even getting better. But is it?  Much of that government spending is funded by debt and money printing.  Those robust GDP headlines ignore debt. 

In economics, one of the most important relationships is really the simplest:   

Real GDP growth = Productivity Growth + Population Growth.  

Let's examine those two factors below.

I. Shrinking US Population

Suddenly data is indicating (unexpected by most), that the US working age population is now shrinking by about 1% per annum.  This explains many of the headlines now that businesses are struggling to find workers and many have to offer more money to get help. It's because of our shrinking "working age" population (plus the generous unemployment benefits that are further shrinking the available pool of labor).

Declining Working Age Population in the US Spells Doom

This "shrinkage" should be no surprise since Economica Blog posted graphs (which I posted in We're Reaching the End of the Road) that show that populations in the world's most important economies are now declining:

The World's Major Economy's Populations are Shrinking  (from Econimica Blog)

Our Declining Working Age Population (15 to 64 yo) (from Econimica Blog)

II. Productivity Growth Is Also Mediocre

So, we've established that the most important portion of the population is shrinking both here and abroad (while debt is EXPLODING). THE GLOBE IS RACING TOWARD A FINANCIAL CRISIS. Eventually, a limit will be reached where the debt is unsustainable due to shrinking economies and population.

From the BLS:

Productivity Change in the US Manufacturing Sector Is Near Zero

Productivity Change in the US Non-Farm Business Sector May be +1.5%

III.  The Punchline

Back to our equation for Real Economic Growth.  

a.) Best case is Population growth = -1.0% + Productivity Growth at 1.5%, then real economic growth potential can be as high as +0.5%  (population growth plus productivity growth), This number is very, very low historically speaking.

b) Worst case is Population growth = -1.0% (working age) + productivity growth of 0.2% (for manufacturing), then real economic growth potential might be NEGATIVE -0.8% per annum.

I have a feeling that it's the worse case, given that the US economy remains in "EMERGENCY" crisis mode of zero percent interest rates, exploding government debt growth, emergency money printing of $120 BILLION PER MONTH -- even 13 years after the Great Financial Crisis.  The Fed tried to roll back it's money printing ONE TIME and the financial world fell apart.

If it wasn't for exponential government debt growth, real GDP would actually be NEGATIVE for the past 13 years.  We're literally IN A DEMOGRAPHIC AND FINANCIAL CRISIS right now. CRISIS IS OUR NEW NORMAL.

Without Government Debt-funded Expenditures, Real GDP has been Negative since 2008

 And then there's this:

Govt Debt Has Gone Exponential (now Debt is even higher at 29 TRILLION)

And this:

Federal Reserve Money "Printing" to Fund the Gov't CAN NOT BE STOPPED or EVERYTHING FALLS APART.  (Notice the attempt to SLIGHTLY reduce it's balance sheet in 2018/2019 caused a financial crisis and market turmoil.)

I'll repeat, Government and even Corporate Debt has gone parabolic and the Federal Reserve has shown that "money printing" can not be stopped or the game is over immediately.  But eventually debt blows up at some point.